Document:

Exhibit 10.2

 

AMENDED RATE CAP TRANSACTION AGREEMENT

 

This Amended Rate Cap Transaction Agreement supersedes the
previous Rate Cap Transaction Agreement dated November 12, 2004 (“the Trade
Date”).

 

This Agreement
is made as of November 15, 2004,
by and among LASALLE BANK NATIONAL ASSOCIATION (the “Floating Rate Payer”) and
STANDARD PARKING CORPORATION (the “Fixed Rate Payer”).

 

WHEREAS, the
Fixed Rate Payer desires to enter into an arrangement for the purpose of
limiting its interest expense on certain existing floating rate liabilities;
and

 

WHEREAS, the
Floating Rate Payer desires to enter into such an arrangement with the Fixed
Rate Payer;

 

NOW,
THEREFORE, the parties hereto agree as follows:

 

1.                                       Payment
of Fixed Amount.  The Fixed Rate
Payer agrees to pay to the Floating Rate Payer a Fixed Amount USD 51,000.00 on
or before November 16, 2004 (the “Fixed Rate Payer Payment Date”), in
consideration of the Floating Rate Payer agreeing to make a payment to the
Fixed Rate Payer for each Calculation Period (as defined below) during which
the Floating Rate (as defined below) exceeds the Cap Rate (as defined below).

 

2.                                       Payment
of Floating Amounts.  The Floating
Rate Payer agrees to make a payment of the Floating Amount (as defined below)
on each Floating Rate Payer Payment Date (as defined below) in immediately
available funds at such location as the Fixed Rate Payer shall direct.  For each Floating Rate Payer Payment Date,
the Floating Rate Payer shall deliver to the Fixed Rate Payer a notice
containing a computation of the Floating Amount payable.

 

3.                                       Definitions.  The applicable definitions and provisions
contained in the 2000 ISDA Definitions (as published by the International Swap
Dealers Association, Inc.) are incorporated by reference into this Agreement.  In the event of any inconsistency between
those definitions and provisions and the provisions of this Agreement, the
provisions of this Agreement shall govern.

 

(a)                                  “Business
Day” shall mean a day on which banks are open in New York for the transaction
of general commercial banking business and on which dealings may be carried on
in the London interbank eurodollar market.

 

(b)                                 “Calculation
Agent” shall mean the Floating Rate Payer.

 

(c)                                  “Calculation
Period” shall mean each period from, and including, one Floating Rate Payer
Payment Date to, but excluding, the next following Floating Rate Payer Payment
Date, except that (i) the initial Calculation Period will commence on, and
include, the Effective Date, and (ii) the final Calculation Period will end on,
but exclude, the Termination Date.

 

(d)                                 “Cap
Rate” shall mean 2.50%.

 

(e)                                  “Designated
Maturity” shall mean 3 Months.

 

(f)                                    “USD”
and the sign “$” mean lawful currency of the United States of America.

 

(g)                                 “Effective
Date” shall mean January 12, 2005.

 

 

(h)                                 “Floating
Amount” with respect to any Calculation Period shall mean an amount equal to
(i) the amount by which the interest earned on the Notional Amount for the
Calculation Period at the Floating Rate would exceed (ii) the amount of
interest which would have been earned on the Notional Amount for the
Calculation Period at the Cap Rate, all said calculations being based on a
Floating Rate Day Count Fraction of Actual/360. 
(If the amount calculated in clause (i) shall be less than the amount
calculated under clause (ii), the Floating Amount for said Calculation Period
shall be zero).

 

(i)                                     “Floating Rate” means (i) with respect to the initial
Calculation Period, the rate determined for the Floating Rate Option two (2)
London and New York Banking Days prior to the Effective Date for value on the
Effective Date; and (ii) with respect to any subsequent Calculation Period, the
rate determined with respect to such period for the Floating Rate Option.

 

(j)                                     “Floating
Rate Option” shall mean USD-LIBOR-BBA.

 

(k)                                  “Floating
Rate Payer Payment Date” shall mean the 12th day of each April, July, October,
and January, commencing on April 12, 2005 and ending on the Termination Date,
subject to adjustment in accordance with the Modified Following Business Day
Convention.

