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Exhibit 4.1    
    

Shares

Pinnacle Airlines Corp.  

Incorporated under the laws of the State of Delaware  

CUSIP 723443 10 7

See reverse for certain definitions  

This is to Certify that 

is
the owner of 

Fully paid and non-assessable shares of common stock  

$0.01 par value per share of Pinnacle Airlines Corp. transferable on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney, on surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. 

        In witness whereof, the Corporation has caused this Certificate to be signed in facsimile by its duly authorized officers and the
facsimile seal of the Corporation to be duly affixed hereto. 

Dated:

Countersigned
and Registered:

EquiServe Trust Company, N.A. 

Transfer
Agent

and Registrar

By

Authorized Signature 

President & Chief Executive Officer  

	Vice President & Chief Financial Officer
Pinnacle Airlines Corp.	 	 

        The
following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or
regulations: 

TEN COM

TEN ENT

JT TEN  

as tenants in common

as tenants by the entireties

as joint tenants with right of

survivorship and not as tenants

in common 

UNIF GIFT MIN ACT Custodian 

(Cust)

(Minor)

under
Uniform Gifts to Minors Act 

(State)

Additional
abbreviations may also be used though not in the above list. 

For value received,                                        
                                hereby sell, assign and transfer unto
 

Please insert social security or other identifying number of assignee
  (Please print or typewrite name and address including postal zip code of assignee), 

Shares
of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within named Corporation,
with full power of substitution in the premises.    Dated: 

Notice:  

The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or
enlargement or any change whatever.  

Signature(s) guaranteed:  

        The signature(s) must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.  

        Keep this certificate in a safe place. If it is lost, stolen, or destroyed, the corporation will require a bond of indemnity as a
condition of the issuance of a replacement certificate.  

        The Company's certificate of incorporation and bylaws restrict foreign ownership of shares of the Company's stock. These restrictions currently require that 75%
of the voting stock must be owned or controlled, directly or indirectly by "citizens of the United States," as such term is defined in 49 U.S.C. 40102(a)(15) and in administrative interpretations
thereof issued by the Department of Transportation, its predecessors and successors, from time to time. All non-U.S. citizens who own (beneficially or of record) shares of the Company's
common stock must register their ownership of such shares with the Company. A holder of shares of the Company's common stock may be precluded from voting such shares at the time of any vote of
stockholders in the event that (i) the holder is not a citizen of the United States and (ii) the foreign ownership of shares of the Company's voting stock exceeds the limits imposed by
U.S. federal law. Upon request, the Company will provide the holder of this certificate with a copy of its certificate of incorporation and bylaws. 

        The
certificate also evidences the entitles the holder hereof to certain rights (the "Rights") as set forth in a Rights Agreement (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and copy of which is on file at the principal executive offices of Pinnacle Airlines Corp. Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Pinnacle Airlines Corp. will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request. As described in the Rights Agreement, Rights beneficially owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement) shall become null and void. 

QuickLinks

Exhibit 4.1Exhibit 4.2

RIGHTS AGREEMENT

Dated November __, 2003

between

PINNACLE
AIRLINES CORP.

and

EQUISERVE TRUST COMPANY, N.A.,

as Rights Agent

 

TABLE OF CONTENTS

	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 1.   

  	
  Certain Definitions

  	
  2

  
	
  SECTION 2.   

  	
  Appointment of Rights Agent

  	
  5

  
	
  SECTION 3.   

  	
  Issue of Right Certificates

  	
  5

  
	
  SECTION 4.   

  	
  Form of Right Certificates

  	
  7

  
	
  SECTION 5.   

  	
  Countersignature and Registration

  	
  7

  
	
  SECTION 6.   

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

  	
  7

  
	
  SECTION 7.   

  	
  Exercise of Rights, Purchase Price; Expiration Date of Rights

  	
  8

  
	
  SECTION 8.   

  	
  Cancellation and Destruction of Right Certificates

  	
  9

  
	
  SECTION 9.   

  	
  Availability of Shares of Preferred Stock

  	
  9

  
	
  SECTION 10.   

  	
  Preferred Stock Record Date

  	
  10

  
	
  SECTION 11.   

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

  	
  11

  
	
  SECTION 12.   

  	
  Certificate of Adjusted Purchase Price or Number of Shares

  	
  18

  
	
  SECTION 13.   

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

  	
  18

  
	
  SECTION 14.   

  	
  Fractional Rights and Fractional Shares

  	
  21

  
	
  SECTION 15.   

  	
  Rights of Action

  	
  22

  
	
  SECTION 16.   

  	
  Agreement of Right Holders

  	
  23

  
	
  SECTION 17.   

  	
  Right Certificate Holder Not Deemed a Stockholder

  	
  23

  
	
  SECTION 18.   

  	
  Concerning the Rights Agent

  	
  23

  
	
  SECTION 19.   

  	
  Merger or Consolidation or Change of Name of Rights Agent

  	
  24

  
	
  SECTION 20.   

  	
  Duties of Rights Agent

  	
  25

  
	
  SECTION 21.   

  	
  Change of Rights Agent

  	
  26

  
	
  SECTION 22.   

  	
  Issuance of New Right Certificates

  	
  27

  
	
  SECTION 23.   

  	
  Redemption

  	
  27

  
	
  SECTION 24.   

  	
  Exchange

  	
  28

  
	
  SECTION 25.   

  	
  Notice of Certain Events

  	
  29

  
	
  SECTION 26.   

  	
  Notices

  	
  30

  
	
  SECTION 27.   

  	
  Supplements and Amendments

  	
  30

  
	
  SECTION 28.   

  	
  Successors

  	
  31

  
	
  SECTION 29.   

  	
  Benefits of this Agreement

  	
  31

  
	
  SECTION 30.   

  	
  Severability

  	
  31

  
	
  SECTION 31.   

  	
  Governing Law

  	
  31

  
	
  SECTION 32.   

  	
  Counterparts

  	
  31

  
	
  SECTION 33.   

  	
  Descriptive Headings

  	
  31

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
  Exhibit A

  	
  Form of Certificate of Designations of
  Series B Preferred Stock

  
	
  Exhibit B

  	
  Form of Rights Certificate

  

 

i

 

RIGHTS AGREEMENT

THIS RIGHTS AGREEMENT is dated November __, 2003
and is between Pinnacle Airlines Corp., a Delaware corporation (the “Company”),
and EquiServe Trust Company, N.A., a 
National Banking Association, as rights agent (the “Rights Agent”).

BACKGROUND

1.  The Company, Northwest Airlines Corporation, Northwest Airlines,
Inc. (“Northwest”),
and Fiduciary Counselors, Inc., (“Fiduciary Counselors”), entered into an
Omnibus Agreement, dated January 14th, 2003 (the “Omnibus Agreement”)
whereby Northwest may satisfy certain minimum funding requirements of ERISA
Section 302 and Internal Revenue Code Section 412 for Plan Years 2002, 2003 or
2004 that are due in calendar years 2003 or 2004 for each of the Northwest
Airlines Pension Plan for Contract Employees, Northwest Airlines Pension Plan
for Pilot Employees and Northwest Airlines Pension Plan for Salaried Employees
(the “Plans”)
by contributing Common Shares (as defined herein) to the Plans in lieu of cash.