 

(l)                                     “Notional
Amount” shall mean USD 15,000,000.00.

 

(m)                               “Reset
Date” shall mean each Floating Rate Payer Payment Date to, but not including,
the Termination Date.

 

(n)                                 “Termination
Date” shall mean October 12, 2005.

 

4.                                       Representations
and Warranties - The Fixed Rate Payer. 
The Fixed Rate Payer hereby represents and warrants to the Floating Rate
Payer that:

 

(a)                                  The
Fixed Rate Payer is a corporation validly existing and in good standing under
the laws of the jurisdiction of its organization and such jurisdiction is a
State of the United States of America.

 

(b)                                 The Fixed Rate Payer has the corporate power
and authority to own its property and assets and to carry on its business as
currently conducted.

 

(c)                                  The
Fixed Rate Payer has the corporate power to execute, deliver and perform this
Agreement.

 

(d)                                 The
execution, delivery and performance of this Agreement (i) have been duly
authorized by all requisite corporate or organizational action on the part of
the Fixed Rate Payer and (ii) will not (A) violate (1) any provision of law,
(2) the constitutional documents of the Fixed Rate Payer, (3) any applicable
order of any court or agency of government or (4) any indenture, agreement
or other instrument to which the Fixed Rate Payer is a party or by which the
Fixed Rate Payer or any of its property or assets is bound, (B) be in conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument to which the
Fixed Rate Payer is a party or by which the Fixed Rate Payer or any of its
property or assets is bound or (C) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any property or
assets of the Fixed Rate Payer.

 

(e)                                  This
Agreement has been duly executed and delivered by the Fixed Rate Payer and
constitutes a legal, valid and binding obligation of the Fixed Rate Payer,
enforceable in accordance with its 

 

2

 

terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
or similar laws from time to time in effect).

 

(f)                                    No
action, consent or approval of, or registration or filing with, or any other
action by any governmental agency, bureau, commission or court has been
required in connection with the execution, delivery and performance by the
Fixed Rate Payer of this Agreement, or if so required, such registration or
filing has been made, such consent or approval has been given or such other
appropriate action has been taken.

 

5.                                       Representations
and Warranties - The Floating Rate Payer. 
The Floating Rate Payer hereby represents and warrants to the Fixed Rate
Payer that:

 

(a)                                  The
Floating Rate Payer is a bank organized or formed under the laws of the United
States of America.

 

(b)                                 The
Floating Rate Payer has the corporate or organizational power and authority to
own its property and assets and to carry on its business as currently
conducted.

 

(c)                                  The
Floating Rate Payer has the corporate or organizational power to execute,
deliver and perform this Agreement.

 

(d)                                 The
execution, delivery and performance of this Agreement (i) have been duly
authorized by all requisite corporate or organizational action on the part of
the Floating Rate Payer and (ii) will not (A) violate (1) any provision of law,
(2) the constitutional documents of the Floating Rate Payer, (3) any applicable
order of any court or agency of government or (4) any indenture, agreement or
other instrument to which the Floating Rate Payer is a party or by which the
Floating Rate Payer or any of its property or assets is bound, (B) be in
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any indenture, agreement or other instrument to
which the Floating Rate Payer is a party or by which the Floating Rate Payer or
any of its property or assets is bound or (C) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
property or assets of the Floating Rate Payer.

 

(e)                                  This
Agreement has been duly executed and delivered by the Floating Rate Payer and
constitutes a legal, valid and binding obligation of the Floating Rate Payer,
enforceable in accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency or similar laws from time
to time in effect).

 

(f)                                    No
action, consent or approval of, or registration or filing with, or any other
action by any governmental agency, bureau, commission or court has been
required in connection with the execution, delivery and performance by the
Floating Rate Payer of this Agreement, or if so required, such registration or
filing has been made, such consent or approval has been given or such other
appropriate action has been taken.

 

6.                                       Assignment
and Transfer.  Neither party may
assign or transfer its rights or obligations under this Agreement without the
prior written consent of the other party and any purported assignment in
violation of this Section shall be void; provided, however, that
the consent to transfer shall not be unreasonably withheld.

 

7.                                       Other
Provisions Relating to the Fixed Amount. 
In no event shall the Fixed Amount (or any portion thereof) paid to the
Floating Rate Payer pursuant to Section 1 hereof be refundable, provided that
nothing contained herein shall be deemed to constitute a waiver by the Fixed
Rate Payer of any of its rights to collect 

 

3

 

damages from, or to enforce
other remedies against, the Floating Rate Payer in the event that the Floating
Rate Payer fails to perform its obligations hereunder.

 

8.                                       Amendments
and Waivers.  No amendment,
modification or waiver with respect to this Agreement will be effective unless
in writing and executed by each of the parties hereto.

 

9.                                       Notices.  All notices, requests and other
communications to either party hereunder shall be in writing and shall be given
to such party at its address, telex or telecopier number set forth on the
signature page hereof or such other address, telex or telecopier number as such
party may hereafter specify for the purpose of notice to the other party.

 

10.                                 Termination.  This Agreement shall terminate on the
Termination Date, subject to any applicable requirement for payment as set
forth in Section 2 hereof.

 

11.                                 Governing
Law.  THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

12.                                 Authorization
Documents.  Upon the execution of this
Agreement, the Fixed Rate Payer shall promptly deliver to the Floating Rate
Payer, certified evidence of the authority, incumbency and specimen signature
of each authorized person executing this Agreement on its behalf.

 

13.                                 Account
Details:

 

	
  Payments to the Floating Rate Payer:

  	
   

  	
  LaSalle Bank National Association, ABA #0710-0050-5, A/C
  2090102-9030, Attn: Derivatives Operations

  
	
   

  	
   

  	
   

  
	
  Payments to the Fixed Rate Payer:

  	
   

  	
   

  
	
   

  	
   

  	
  Please
  advise

  

 

14.                                 Relationship
Between the Parties.  Each party
represents to the other party that:

 

(a)                                  Non-Reliance.  It is acting for its own account, and it has
made its own independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisors as it has deemed necessary.  It is not relying on any communication
(written or oral) of the other party as investment advice or as a
recommendation to enter into this Transaction; it being understood that
information and explanation related to the terms and conditions of this
Transaction shall not be considered investment advice or a recommendation to
enter into this Transaction.  No
communication (written or oral) received from the other party shall be deemed
to be an assurance or guarantee as to the expected results of this Transaction.

 

(b)                                 Assessment and
Understanding.  It is capable
of assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts the terms,
conditions and risks of this Transaction. 
It is also capable of assuming, and assumes, the risks of this
Transaction.

 

(c)                                  Status of Parties. The other party is not
acting as a fiduciary or an advisor to it in respect of this Transaction.

 

4

 

15.                                 Waiver
of Jury Trial.   Each party
irrevocably waives any and all right to trial by jury in any legal proceeding
instituted in connection with this Agreement or this Transaction to the fullest
extent permitted by law.  As to any
matter for which a jury trial cannot be waived, each party agrees not to assert
any such matter as a cross claim or counterclaim in, nor move to consolidate
the same with, any legal proceeding in which a jury trial is waived.”

 

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

 

LASALLE BANK NATIONAL ASSOCIATION

 

 

	
  By:

  	
  /s/ Doreen Nosek

  	
   

  	
  By:

  	
  /s/ Jennifer Bonifazi

  	
   

  
	
   

  	
  Name: Doreen Nosek

  	
   

  	
  Name: Jennifer Bonifazi

  
	
   

  	
  Title: Treasury Officer

  	
   

  	
  Title: Assistant Vice President of Derivatives Operations

  

 

 

	
  Address:

  	
  540 West Madison Avenue

  	
   

  	
   

  
	
   

  	
  Suite 2132

  	
   

  	
   

  
	
   

  	
  Chicago, IL 60661

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Treasury Documentation

  	
   

  	
   

  
	
  Facsimile:

  	
  312-992-5847/5852

  	
   

  	
   

  
	
  Phone:

  	
  312-992-5844

  	
   

  	
   

  

 

 

STANDARD PARKING CORPORATION

 

 

	
  By:

  	
  /s/ G. Marc Baumann

  	
   

  
	
   

  	
  Name: G. Marc Baumann

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  900 N. Michigan

  	
   

  
	
   

  	
  Suite 1600

  	
   

  
	
   

  	
  Chicago, IL 60611

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
  G. Marc Baumann

  	
   

  
	
  Facsimile:

  	
  312-640-6165

  	
   

  
	
  Telephone:

  	
  312-274-2199

  	
   

  
					

 

5Exhibit 4.2

 

THERAVANCE, INC.