2.  Upon the effectiveness of the Omnibus Agreement, NWA Inc. (“NWA”),
the parent of each of Northwest and Pinnacle Airlines, Inc., a Georgia
corporation (“Pinnacle Airlines”) received a dividend from Pinnacle
Airlines consisting of a promissory note payable to the order of NWA in the
aggregate principle amount of $200 million (the “Note”).  Upon receipt of the Note, NWA transferred
all of its shares of Pinnacle Airlines in exchange for 100% of the issued and
outstanding Common Shares and one share of Series A Preferred Stock of the
Company (the “Series A Preferred Share”).  NWA then transferred the Common Shares held by it and the Series
A Preferred Share to Northwest as a contribution to the capital of
Northwest.  In accordance with the terms
and conditions of the Omnibus Agreement, Northwest transferred some of the
Common Shares to the Plans.  As of the
effective date of this Agreement, Northwest owns 2,492,060 Common Shares, or
11.4% of the Company’s outstanding Common Stock and the Plans own 19,400,000
Common Shares, or 88.6% of the Company’s outstanding Common Stock.

3.             In connection with the consummation of the proposed
initial public offering (the “Offering”) of the Common Stock of the
Company, the Board of Directors of the Company (the “Board”) authorized
and declared a dividend of one preferred share purchase right (a “Right”)
for each share of Common Stock of the Company outstanding as of the effective
time of the Offering (the “Record Date”), each Right
representing the right to purchase one one-hundredth (subject to adjustment) of
a share of Preferred Stock (as defined below), upon the terms and subject to
the conditions contained in this Agreement. 
The Board has also authorized and directed the issuance of one Right
(subject to adjustment as described in this Agreement) with respect to each
share of Common Stock that becomes outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are defined below), although Rights may be issued in
accordance with Section 22 with respect to Common Shares that become
outstanding after the Distribution Date and prior to the Redemption Date and
the Final Expiration Date.

 

AGREEMENT

The parties agree as
follows:

SECTION 1.  Certain Definitions. 
As used in this Agreement:

“Acquiring Person”  means,
subject to the exceptions described below, any Person (as defined below), other
than an Exempt Person (as defined below), that is or becomes the Beneficial
Owner (as defined below) of a number of Common Shares (as defined below) equal
to 15% or more of the number of Common Shares then outstanding.  The phrase “then outstanding”,
when used with reference to a Person’s Beneficial Ownership of Common Shares
means the number of Common Shares then issued and outstanding together with any
other Common Shares not then actually issued and outstanding but which such
Person would be deemed to Beneficially Own. 
These are the exceptions referred to above:

(i)            A Person will not be deemed to be or
to have become an Acquiring Person for any purposes of this Agreement if the
Board determines in good faith that such Person who would otherwise be an
Acquiring Person has become such inadvertently including, without limitation,
because:  (A) such Person was unaware
that it beneficially owned a number of Common Shares 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 Shares but had no actual knowledge
of the consequences of such Beneficial Ownership under this Rights Agreement
and without any intention of changing or influencing control of the Company,
and such Person, as promptly as practicable divested or divests himself or
itself of Beneficial Ownership of a sufficient number of Common Shares so that
such Person would no longer be an Acquiring Person.

(ii)           A Person will not be deemed to be or
to have become an Acquiring Person for any purposes of this Agreement 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 Common
Shares beneficially owned by such Person to 15% or more of the number of Common
Shares then outstanding, unless such person subsequently becomes the Beneficial
Owner of any additional Common Shares and remains the Beneficial Owner of a
number of Common Shares equal to 15% or more of the number of Common Shares
then outstanding.

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

“Fiduciary Counselors” shall have the meaning set
forth in paragraph 1 of the preamble to this Agreement.

A Person will be deemed the “Beneficial
Owner” of, will be deemed to have “Beneficial Ownership”
of and will be deemed to “beneficially own”:

 

2

 

(i)            any securities that such Person or
any of such Person’s Affiliates or Associates is deemed to beneficially own,
directly or indirectly, within the meaning of Rule 13d-3 under the Exchange
Act, as in effect on the date of this Agreement;

(ii)           any securities that such Person or
any of such Person’s Affiliates or Associates has the right to acquire (whether
such right is exercisable immediately or only after the passage of time) in
accordance with any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise, but not including (A) 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, (B) securities which such Person has a right to acquire on the
exercise of Rights at any time prior to the time a Person becomes an Acquiring
Person or (C) securities issuable upon exercise of Rights from and after the
time a 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(a) or Section 22 (“original Rights”)
or pursuant to Section 11(a)(i) or Section 11(n) with respect to an adjustment
to original Rights; or

(iii)          any securities that such Person or any
of such Person’s Affiliates or Associates has the right to vote in accordance
with any agreement, arrangement or understanding, unless the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and is not
also then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report);

(iv)          any securities that are beneficially
owned, directly or indirectly, by any other Person with which such Person or
any of such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the extent
contemplated by the requirement expressed in (iii) above or disposing of any
securities of the Company; and

(v)           any securities of the Company
convertible into Common Shares held by such Person.

“Business Day” means any day other than a
Saturday, a Sunday, or a day on which banking institutions in the State of New
York, or the State in which the principal office of the Rights Agent is
located, are authorized or obligated by law or executive order to close.

 

3

 

“close of business” on any given date means
5:00 P.M., New York City time, on such date; provided, however,
that if such date is not a Business Day it means 5:00 P.M., New York City time,
on the next succeeding Business Day.

“Common Shares” means the Company’s Common
Stock, par value $.01 per share.

“Common Stock” when used with reference to
any Person other than the Company means the capital stock (or, in the case of
an unincorporated entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a subsidiary of
another Person, the Person or Persons which ultimately control such first–mentioned
Person.

“Distribution Date” means the earlier of (i)
the tenth day after the Stock Acquisition Date or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of a number of Common Shares
equal to 15% or more of the number of Common Shares then outstanding (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights.

“Effective Time of the Offering” means the time
and date of the initial closing under the underwriting agreement relating to
the Offering.

“Exempt Person” means (i) the Company, (ii)
any Subsidiary (as defined below) of the Company, (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity or
trustee holding Common Shares for or pursuant to the terms of any such plan or
for the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company, (iv) Northwest
Airlines Corporation, a Delaware corporation, and any of its successors, (v)
any Affiliate of Northwest Airlines Corporation and (vi) Fiduciary Counselors
and the Plans; provided that the term “Exempt Person” will
apply to Fiduciary Counselors and the Plans only to the extent any of them
acquires Beneficial Ownership of Common Shares in the manner specifically
provided in Articles III and IV of the Omnibus Agreement.

“Final Expiration Date” has the meaning given in
Section 7.

“NASDAQ” means The Nasdaq Stock
Market’s National Market.

“Person” means any individual, firm,
corporation or other entity, including any successor (by Offering or otherwise)
of such entity.

“Plans” shall have the meaning set
forth in paragraph 1 of the preamble to this Agreement.

 

4

 

“Preferred Stock” means the Series B
Preferred Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the Form of Certificate of Designations attached to
this Agreement as Exhibit A.

“Redemption Date” has the meaning given in
Section 7.

“Securities Act” means the Securities Act of
1933, as amended.

“Stock Acquisition Date” means the
first date of public announcement (which for purposes of this definition
includes, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such or such earlier date as a majority of the Board becomes aware
of the existence of an Acquiring Person.

“Subsidiary” of any Person” means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person, and any corporation or other entity
that is otherwise controlled by such Person.

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, prior to the Distribution Date are also the holders
of the Common Shares) in accordance with the terms and conditions of this
Agreement, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable, upon ten (10)
days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to supervise, and in no event
be liable for, the acts or omissions of any such co-Rights Agent.

SECTION 3.  Issue of
Right Certificates.

(a)   Until the Distribution Date (i) the Rights
will be evidenced (subject to the provisions of Section 3(b)) by the
certificates for Common Shares registered in the names of the holders thereof
and not by separate Right Certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the Common Shares.  As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage–prepaid
mail, to each record holder of Common Shares as of the close of business on the
“Distribution Date” (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, a
Right Certificate, 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.