 

and

 

American Stock Transfer &
Trust Company,

as Rights Agent

 

 

RIGHTS AGREEMENT

 

Dated as of October 8,
2004

 

 

TABLE OF
CONTENTS

 

	
  Section 1.

  	
  Certain
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of
  Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issue of Right
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Right
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature
  and Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of
  Rights, Purchase Price; Expiration Date of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation
  and Destruction of Right Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Availability of
  Shares of Preferred Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Preferred
  Stock Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate
  of Adjusted Purchase Price or Number of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional Rights
  and Fractional Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of
  Action

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement of
  Right Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Right Certificate
  Holder Not Deemed a Stockholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning
  the Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger
  or Consolidation or Change of Name of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties
  of Rights Agent

  	
   

  

 

 

	
  Section 21.

  	
  Change
  of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance
  of New Right Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Notice
  of Certain Events

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements
  and Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Benefits
  of this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Determinations
  and Actions by the Board of Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive
  Headings

  	
   

  

 

 

RIGHTS
AGREEMENT

 

Rights Agreement, dated as of October 8, 2004 (“Agreement”),
between Theravance, Inc., a Delaware corporation (the “Company”), and American
Stock Transfer & Trust Company, as Rights Agent (the “Rights Agent”).

 

The Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right (a “Right”) for
each share of Common Stock (as hereinafter defined) of the Company outstanding
as of the Close of Business (as defined below) on October 8, 2004 (the “Record
Date”), each Right representing the right to purchase one one-thousandth
(subject to adjustment) of a share of Preferred Stock (as hereinafter defined),
upon the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to shares of Common Stock that
shall become outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.

 

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

 

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

 

(a)                                  “Acquiring Person” shall mean any Person (as
such term is hereinafter defined) who or which shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the shares of Common Stock
then outstanding, but shall not include an Exempt Person (as such term is
hereinafter defined); provided, however, that (i) if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person” became the Beneficial Owner of a number of
shares of Common Stock such that the Person would otherwise qualify as an “Acquiring
Person” inadvertently (including, without limitation, because (A) such Person
was unaware that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an “Acquiring Person” or (B) such Person was
aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, then such Person shall not be deemed to be or to have become an “Acquiring
Person” for any purposes of this Agreement unless and until such Person shall
have failed to divest itself, as soon as practicable (as determined, in good
faith, by the Board of Directors of the Company), of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
otherwise qualify as an “Acquiring Person”; (ii) if, as of the date hereof or
prior to the first public announcement of the adoption of this Agreement, any
Person is or becomes the Beneficial Owner of 15% or more of the shares of
Common Stock outstanding, such Person shall not be deemed to be or to become an
“Acquiring Person” unless

 

1

 

and until such time as such Person shall, after the
first public announcement of the adoption of this Agreement, become the
Beneficial Owner of additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock),
unless, upon becoming the Beneficial Owner of such additional shares of Common
Stock, such Person is not then the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding; (iii) no Person shall become an “Acquiring
Person” as the result of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares of Common Stock beneficially owned by such
Person to 15% or more of the shares of Common Stock then outstanding, provided,
however, that if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding by reason of such share
acquisitions by the Company and shall thereafter become the Beneficial Owner of
any additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), then such
Person shall be deemed to be an “Acquiring Person” unless upon becoming the
Beneficial Owner of such additional shares of Common Stock such Person does not
beneficially own 15% or more of the shares of Common Stock then outstanding;
and (iv) GlaxoSmithKline plc, Glaxo Group Limited and SmithKlineBeecham
Corporation (collectively “GSK”) shall not be deemed an “Acquiring Person”
under this Agreement for so long as GSK is in compliance with the terms of that
certain Governance Agreement dated May 11, 2004 by and among the Company and
GSK.  For all purposes of this Agreement,
any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date
hereof.

 

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

 

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

 

(i)                                     which such Person or any of such Person’s
Affiliates or Associates is deemed to beneficially own, directly or indirectly,
within the meaning of Rule l3d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof;

 

(ii)                                  which such Person or any of such Person’s
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
that a Person

 

2

 

shall not be deemed the Beneficial Owner of,
or to beneficially own, (x) 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, (y) securities which such Person has a right to acquire upon the
exercise of Rights at any time prior to the time that any Person becomes an
Acquiring Person or (z) securities issuable upon the exercise of Rights from
and after the time that any Person becomes an Acquiring Person if such Rights
were acquired by such Person or any of such Person’s Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or Section 22
hereof (“Original Rights”) or pursuant to Section 11(i) or Section 11(n)
with respect to an adjustment to Original Rights; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security by reason of such agreement, arrangement or understanding if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

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

 

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

 

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

 

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

 

(f)                                    “Common Stock” when used with reference to
the Company shall mean the Common Stock and Class A Common Stock, each
presently par value $0.01 per share, of the Company.  “Common Stock” when used with reference to
any Person other than the Company shall mean the common 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

 

3

 

Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.

 

(g)                                 “Common Stock Equivalents” shall have the
meaning set forth in Section 11(a)(iii) hereof.

 

(h)                                 “Current Value” shall have the meaning set
forth in Section 11(a)(iii) hereof.

 

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

 

(j)                                     “Equivalent Preferred Shares” shall have the
meaning set forth in Section 11(b) hereof.

 

(k)                                  “Exempt Person” shall mean the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in each case
including, without limitation, in its fiduciary capacity, or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Stock 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.

 

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

 

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

 

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

 

(o)                                 “Flip-In Event” shall have the meaning set
forth in Section 11(a)(ii) hereof.

 

(p)                                 “NASDAQ” shall mean The Nasdaq Stock Market.

 

(q)                                 “New York Stock Exchange” shall mean the New
York Stock Exchange, Inc.

 

(r)                                    “Person” shall mean any individual, firm,
corporation, partnership, limited liability company, trust or other entity, and
shall include any successor (by merger or otherwise) to such entity.

 

(s)                                  “Preferred Stock” shall mean the Series A
Junior Participating Preferred Stock, par value $0.01 per share, of the Company
having the rights and preferences set forth in the Amended and Restated
Certificate of Incorporation attached to this Agreement as Exhibit A.

 

(t)                                    “Principal Party” shall have the meaning set
forth in Section 13(b) hereof.

 

4

 

(u)                                 “Purchase Price” shall have the meaning set
forth in Section 7(b) hereof.

 

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

 

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

 

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

 

(y)                                 “Securities Act” shall mean the Securities
Act of 1933, as amended.

 

(z)                                   “Section 11(a)(ii) Trigger Date” shall
have the meaning set forth in Section 11(a)(iii) hereof.

 

(aa)                            “Spread” shall have the meaning set forth in Section 11(a)(iii)
hereof.

 

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

 

(cc)                            “Subsidiary” of any Person shall mean 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.

 

(dd)                          “Substitution Period” shall have the meaning
set forth in Section 11(a)(iii) hereof.

 

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

 

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

 

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 hereof, shall prior to the Distribution Date be
the holders of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.

 

Section 3.  Issue of
Right Certificates.

 

(a)                                  Until the Close of Business on 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 of
Directors prior to such time as any Person becomes an Acquiring

 

5

 

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
(other than an Exempt Person) becoming the Beneficial Owner of shares of Common
Stock aggregating 15% or more of the Common Stock then outstanding (the earlier
of such dates being herein referred to as the “Distribution Date”, provided,
however, that if either of such dates occurs after the date of this
Agreement and on or prior to the Record Date, then the Distribution Date shall
be the Record Date), (x) the Rights will be evidenced (subject to the provisions
of Section 3(b) hereof) by the certificates for Common Stock registered in
the names of the holders thereof and not by separate Right Certificates, and
(y) the Rights will be transferable only in connection with the transfer of
Common Stock.  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 Stock 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 share of Common Stock 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 each record holder of
Common Stock 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 Stock
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, if earlier, the Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Stock
represented thereby.