(b)   On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Shares of Preferred Stock, in substantially the Form of Exhibit C hereto (the “Summary of Rights”), by first–class,
postage–prepaid mail, to 

 

5

 

each record holder of Common
Shares as of the close of business on the Record Date (other than any Acquiring
Person or any Associate or Affiliate of any Acquiring Person), at the address
of such holder shown on the records of the Company.  With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with
the Summary of Rights.  Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights, will also constitute the transfer of the Rights associated with the
Common Shares represented thereby.

(c)   Certificates issued for Common Shares after
the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date will have impressed on, printed
on, written on or otherwise affixed to them the following legend:

THIS CERTIFICATE ALSO
EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
RIGHTS AGREEMENT BETWEEN PINNACLE AIRLINES CORP. AND [U.S. BANK, N.A.], DATED
_________, 20__ AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE “RIGHTS
AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN
BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES
OF PINNACLE AIRLINES CORP.  UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL
BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE.  PINNACLE AIRLINES CORP. WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER
RECEIPT OF A WRITTEN REQUEST THEREFORE. 
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

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

(d)   Notwithstanding Section 3(c), the omission of
a legend will not affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights.

 

6

 

SECTION 4.  Form of
Right Certificates.  The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) will be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of NASDAQ or of
any other stock exchange or automated quotation system on which the Rights may
from time to time be listed, or to conform to usage.  Subject to the provisions of Sections 11, 13 and 22, the Right
Certificates will entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth therein at
the price per one one-hundredth of a share of Preferred Stock set forth therein
(the “Purchase
Price”), but the number of such one one-hundredths of a share of
Preferred Stock and the Purchase Price will be subject to adjustment as
provided in this Agreement.

SECTION 5.  Countersignature
and Registration.  (a) 
The Right Certificates will be executed on behalf of the Company by the
President, any of the Vice Presidents, the Treasurer or the Controller of the
Company, either manually or by facsimile signature, and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature.  The Right
Certificates must be manually countersigned by the Rights Agent and will not be
valid for any purpose unless countersigned. 
In case any officer of the Company who has signed any of the Right
Certificates ceases 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, was 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.

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

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

(a)   Subject to the provisions of Sections 7(e),
11(a)(ii) and 14, at any time after the close of business on the Distribution
Date, and prior to the close of business on the earlier of the Redemption Date
or the Final Expiration Date, any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one–hundredths of a share of Preferred Stock as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase.  Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates will make such request in writing delivered 

 

7

 

to the Rights Agent, and
will surrender the Right Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the office or agency of the Rights Agent
designated for such purpose.  Thereupon
the Rights Agent will countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so
requested.  The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

(b)   Subject to the provisions of Section
11(a)(ii), at any time after the Distribution Date and prior to the close of
business on the earlier of the Redemption Date or the Final 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 delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed
or mutilated.

SECTION 7.  Exercise of
Rights, Purchase Price; Expiration Date of Rights.

(a)   Except as otherwise provided herein, the
Rights will become exercisable on the Distribution Date, and thereafter the
registered holder of any Right Certificate may, subject to Section 11(a)(ii)
and except as otherwise provided herein, exercise the Rights evidenced thereby
in whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one–hundredth of
a share of Preferred Stock as to which the Rights are exercised, at any time
which is both after the Distribution Date and prior to the earliest of (i) the
close of business on ___________, 2013 (the “Final
Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the “Redemption
Date”) or (iii) the time at which such Rights are exchanged as
provided in Section 24.

(b)   The Purchase Price will be initially $___ for
each one one–hundredth of a share of Preferred Stock purchasable upon the
exercise of a Right.  The Purchase Price
and the number of one one-hundredths of a share of Preferred Stock or other
securities or property to be acquired upon exercise of a Right will be subject
to adjustment from time to time as provided in Sections 11 and 13 and will be
payable in lawful money of the United States of America in accordance with
paragraph (c) of this Section 7.

(c)   Except as otherwise provided herein, upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the aggregate
Purchase Price for the shares of Preferred Stock 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 check,
cashier’s check or money order payable to the order of the Company, the Rights
Agent will thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock certificates for the 

 

8

 

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

(d)   Except as otherwise provided herein, in case
the registered holder of any Right Certificate exercises less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the exercisable Rights remaining unexercised will be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14.

(e)   Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section
6 or this Section 7 unless such registered holder has (i) completed and signed
the certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) 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 will, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, will be cancelled by it, and no Right Certificates will be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement.  The Company will deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent will deliver all cancelled Right Certificates to
the Company.

SECTION 9.  Availability
of Shares of Preferred Stock.

(a)   The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock or any shares of Preferred
Stock held in its treasury, the number of shares of Preferred Stock that will
be sufficient to permit the exercise in full of all outstanding Rights.

(b)   So long as the shares of Preferred Stock
(and, following the time that a Person becomes an Acquiring Person, Common
Shares and other securities) issuable upon the exercise 

 

9

 

of Rights may be listed or
admitted to trading on NASDAQ or listed on any other national securities exchange
or quotation system, the Company will 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 NASDAQ or listed on any other
exchange or quotation system upon official notice of issuance upon such
exercise.

(c)   From and after such time as the Rights become
exercisable, the Company will use its best efforts, if then necessary to permit
the issuance of shares of Preferred Stock (and following the time that a Person
first becomes an Acquiring Person, Common Shares and other securities) upon the
exercise of Rights, to register and qualify such shares of Preferred Stock (and
following the time that a Person first becomes an Acquiring Person, Common
Shares and other securities) under the Securities Act and any applicable 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 Final Expiration
Date.  The Company may temporarily
suspend, for a period of time not to exceed 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 will 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 will not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction is
obtained and until a registration statement under the Securities Act (if
required) is declared effective.

(d)   The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all shares of Preferred
Stock (and, following the time that a Person becomes an Acquiring Person,
Common Shares and other securities) delivered upon exercise of Rights will, at
the time of delivery of the certificates therefor (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

(e)   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 shares of Preferred Stock (or Common Shares or
other securities) upon the exercise of Rights. 
The Company will not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of Right Certificates to
a Person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Stock (or Common Shares or other securities) 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 or depositary receipts for Preferred Stock (or Common Shares or
other securities) upon the exercise of any Rights until any such tax will have
been paid (any such tax being payable by that holder of such Right Certificate
at the time of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax is due.

SECTION 10.  Preferred Stock Record Date.  Each Person in whose name any certificate for Preferred Stock is
issued upon the exercise of Rights will for all purposes be 

 

10

 

deemed to have become the holder of record of the
shares of Preferred Stock represented thereby on, and such certificate will 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 Stock transfer books of the Company
are closed, such Person will be deemed to have become the record holder of such
shares on, and such certificate will be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open.  Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate will not be entitled to
any rights of a holder of Preferred Stock for which the Rights will be
exercisable, including, without limitation, the right to vote or to receive
dividends or other distributions, and will not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

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

(a)   (i)    In
the event the Company at any time after the date of this Agreement (A) declares
a dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivides the outstanding Preferred Stock, (C) combines the outstanding
Preferred Stock into a smaller number of Preferred Stock or (D) issues any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
Offering in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, will be proportionately
adjusted so that the holder of any Right exercised after such time will be
entitled to receive the same number and kind of shares of capital stock which
were available to the holder prior to such dividend, subdivision, combination
or reclassification.  The consideration
to be paid upon the exercise of one Right will not be less than the aggregate
par value of the shares of capital stock of the Company issuable upon exercise
of one Right.

(ii)           Subject to Section 24 of this
Agreement and except as otherwise provided in this Section 11(a)(ii), in the
event any Person becomes an Acquiring Person, each holder of a Right will have
the right to receive, upon its exercise at a price equal to the then current
Purchase Price multiplied by the number of one one–hundredths of a share
of Preferred Stock for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of shares of Preferred Stock, such
number of Common Shares (or at the option of the Company, such number of one
one-hundredths of shares of Preferred Stock) obtained by:

(A)           multiplying the then current Purchase
Price by the number of one one–hundredths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Company’s Common Shares
(determined pursuant to Section 11(d)) on the 

 

11

 

date
of the occurrence of such event; and from such date forward the Purchase Price
and the number of Common Shares so receivable upon exercise of a Right will be
subject to further adjustment as appropriate in accordance with Section 11(f)
below.