 

(c)                                  Rights shall be issued in respect of all
shares of Common Stock issued or disposed of (including, without limitation,
upon disposition of Common Stock out of treasury stock or issuance or
reissuance of Common Stock out of authorized but unissued shares) after the
Record Date but prior to the earlier of the Distribution Date and the
Expiration Date, or in certain circumstances provided in Section 22
hereof, after the Distribution Date.  Certificates
issued for Common Stock (including, without limitation, upon transfer of
outstanding Common Stock, disposition of Common Stock out of treasury stock or
issuance or reissuance of Common Stock out of authorized but unissued shares)
after the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:

 

6

 

This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights Agreement between
Theravance, Inc. (the “Company”) and American Stock Transfer & Trust
Company, as Rights Agent, dated as of October 8, 2004 and as 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 the Company. 
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate.  The
Company will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.  Under certain circumstances, as set forth
in the Rights Agreement, Rights owned by or transferred to any Person who is or
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 Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.  In the
event that the Company purchases or otherwise acquires any Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Stock which are
no longer outstanding.

 

Notwithstanding this paragraph (c), the omission of
a legend shall not affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights.

 

Section 4.  Form of Right Certificates.  The
Right Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall 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
any stock exchange or interdealer quotation system on which the Rights may from
time to time be listed or quoted, or to conform to usage.  Subject to the provisions of this Agreement,
the Right Certificates shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the Purchase Price, but the number of such one one-thousandths
of a share of Preferred Stock and the Purchase Price shall be subject to
adjustment as provided herein.

 

 

7

 

Section 5.  Countersignature
and Registration.

 

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

 

(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 shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates 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 this Agreement,
at any time after the Distribution Date and prior to the 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-thousandths 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 shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such
purpose.  Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

 

(b)                                 Subject to the provisions of this Agreement,
at any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the

 

8

 

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 shall become exercisable on the Distribution Date, and thereafter the
registered holder of any Right Certificate may, subject to Section 11(a)(ii)
hereof 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 aggregate Purchase Price with respect to
the total number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which the Rights
are exercised, at any time which is both after the Distribution Date and prior
to the time (the “Expiration Date”) that is the earliest of (i) the Close of
Business on October 8, 2014 (the “Final Expiration Date”), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption
Date”) or (iii) the time at which such Rights are exchanged as provided in Section 24
hereof.

 

(b)                                 The Purchase Price shall be initially $209.25
for each one one-thousandth of a share of Preferred Stock purchasable upon the
exercise of a Right.  The Purchase Price
and the number of one one-thousandths of a share of Preferred Stock or other
securities or property to be acquired upon exercise of a Right shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) 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 hereof, in cash or by
certified check, cashier’s check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Stock, or make available if the Rights Agent is
the transfer agent for the Preferred Stock, 
certificates for the 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 a depositary agent
appointed by the Company depositary receipts representing interests in such
number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent), and the Company hereby directs any such depositary agent to comply with
such request, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after

 

9

 

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 shall exercise less than all of
the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the exercisable Rights remaining unexercised shall 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 hereof.

 

(e)                                  Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of assignment or
form of 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 shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.  The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. 
The Rights Agent shall deliver all canceled Right Certificates to the
Company, or shall, at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

 

Section 9.  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
issuable upon the exercise of Rights may be listed or admitted to trading on
any national securities exchange, or quoted on NASDAQ, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed or admitted to
trading on such exchange, or quoted on NASDAQ, upon official notice of issuance
upon such exercise.

 

(c)                                  From and after such time as the Rights become
exercisable, the Company shall use its best efforts, if then necessary to
permit the issuance of shares of Preferred Stock

 

10

 

upon the exercise of Rights, to register and qualify
such shares of Preferred Stock 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 (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of the date as of which
the Rights are no longer exercisable for such securities and the Expiration
Date.  The Company may temporarily
suspend, for a period of time not to exceed 90 days, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act and permit it to become effective.  Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. 
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act shall have been declared
effective, unless an exemption therefrom is available.

 

(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 delivered upon exercise of Rights shall, 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 upon the exercise of
Rights.  The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock 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 upon the exercise of
any Rights until any such tax shall 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 shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred Stock transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open.  Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred

 

11

 

Stock
for which the Rights shall be exercisable, including, without limitation, the
right to vote or to receive dividends or other distributions, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.

 

Section 11.  Adjustment
of Purchase Price, Number and Kind 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 from
time to time as provided in this Section 11.

 

(a)(i)  In the
event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the
number and kind of shares of capital stock issuable upon exercise of a Right as
of the record date for such dividend or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, the holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.

 

(ii)                                  Subject to Section 24 of this Agreement,
in the event any Person becomes an Acquiring Person (the first occurrence of
such event being referred to hereinafter as the “Flip-In Event”), then (A) the
Purchase Price shall be adjusted to be the Purchase Price in effect immediately
prior to the Flip-In Event multiplied by the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such Flip-In Event, whether or not such Right was then exercisable, and (B)
each holder of a Right, except as otherwise provided in this Section 11(a)(ii)
and Section 11(a)(iii) hereof, shall thereafter have the right to receive,
upon exercise thereof at a price equal to the Purchase Price (as so adjusted),
in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock as shall equal the
result obtained by dividing the Purchase Price (as so adjusted) by 50% of the
current per share market price of the Common Stock (determined pursuant to Section 11(d)
hereof) on the date of such Flip-In Event; provided, however,
that the Purchase Price (as so adjusted) and the number of shares of Common
Stock so receivable upon exercise of a Right shall, following the Flip-In
Event, be subject to further adjustment as appropriate in accordance with Section 11(f)
hereof.  Notwithstanding anything in this
Agreement to the contrary, however, from and after the Flip-In Event, any
Rights that are beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the Flip-In Event or (z) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or concurrently
with the Flip-In Event 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,

 

12

 

arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors 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, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect
to such Rights under any provision of this Agreement.  The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are complied with,
but shall have no liability to any holder of Right Certificates or other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.  From and after the Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the provisions
of this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be canceled.  From
and after the occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exercised pursuant to this Section 11(a)(ii)
shall thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii).

 

(iii)                               The Company may at its option substitute for
a share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) a number of shares of Preferred Stock or
fraction thereof such that the current per share market price of one share of
Preferred Stock multiplied by such number or fraction is equal to the current
per share market price of one share of Common Stock.  In the event that there shall not be
sufficient shares of Common Stock 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 of Directors shall, with respect to such
deficiency, 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 (such excess, the “Spread”) of (1) the value of the shares of Common
Stock issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the “Current Value”) over (2) the Purchase Price (as
adjusted in accordance with the foregoing subparagraph (ii)), and (B) with
respect to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the shares
of Common Stock issuable in accordance with the foregoing subparagraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in
accordance therewith), (1) cash, (2) a reduction in such 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 shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of Preferred Stock and shares or fractions of shares
of preferred stock are hereinafter referred to as “Common Stock 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 shares of
Common Stock issued upon exercise of such Right, shall have an aggregate value
equal to the Current Value (less the amount of any reduction in such Purchase
Price), where such aggregate value has been determined by the Board of
Directors upon the advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors; provided, however,
that if the Company shall not make adequate provision to deliver value pursuant
to

 

13

 

clause (B) above within thirty (30) days following
the Flip-In Event (the date of the Flip-In Event being the “Section 11(a)(ii)
Trigger Date”), then the Company shall be obligated to 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 such Purchase Price, shares of Common Stock (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 occurrence of the Flip-In Event,
the Board of Directors shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of Directors 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 herein 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 (x) shall provide, subject to Section 11(a)(ii)
hereof and the last sentence of this Section 11(a)(iii) hereof, that such
action shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such second sentence
and to determine the value thereof.  In
the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect.  For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall 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 Stock
Equivalent” shall be deemed to equal the current per share market price of the
Common Stock.  The Board of Directors of
the Company may, but shall not be required to, establish procedures to allocate
the right to receive shares of Common Stock upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).

 

(b)                                 In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Stock (or shares having the
same rights, 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) hereof) on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock 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

 

14

 

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

 

(c)                                  In case the Company shall fix a record date
for the making of a distribution to all holders of the Preferred 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) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share
market price of the Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
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 shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right.  Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

 

(d)(i)  Except as otherwise provided herein, for the
purpose of any computation hereunder, the “current per share market price” of
any security (a “Security” for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily closing prices per share
of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares
of such Security or securities convertible into such shares, or (B) any

 

15

 

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 shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security.  The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company.  The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.