Notwithstanding
anything in this Agreement to the contrary, however, from and after the time
(the “invalidation
time”) when any Person first becomes an Acquiring Person, any
Rights that are beneficially owned by (A) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (B) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the invalidation time or (C) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or concurrently
with the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board has determined is part of
a plan, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this paragraph, and subsequent transferees of such
Persons, will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement.  The
Company will use all reasonable efforts to ensure that the provisions of this
Section 11(a)(ii) are complied with, but will have no liability to any holder
of Right Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. 
From and after the invalidation time, no Right Certificate will 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 will be
cancelled.  From and after the
occurrence of an event specified in Section 13(a), any Rights that have not
been exercised pursuant to this Section 11(a)(ii) will be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).

(iii)          The Company may substitute for a
Common Share issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the current per share
market price of Common Shares.  In the
event that there are insufficient Common Shares issued but not outstanding or
authorized but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Board will, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess of (1) the value of the Common
Shares issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the “Current Value”)
over (2) the then current Purchase Price multiplied by the number of one
one-hundredths of shares of Preferred Stock for which a Right was exercisable
immediately prior to the time that the Acquiring Person became such (such
excess, the “Spread”), and
(B) with respect to each Right (other than Rights which have become void
pursuant to Section 11(a)(ii)), make adequate provision to substitute for the
Common Shares issuable in accordance with subparagraph (ii) upon exercise of
the Right and payment of the applicable Purchase Price, (1) cash, (2) a 

 

12

 

reduction
in the Purchase Price, (3) shares of Preferred Stock or other equity securities
of the Company (including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common Shares, are deemed in
good faith by the Board to have substantially the same value as the Common
Shares (“Common Share equivalents”)),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the Common
Shares actually issued upon exercise of such Right, will have an aggregate
value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the Board
upon the advice of a nationally recognized investment banking firm selected in
good faith by the Board; but, if the Company does not make adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days following
the date that the Acquiring Person became such (the “Section 11(a)(ii) Trigger Date”), then the Company
will deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company 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 shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread.  If, upon the date any Person
becomes an Acquiring Person, the Board determines that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, then, if the Board so elects, the thirty (30)
day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order
that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is
called the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (A) will provide, subject to Section
11(a)(ii) and the last sentence of this Section 11(a)(iii), that such action
will apply uniformly to all outstanding Rights and (B) 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 determine the
value of the Rights and their form of distribution.  In the event of any such suspension, the Company will 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(a)(iii), the value of the Common Shares will be the current
per share market price (as determined pursuant to Section 11(d)(i)) on the
Section 11(a)(ii) Trigger Date and the per share or fractional value of any “Common Share equivalent” will be
deemed to equal the current per share market price of the Common Shares.  The Board may, but will 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(a)(iii).

(b)   Issuance of Rights, Options or Warrants to
Purchase Preferred Stock or its Equivalent.  If the Company fixes a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe
for or purchase Preferred Stock (or shares having the same rights, 

 

13

 

privileges and preferences
as the Preferred Stock (“equivalent
preferred shares”)) or securities convertible into Preferred
Stock or equivalent preferred shares at a price per share of Preferred  Stock
or equivalent preferred shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or equivalent preferred
shares) less than the then current per share market price of the Preferred
Stock (determined pursuant to Section 11(d) below) on such record date, the
Purchase Price to be in effect after such record date will be determined by:

(A)      
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which will be the number of shares
of Preferred Stock and equivalent preferred shares outstanding on such record
date plus the number of shares of Preferred Stock and equivalent preferred
shares which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which will be the number of shares of Preferred Stock and equivalent preferred
shares outstanding on such record date plus the number of additional shares of
Preferred Stock and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible).

The consideration to be paid
upon the exercise of one Right will not 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
is paid in a form other than cash, the value will be determined by the Board,
whose determination will be described in a statement filed with the Rights
Agent and which shall be binding on the Rights Agent.  Shares of Preferred Stock and equivalent preferred shares owned
by or held for the account of the Company will not be deemed outstanding for
the purpose of any such computation. 
Such adjustment will be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price will be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

(c)   Issuance of Bonds, Assets, Rights or
Warrants (excluding those referred to in Section 11(b)).  If the Company fixes a record date for a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a dividend
payable in Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
will be the then current per share market price of the Preferred Stock
(determined pursuant to Section 11(d) below) on such record date, less the fair
market value (as determined by the Board whose determination will be described
in a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock, and the denominator of
which will be such current per share market price (determined pursuant to
Section 11(d) below) of the Preferred Stock; in no event will what is 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 

 

14

 

one Right.  Such adjustments will be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price will again be adjusted to be the Purchase
Price that would then be in effect if such record date had not been fixed.

(d)   Current Per Share Market Price.

(i)            Except as otherwise provided the “current per share market price” of
any security (a “Security”
for the purpose of this Section 11(d)(i)) will be deemed to be the average of
the daily closing prices per share of such Security for the 30 consecutive
Trading Days (defined below) immediately prior to such date.  In the event that the current per share
market price of the Security is determined following the announcement of (A) a
dividend or distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after 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 will be appropriately
adjusted to reflect the current market price per share equivalent of such
Security.  The closing price for each
day will 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 by the principal consolidated transaction
reporting system with respect to securities on NASDAQ or, if the Security is
not on NASDAQ, 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 or such other system
then in use, or, if on any such date the Security is not quoted by any
organization in the over-the-counter market, 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 the Company. 
The term “Trading Day”
means a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

(ii)           If the Preferred Stock is publicly
traded, the “current per share market
price” of the Preferred Stock will be determined in accordance
with the method set forth in Section 11(d)(i). 
If the Preferred Stock is not publicly traded but the Common Shares are
publicly traded, the “current per share market
price” of the Preferred Stock will be conclusively deemed to be
the current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i) multiplied by one hundred (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof).  If neither the Common
Shares nor the Preferred Stock is publicly traded, “current per share market price” means the fair value
per share as determined by the Board and described in a statement to be filed
with the Rights Agent.

 

15

 

(e)   Minimum Threshold.  No adjustment in the Purchase Price will be
required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; and any adjustments which by reason of this
Section 11(e) are not required to be made will be carried forward and taken
into account in any subsequent adjustment. 
All calculations under this Section 11 will be made to the nearest cent
or to the nearest one ten-thousandth of a share of Preferred Stock or Common
Share or other share or security as the case may be.  Any adjustment required by this Section 11 will be made no later
than the earlier of (A) three years from the date of the transaction which
requires such adjustment or (B) the date of the expiration of the right to
exercise any Rights.

(f)    Capital Stock.  If as a result of an adjustment made
pursuant to Section 11(a), the holder of any Right that is exercised will
become entitled to receive any shares of capital stock of the Company other
than the Preferred Stock, thereafter the Purchase Price and the number of such
other shares so receivable upon exercise of a Right will 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 Stock contained in
Sections 11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) and the provisions
of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock will apply
on like terms to any such other shares.

(g)   Fractions of Preferred Stock.  All Rights issued by the Company subsequent
to any adjustment made to the Purchase Price evidences the right to purchase,
at the adjusted Purchase Price, one one–hundredths of a share of
Preferred Stock purchasable upon exercise of the Rights, all subject to further
adjustment as provided below.

(h)   Number of Preferred Stock Purchaseable in
Event of Adjustment.  If the Company
does not exercise its election as provided in Section 11(i), then upon each
adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment will evidence the right to purchase, at the adjusted Purchase
Price, that number of one one–hundredths of a share of Preferred Stock
(calculated to the nearest one ten- thousandth of a share of Preferred Stock)
obtained by (A) multiplying (1) the number of one one–hundredths of a
share covered by a Right immediately prior to such adjustment by (2) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (B) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

(i)    Adjustment to 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–hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one–hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number
of Rights will be calculated (to the nearest one ten–thousandth) by (A)
dividing the Purchase Price in effect immediately prior to its adjustment by
the Purchase Price in effect immediately after its adjustment.  The Company will publicly announce such
election, 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, 

 

16

 

will be at least 10 days
later than the date of the public announcement.  If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company may distribute
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 are entitled as a result of such adjustment, or, at the option of
the Company, will distribute 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 will be
entitled after such adjustment.  Right
Certificates so to be distributed will be issued, executed and countersigned in
the manner provided for in this Agreement and will be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.

(j)    Ratios and Purchase Price of New Rights
Certificates.  Irrespective of any
adjustment or change in the Purchase Price or the number of one one–hundredths
of a share of Preferred Stock issuable upon the exercise of the Rights, new
Right Certificates issued may continue to express the Purchase Price and the
number of one one–hundredths of a share of Preferred Stock which were
expressed in the initial Right Certificates.

(k)   Purchase Price below Par Value.  Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
Preferred Stock or other shares of capital stock issuable upon exercise of the
Rights, the Company will validly and legally issue fully paid and nonassessable
shares of Preferred Stock or other such shares at such adjusted Purchase Price.

(l)    Deferral.  In any case in which this Section 11 requires that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may defer issuing any additional Preferred Stock and other
capital stock or securities of the Company until the occurrence of such
specified event.  The Company will
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares upon the occurrence of the
event requiring such adjustment.

(m)  Reductions in Purchase Price to Avoid
Taxation.  Anything in this Section
11 to the contrary notwithstanding, the Company will be entitled to make
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, in order that any consolidation or subdivision of
the Preferred Stock, issuance wholly for cash of any shares of Preferred Stock
at less than the current market price, issuance wholly for cash or Preferred
Stock or securities which by their terms are convertible into or exchangeable
for Preferred Stock, dividends on Preferred Stock payable in shares of
Preferred Stock or issuance of rights, options or warrants referred to above in
Section 11(b), made by the Company to holders of its Preferred Stock will not be
taxable to such stockholders.

(n)   Purchase Price Adjustment for Dividends
on, or Subdivision, Combination or Reclassification of, Preferred Stock.  Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company (i) declares or pays any
dividend on the Common Shares payable in Common Shares or (ii) effects a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of a dividend payable in 

 

17

 

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, will be proportionately adjusted so that the number of
Rights associated with each Common Share following any such event will equal
the result obtained by:

(A)      
multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction (1) the numerator of which will
be the total number of Common Shares outstanding immediately prior to the
occurrence of the event and (2) the denominator of which will be the total
number of Common Shares outstanding immediately following the occurrence of
such event.

(o)   The Company agrees that, after the earlier of
the Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 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 diminish substantially or eliminate the benefits intended to
be afforded by the Rights.

SECTION 12.  Certificate
of Adjusted Purchase Price or Number of Shares. 
Whenever an adjustment is made as provided in Section 11 or 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Stock a copy of such certificate and (c) mail a brief summary to each
holder of a Right Certificate in accordance with Section 25 (if so required
under Section 25).  The Rights Agent
will be fully protected in relying on any such certificate and on any
adjustment therein contained and will not be deemed to have knowledge of any
such adjustment unless and until it receives such certificate.

SECTION 13.  Consolidation,
Merger or Sale or Transfer of Assets or Earnings Power.

(a)   In the event, directly or indirectly, at any
time after any Person has become an Acquiring Person, (i) the Company merges
with and into any other Person, (ii) any Person consolidates with the Company,
or any Person merges with and into the Company and the Company is the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares are changed into or exchanged for
stock or other securities of any other Person (or of the Company) or cash or
any other property, or (iii) the Company sells or otherwise transfers (or one
or more of its Subsidiaries sells or otherwise transfers), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly–owned
Subsidiaries), then upon the first occurrence of such event:

(A)       each holder of record of
a Right (other than Rights which have become void pursuant to Section
11(a)(ii)) will have the right to receive, upon its exercise at a price equal
to the then current Purchase Price multiplied by the number of one one–hundredths
of a share of Preferred Stock for which a Right was exercisable (whether or not
such Right was then exercisable) immediately prior to the time that any Person
first became an 

 

18

 

Acquiring Person (each as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c),
11(h), 11(i) and 11(m)), in accordance with the terms of this Agreement and in
lieu of Preferred Stock, validly issued, fully paid and non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as defined in
this Agreement) free from any liens, encumbrances, rights of first refusal or
other adverse claims.  This amount will
be determined by:

(1)           multiplying the then current Purchase
Price by the number of one one–hundredths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the time that any Person
first became an Acquiring Person (as subsequently adjusted thereafter pursuant
to Sections 11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)) and

(2)           dividing that product by 50% of the
then current per share market price of the Common Stock of such Principal Party
(determined pursuant to Section 11(d)(i)) on the date of consummation of such
consolidation, merger, sale or transfer; and the Purchase Price and the number
of shares of Common Stock of such Principal Party issuable upon exercise of
each Right will be further adjusted as provided in Section 11(f) of this
Agreement to reflect any events occurring in respect of such Principal Party
after the date of the such consolidation, merger, sale or transfer; (B) such
Principal Party will thereafter be liable for, and will assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term “Company” will
thereafter be deemed to refer to such Principal Party; and (D) such Principal
Party will take such steps (including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in accordance with Section 9)
in connection with such consummation of any such transaction as may be
necessary to assure that the provisions will thereafter be applicable, as
nearly as reasonably may be, in relation to the shares of its Common Stock
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 will thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had such holder, at the time of such transaction,
owned the Common Stock of the Principal Party receivable upon the exercise of a
Right pursuant to this Section 13(a), and such Principal Party will 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 for such cash, shares, rights, warrants and other property.

(b)   “Principal
Party” means:

(i)            in the case of any transaction
described in (i) or (ii) of the first sentence of Section 13(a):  (A) the Person that is the issuer of the
securities into which the shares of Common Shares are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (1) the Person that
is the other party to the merger, if such Person survives said 

 

19

 

merger,
or, if there is more than one such Person, the Person the shares of Common
Stock of which have the greatest aggregate market value of shares outstanding
or (2) 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 (3) the Person resulting from the consolidation; and

(ii)           in the case of any transaction
described in (iii) of the first sentence in Section 13(a), 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 as is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding;

provided, however,
that in any such case described in the foregoing clause (b)(i) or (b)(ii), if
the Common Stock of such Person is not at such time or has 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 Stock of which is and has been so registered, the
term “Principal
Party” will refer to such other Person, or (2) if such Person is
a Subsidiary, directly or indirectly, of more than one Person and the Common
Stocks of all of such Persons have been so registered, the term “Principal
Party” will refer to whichever of such Persons is the issuer of
Common Stock 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 will 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 will 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.

(c)   The Company will not consummate any
consolidation, merger, sale or transfer referred to in Section 13(a) unless
prior thereto the Company and the Principal Party involved therein executes and
delivers to the Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) will promptly be performed in accordance with their
terms and that such consolidation, merger, sale or transfer of assets will 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 Sections 13(a) and (b) and
providing that, as soon as practicable after executing such agreement pursuant
to this Section 13, the Principal Party will:

(i)            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 Final
Expiration Date, and similarly comply with applicable state securities laws;

 

20

 

(ii)           use its best efforts, if the Common
Stock of the Principal Party is listed or admitted to trading on NASDAQ 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 NASDAQ or such securities exchange, or, if the Common Stock of the
Principal Party is not listed or admitted to trading on NASDAQ or a national
securities exchange, to cause the Rights and the securities receivable upon
exercise of the Rights to be reported by such other system then in use;

(iii)          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

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

(d)   In case the Principal Party has a 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 consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then
current market price per share thereof (determined pursuant to Section 11(d))
or securities exercisable for, or convertible into, Common Stock of such
Principal Party at less than such then current market price, or (ii) providing
for any special payment, tax or similar provision in connection with the
issuance of the Common Stock of such Principal Party pursuant to the provisions
of Section 13, then, in such event, the Company hereby agrees with each holder
of Rights that it will not consummate any such transaction unless prior thereto
the Company and such Principal Party executes and delivers to the Rights Agent
a supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.

(e)   The Company covenants and agrees that it will
not, at any time after a Person first becomes an Acquiring Person, enter into
any transaction of the type contemplated by (i) - (iii) of Section 13(a) if (1)
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, (2) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer of other transaction, the stockholders of
the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(a) shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates or Associates or (3) the form or
nature of organization of the Principal Party would preclude or limit the
exercisability of the Rights.

SECTION 14.  Fractional
Rights and Fractional Shares.

 

21

 

(a)   The Company will not be required to issue
fractions of Rights or to distribute Right Certificates that evidence
fractional Rights.  In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the
purposes of this Section 14(a), the current market value of a whole Right will
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 will 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 NASDAQ or, if the Rights
are not listed or admitted to trading on NASDAQ, 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 any system then in use or, if on any such date the
Rights are not quoted by any organization in the over-the-counter market, 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 the
Company.  If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of the Company will be used.

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

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

SECTION 15.  Rights of Action. 
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, 

 

22

 

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), on his own behalf and for his own benefit, may enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate (or, prior to the Distribution Date, such
Common Shares) in the manner provided in such Right Certificate and in this
Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

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

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

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

(c)   the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the Common Share 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 Common Share
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent will 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 will be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor will 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 this Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by such Right Certificate is
exercised in accordance with the provisions hereof.

SECTION 18.  Concerning
the Rights Agent.

 

23

 

(a)   The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.

(b)   The Rights Agent will be protected and will
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 Stock or Common Shares
or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20.

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

(a)   Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent is a party, or any
corporation succeeding to the stock transfer or corporate trust powers of the
Rights Agent or any successor Rights Agent, will be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21.  In case
at the time such successor Rights Agent succeeds 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 have not 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
will have the full force provided in the Right Certificates and in this
Agreement.

(b)   In case at any time the name of the Rights
Agent is 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 will have the full force provided in the Right Certificates and in
this Agreement.

 

24

 

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, will be bound:

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

(b)   Whenever in the performance of its duties
under this Agreement the Rights Agent deems 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
President, the Chief Financial Officer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate will be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

(c)   The Rights Agent will be liable hereunder to
the Company and any other Person only for its own negligence, bad faith or
willful misconduct.

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

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

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

 

25

 

(g)   The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any person reasonably believed by the Rights Agent to be one of
the President, the Chief Financial Officer or the Secretary of the Company, and
to apply to such officers for advice or instructions in connection with its
duties, and it will not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.  Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on and/or after which such action will be taken or such omission
will be effective.  The Rights Agent
will not be liable 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 in such application (which date will not be less than five
Business Days after the date any officer of the Company actually receives such
application, unless any such officer will have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent will have received written
instructions in response to such application specifying the action to be taken
or omitted.

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

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

(j)    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 will not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

SECTION 21.  Change of
Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent of the
Common Shares or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first–class mail.  In the event
the transfer agency relationship in effect between the Company and the Rights
Agent terminates, the Rights Agent will be deemed to resign automatically on
the effective date of such termination; and any required notice will be sent by
the Company.  The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days’ notice in writing,
mailed to the Rights Agent or successor Rights 

 

26

 

Agent, as the case may be, and to each transfer agent
of the Common Shares or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first–class mail.  If the Rights
Agent will resign or be removed or will otherwise become incapable of acting,
the Company will appoint a successor to the Rights Agent.  If the Company will fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who will, 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, will be a corporation organized
and doing business under the laws of the United States or any State thereof,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $[50 million].  After appointment, the successor Rights
Agent will 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 will 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 will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Stock, 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, will 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 forms as may be approved by its Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of shares
or other securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Agreement.  In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, the Company may with respect to
such Common Shares so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise,
conversion or exchange of securities, notes or debentures issued by the Company
or (iv) a contractual obligation of the Company in each case existing prior to
the Distribution Date, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale.

SECTION 23.  Redemption.

(a)   The Board may, at any time prior to such time
as any Person first becomes an Acquiring Person, redeem all but not less than
all the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date (the redemption price being hereinafter
referred to as the 

 

27

 

“Redemption
Price”).  The redemption
of the Rights may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the current market price of
the Common Shares at the time of redemption) or any other form of consideration
deemed appropriate by the Board.

(b)   Immediately upon the action of the Board
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board 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 will be to receive the Redemption Price.  The Company will promptly give public notice
of any such redemption.  The failure to
give, or any defect in, any such notice will not affect the validity of such
redemption.  Within 10 days after such
action of the Board ordering the redemption of the Rights (or such later time
as the Board may establish for the effectiveness of such redemption), the
Company will mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares.  Any notice which is mailed in the manner herein provided will be
deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.

SECTION 24.  Exchange.

(a)   The Board may, at its option, at any time
after any Person first becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which will not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii)) for Common
Shares (or, at the Company’s option, Preferred Stock) at an exchange ratio of
one Common Share (or one one-hundredth of a share of Preferred Stock) per
Right, (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board
will not be empowered to effect such exchange at any time (1) after any Person
(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of a number of Common Shares equal to
50% or more of the number of Common Shares then outstanding or (2) after the
occurrence of an event specified in Section 13(a).

(b)   Immediately upon the action of the Board
ordering the exchange of any Rights pursuant to paragraph (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights will terminate and the only right thereafter of a holder of such
Rights will be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio.  The Company will promptly give public notice
of any such exchange.  The failure to
give, or any defect in, such notice will not affect the validity of such
exchange.  The Company will promptly
mail a notice of any such exchange to all of the holders of the Rights so
exchanged 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 will be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be 

 

28

 

exchanged.  Any partial exchange will be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights.

(c)   In the event that there will not be
sufficient Common Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company may, in its discretion, take such action as may be
necessary to authorize additional Common Shares for issuance upon exchange of
the Rights.  In the event that the
Company will determine not to take such action or will, after good faith
effort, be unable to take such action as may be necessary to authorize such
additional Common Shares, the Company will substitute, to the extent of such
insufficiency, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of shares of Preferred Stock or fractions thereof
(or equivalent preferred shares as such term is defined in Section 11(b))
having an aggregate current per share market price (determined pursuant to
Section 11(d)) equal to the current per share market price of Common Shares
(determined pursuant to Section 11(d)) as of the date of issuance of such
shares of Preferred Stock or fractions thereof (or equivalent preferred
shares).

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

SECTION 25.  Notice of
Certain Events.

(a)   In case the Company will at any time after
the earlier of the Distribution Date or the Stock Acquisition Date propose (i)
to pay any dividend payable in stock of any class to the holders of its
Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding Preferred Stock), (iv) to effect
the liquidation, dissolution or winding up of the Company, or (v) 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 will give to each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which will specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Stock, if any such
date is to be fixed, and such notice will be so given in the case of any action
covered by clause (i) or (ii) above at least 10 

 

29

 

days prior to the record
date for determining holders of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Shares and/or Preferred Stock, whichever will be
the earlier.

(b)   In case any event described in Section
11(a)(ii) or Section 13 will occur then the Company will as soon as practicable
thereafter give to each holder of a Right Certificate (or if occurring prior to
the Distribution Date, the holders of the Common Shares) in accordance with
Section 26, a notice of the occurrence of such event, which notice will
describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii) and Section 13.

SECTION 26.  Notices. 
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company
will 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:

	
  Pinnacle Airlines Corp.

  
	
  1689 Nonconnah Blvd.,
  Suite 111

  
	
  Memphis, Tennessee 38132

  
	
  Attention: Secretary

  

 

Subject to the provisions of
Section 21, 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 will 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:

	
  EquiServe Trust Company, N.A.

  	
   

  
	
  150 Royall Street

  
	
  Canton, MA 02021

  
	
  Attn:  Client Administration

  	
   

  

 

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

SECTION 27.  Supplements
and Amendments.
 Except as otherwise provided in this
Section 27, for so long as the Rights are then redeemable, the Company may in
its sole and absolute discretion, and the Rights Agent will if the Company so
directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of the Rights.  At any time when the Rights are no longer redeemable, except as
otherwise provided in this Section 27, the Company may, and the Rights Agent
will, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, (iii) shorten or
lengthen any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable;
provided that no such supplement or 

 

30

 

amendment will 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 amendment may cause the rights
again to become redeemable or cause the Agreement again to become amendable
other than in accordance with this sentence. 
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment will be made that decreases the Redemption Price.  Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
will execute such supplement or amendment.

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

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

SECTION 30.  Severability. 
If any term, provision, covenant or restriction of this Agreement or
applicable to 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 will remain in
full force and effect and will in no way be affected, impaired or invalidated.

SECTION 31.  Governing
Law.  This Agreement and each Right Certificate
issued hereunder will be deemed to be a contract made under the laws of the
State of Delaware and for all purposes will 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 32.  Counterparts. 
This Agreement may be executed in any number of counterparts and each of
such counterparts will for all purposes be deemed to be an original, and all
such counterparts will together constitute but one and the same instrument.

SECTION 33.   Descriptive
Headings.  Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and do not control or
affect the meaning or construction of any of the provisions.

 

31

 

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

	
  Attest:

  	
  PINNACLE AIRLINES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  EQUISERVE TRUST COMPANY, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title:

  

 

32

 

Exhibit A

FORM

OF

CERTIFICATE OF DESIGNATIONS

OF

SERIES B PREFERRED STOCK

OF

PINNACLE AIRLINES CORP.

(Pursuant to Section 151 of
the

General Corporation Law of the State of Delaware)

___________________

Pinnacle Airlines Corp., a
corporation organized and existing under the General Corporation Law of the
State of Delaware (hereinafter called the Company), hereby certifies that the
following resolution was duly adopted by the Board of Directors of the Company
as required by Section 151 of the General Corporation Law of the State of
Delaware by written consent in lieu of a meeting on November __, 2003:

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

SECTION 1. 
Designation and Amount.  The shares of such series shall be designated as Series B
Preferred Stock (the Series B Preferred Stock) and the number of shares
constituting the Series B Preferred Stock shall be _________.  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 B Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series B Preferred Stock.

 

A-1

 

SECTION 2.  Dividends and Distributions.

 

(A)          Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the “Preferred Stock”) (or
any similar stock) ranking prior and superior to the Series B Preferred Stock
with respect to dividends, the holders of shares of Series B Preferred Stock,
in preference to the holders of Common Stock, par value $.01 per share of the
Company (the Common Shares) and of any other stock of the Company ranking
junior to the Series B Preferred Stock, shall be entitled to receive, when, as
and if declared by the Board out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of January, April, July,
and October in each year (each such date being referred to herein as a “Dividend
Payment Date”), commencing on the first Dividend Payment Date
after the first issuance of a share or fraction of a share of Series B
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non–cash dividends or other distributions other than a dividend
payable in Common Shares, declared on the Common Shares since the immediately
preceding Dividend Payment Date or, with respect to the first Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series B
Preferred Stock.  In the event the Company
shall at any time after ________ declare or pay any dividend on the Common
Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount to which
holders of shares of Series B 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
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.

(B)           The Company shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Shares
(other than a dividend payable in shares of Common Shares); provided that, in
the event no dividend or distribution shall have been declared on the Common
Shares during the period between any Dividend Payment Date and the next
subsequent Dividend Payment Date, a dividend of $1 per share on the Series B
Preferred Stock shall nevertheless be payable, when, as and if declared, on
such subsequent Dividend Payment Date.

(C)           Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series B Preferred Stock
from the 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 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 Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Dividend Payment Date.  Accrued but
unpaid dividends shall not bear interest. 
Dividends paid on the shares of Series B Preferred Stock in an amount
less than the total amount 

 

A-2

 

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

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

(A)          Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series B Preferred Stock shall entitle the
holder thereof to 100 votes on all matters upon which the holders of the Common
Shares of the Company are entitled to vote. 
In the event the Company shall at any time after _________________,
declare or pay any dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend in
Common Shares) into a greater or lesser number of Common Shares, then in each
such case the number of votes per share to which holders of shares of Series B
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 Common Shares outstanding immediately after such event and the denominator
of which is the number of Common Shares that were outstanding immediately prior
to such event.

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

(C)           Except as set forth herein, or as otherwise provided by
law, holders of Series B 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 Shares 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 B Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not earned or declared, on shares of Series B
Preferred Stock outstanding shall have been paid in full, the Company shall
not:

(i)  declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to dividends) to the
Series B Preferred Stock;

 

A-3

 

(ii)  declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to dividends)
with the Series B Preferred Stock, except dividends paid ratably on the Series
B 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 B Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Company ranking junior (as to dividends and upon dissolution, liquidation or
winding up) to the Series B Preferred Stock or rights, warrants or options to
acquire such junior stock;

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

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

SECTION 5.  Reacquired
Shares.  Any shares of
Series B Preferred Stock purchased or otherwise acquired by the Company in any
manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof.

SECTION 6.  Liquidation,
Dissolution or Winding Up. 
Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made (A) to the holders of the Common Shares or of shares
of any other stock of the Company ranking junior, upon liquidation, dissolution
or winding up, to the Series B Preferred Stock unless, prior thereto, the
holders of shares of Series B Preferred Stock shall have received $____ per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not earned or declared, to the date of such payment,
provided that the holders of shares of Series B Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth,  equal
to 100 times the aggregate amount to be distributed per share to holders of
Common Shares, or (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series B Preferred Stock,
except distributions made ratably on the Series B Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.  In the event the Company shall at any time
after __________ declare or pay any 

 

A-4

 

dividend on the Common
Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the aggregate amount to
which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event under the proviso in clause (A) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.

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

SECTION 8.  No
Redemption. The shares of Series B Preferred Stock shall not be
redeemable from any holder.

SECTION 9.  Rank.  The Series B Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, junior to all other
series of Preferred Stock and senior to the Common Shares.

SECTION 10. 
Amendment.  If
any proposed amendment to the Certificate of Incorporation (including this
Certificate of Designations) would alter, change or repeal any of the
preferences, powers or special rights given to the Series B Preferred Stock so
as to affect the Series B Preferred Stock adversely, then the holders of the
Series B Preferred Stock shall be entitled to vote separately as a class upon such
amendment, and the affirmative vote of two–thirds of the outstanding
shares of the Series B Preferred Stock, voting separately as a class, shall be
necessary for the adoption thereof, in addition to such other vote as may be
required by the General Corporation Law of the State of Delaware.

 

A-5

 

IN WITNESS WHEREOF, this Certificate of
Designations is executed on behalf of the Company by its President and Chief
Executive Officer and attested by its Secretary this ___ day of November, 2003.

 

	
   

  	
   

  
	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Secretary

  	
   

  
			

 

A-6

 

Exhibit B

FORM OF RIGHT CERTIFICATE

Certificate No. R- ____                                                                                                                                               _____
Rights

NOT EXERCISABLE AFTER
____________ OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES
AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

Right
Certificate

PINNACLE AIRLINES CORP.

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 ________, 2003, as the same may be amended from time to time (the “Rights
Agreement”), between Pinnacle Airlines Corp., a Delaware
corporation (the “Company”), and ______________________ (the “Rights
Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., New York City time, on ________, 2013 at the office or agency of
the Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one–hundredth of a fully paid non–assessable share of
Series B Preferred Stock, par value $.01 per share (the “Preferred Stock”), of
the Company, at a purchase price of $___ per one one–hundredth of a share
of Preferred Stock (the “Purchase Price”), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed.  The number of Rights
evidenced by this Rights Certificate (and the number of one one–hundredths
of a share of Preferred Stock which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of __________, 20__, based on the Preferred Stock as
constituted at such date.  As provided
in the Rights Agreement, the Purchase Price, the number of one one–hundredths
of a share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of 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 Rights Agreement,
which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a 

 

B-1

 

full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates.  Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the above–mentioned
office or agency of the Rights Agent. 
The Company will mail to the holder of this Right Certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor.

This Right Certificate, with
or without other Right Certificates, upon surrender at the office or agency 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 shares of Preferred
Stock as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase.  If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.

Subject to the provisions of
the Rights Agreement, the Rights evidenced by this Certificate (i) may be
redeemed by the Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for shares of Preferred Stock or shares of the Company’s
Common Stock, par value $.01 per share.

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

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

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

 

B-2

 

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

	
  Dated:

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
  PINNACLE AIRLINES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
  By 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
  EQUISERVE TRUST COMPANY, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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 transfer unto
______________________________________________________________

(Please print name and
address of transferee)

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

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  

 

Signatures must be
guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States.

___________________________________________________________________________________________

(To be completed)

The undersigned hereby
certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by, were not acquired by the undersigned from, and are not
being assigned to, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).

	
   

  	
   

  
	
   

  	
  Signature

  

 

B-4

 

Form of Reverse Side of
Right Certificate—continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder
desires to exercise

Rights represented by the Rights Certificate)

To Pinnacle Airlines Corp.:

The undersigned hereby
irrevocably elects to exercise __________________ Rights represented by this
Right Certificate to purchase the shares of Preferred Stock (or other
securities or property) issuable upon the exercise of such Rights and requests
that certificates for such shares of Preferred Stock (or such other securities)
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 delivery to:

Please insert social security

or
other identifying number

___________________________________________________________________________________________

(Please print name and
address)

___________________________________________________________________________________________

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
					

(Signature
must conform to holder specified on Right Certificate)

Signature Guaranteed:

Signature must be guaranteed
by a member of firm of a registered national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States.

 

B-5

 

Form of Reverse Side of
Right Certificate—continued

__________________________________________________________________________________________

(To be completed)

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

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  

 

___________________________________________________________________________________________

NOTICE

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

In the event the
certification set forth above in the Form of Assignment or the Form of Election
to Purchase, as the case may be, is not completed, such Assignment or Election
to Purchase will not be honored.

UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY
PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

SUMMARY OF RIGHTS TO PURCHASE

Shares of Preferred Stock

On November __, 2003, the
Board of Directors of Pinnacle Airlines Corp., a Delaware corporation (the “Company”),
authorized and declared a dividend of one preferred share purchase right (a “Right”)
for each outstanding share of Common Stock, par value $.01 per share, of the
Company (the “Common Shares”). 
The dividend is payable to the stockholders of record as of the time of
______________(the “Record Date”).  Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series B Preferred
Stock, par value $.01 per share (the “Preferred Stock”), of the Company
at a price of $___ per one one-hundredth of a share of Preferred Stock (as the
same may be adjusted, the “Purchase Price”).  The description and terms of the Rights are
set forth in a Rights Agreement dated as of November __, 2003, as the same may
be amended from time to time (the “Rights Agreement”), between the
Company and ______________________, as Rights Agent (the “Rights Agent”).

 

B-6

 

Until the earlier to occur
of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an “Acquiring Person”) have acquired
beneficial ownership of a number of Common Shares equal to 15% or more of the
sum of (a) the Common Shares then issued and outstanding, (b) all Common Shares
issuable upon conversion of all the shares of Series B Preferred Stock, par
value $.01 per share (“Series B Preferred Stock”), then
issued and outstanding, (c) all Common Shares issuable upon the exercise of all
employee stock options then issued and outstanding as of ___________, 20__ and
(d) any other Common Shares not then actually issued and outstanding but which
such Person would be deemed to beneficially own under the Rights Agreement
(together, the “outstanding Common Shares”) or (ii) 10 business days
(or such later date as may be determined by action of the Board prior to such
time as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, 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 a number of Common Shares equal to
15% or more of the number of outstanding Common Shares (the earlier of such
dates being called the “Distribution Date”), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate together
with a copy of this Summary of Rights distributed to each holder of Common
Shares (the “Summary of Rights”).

The Rights Agreement
provides that, until the Distribution Date (or earlier redemption 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 Record Date upon transfer or new issuances of Common Shares
(including pursuant to the conversion of Series B Preferred Stock) will contain
a notation incorporating the Rights Agreement by reference.  Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date, even 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 __________, 2013 (the “Final Expiration Date”),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

The Purchase Price payable,
and the number of shares of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the then–current
market price of the Preferred Stock or (iii) upon the distribution to holders
of the Preferred Stock of evidences 

 

B-7

 

of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable in Preferred
Stock) or of subscription rights or warrants (other than those referred to
above).

The number of outstanding
Rights are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in Common Shares
or subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.

Shares of Preferred Stock
purchasable upon exercise of the Rights will not be redeemable.  Each share of Preferred Stock will be
entitled, when, as and if declared, to a minimum preferential quarterly
dividend payment of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per share of Common Stock.  In the event of liquidation, the holders of
the Preferred Stock will be entitled to a minimum preferential liquidation
payment of $____ per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 100 times the payment made per share of
Common Stock.  Each share of Preferred
Stock will have 100 votes, voting together with the Common Stock.  Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock.  These rights are protected by customary
antidilution provisions.

In the event that any person
or group of affiliated or associated persons becomes an Acquiring Person, each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereupon become void), will thereafter have the right to receive
upon exercise of a Right at the then current exercise price of the Right, that
number of Common Shares (or one one-hundredths of a share of Preferred Stock)
having a market value of two times the exercise price of the Right.

In the event that, after a
person or group has become an Acquiring Person, the Company is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person which will have become void) will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of Common Stock of the person with whom the
Company has engaged in the foregoing transaction (or its parent), which number
of shares at the time of such transaction will have a market value of two times
the exercise price of the Right.

At any time after any person
or group becomes an Acquiring Person and prior to the acquisition by such
person or group of beneficial ownership of a number of Common Shares equal to
50% or more of the number of outstanding Common Shares, the Board of the
Company may exchange the Rights (other than Rights owned by such person or
group which will have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one–hundredth of a share of Preferred Stock
(or of a share of a class or series of the Company’s preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).

 

B-8

 

With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.  No fractional shares of Preferred Stock will
be issued (other than fractions which are integral multiples of one one–hundredth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.

At any time prior to the
time an Acquiring Person becomes such, the Board of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the Redemption
Price).  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.

For
so long as the Rights are then redeemable, the Company may amend the Rights in
any manner except that it may not decrease the redemption price.  After the Rights are no longer redeemable
the Company may, except with respect to the Redemption Price, amend the Rights
in any manner that does not adversely affect the interests of holders of the
Rights.

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

A copy of the Rights
Agreement is available free of charge from the Company.  This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.

 

B-9

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