 

(ii)                                  For the purpose of any computation hereunder,
if the Preferred Stock is publicly traded, the “current per share market price”
of the Preferred Stock shall 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 Stock is publicly traded,
the “current per share market price” of the Preferred Stock shall be
conclusively deemed to be the current per share market price of the Common
Stock as determined pursuant to Section 11(d)(i) multiplied by the then
applicable Adjustment Number (as defined in and determined in accordance with
the terms of the Preferred Stock).  If
neither the Common Stock nor the Preferred Stock is publicly traded, “current
per share market price” shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent.

 

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

 

16

 

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

 

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

 

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

 

(i)                                     The Company may elect on or after the date of
any adjustment of the Purchase Price pursuant to Sections 11(b) or 11(c) hereof
to adjust the number of Rights, in substitution for any adjustment in the
number of one one-thousandths 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 shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-hundredth) obtained by dividing the Purchase Price
in effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price.  The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made.  Such record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement.  If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company may, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,

 

17

 

shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment.  Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein and shall
be registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.

 

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

 

(k)                                  Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
fraction of Preferred Stock or other shares of capital stock issuable upon
exercise of a Right, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Preferred Stock or
other such shares at such adjusted Purchase Price.

 

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

 

(m)                               Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make such
adjustments in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, issuance wholly for cash
of 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 hereinabove in Section 11(b), hereafter made by the Company to holders
of its Preferred Stock shall not be taxable to such stockholders.

 

(n) Anything in this
Agreement to the contrary notwithstanding, in the event that at any time after
the date of this Agreement and prior to the Distribution Date, the Company
shall (i) declare and pay any dividend on the Common Stock payable in Common
Stock or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or

 

18

 

otherwise than by payment of a dividend payable in
Common Stock) into a greater or lesser number of shares of Common Stock, then,
in each such case, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.

 

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

 

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

 

(a) In the event, directly
or indirectly, at any time after the Flip-In Event (i) the Company shall
consolidate with or shall merge into any other Person, (ii) any Person shall
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Stock shall be 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 shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more wholly-owned Subsidiaries
of the Company), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of a Right (other than Rights which have
become void pursuant to Section 11(a)(ii) hereof) shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof), in
accordance with the terms of this Agreement and in lieu of shares of Preferred
Stock or Common Stock of the Company,

 

19

 

such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by dividing the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) by 50% of the current per share
market price of the Common Stock of such Principal Party (determined pursuant
to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided, however, that
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (B) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term “Company” shall thereafter be
deemed to refer to such Principal Party; and (D) such Principal Party shall
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 hereof)
in connection with such consummation of any such transaction as may be
necessary to assure that the provisions hereof shall 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 shall 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 shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property.

 

(b)                                 “Principal Party” shall mean:

 

(i)                                     in the case of any transaction described in
(i) or (ii) of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which the shares of Common Stock 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, (x) the Person that is the other party to the merger, if such Person
survives said merger, or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the consolidation;
and

 

(ii)                                  in the case of any transaction described in
(iii) of the first sentence of Section 13(a) hereof, the Person that is
the party receiving the greatest portion of the assets

 

20

 

or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common 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” shall refer to such other Person, or (2) if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common
Stock of all of which is and has been so registered, the term “Principal Party”
shall 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 shall apply to each of the
owners having an interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this Section 13
in the same ratio as its interest in such Person bears to the total of such
interests.

 

(c)                                  The Company shall not consummate any
consolidation, merger, sale or transfer referred to in Section 13(a)
hereof unless prior thereto the Company and the Principal Party involved
therein shall have executed and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) hereof shall
promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Agreement as the same shall have been assumed
by the Principal Party pursuant to Sections 13(a) and (b) hereof 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 Expiration Date and
similarly comply with applicable state securities laws;

 

(ii)                                  use its best efforts, if the Common Stock of
the Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Stock of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities
exchange, to

 

21

 

cause the Rights and the securities receivable upon
exercise of the Rights to be authorized for quotation on NASDAQ or on such
other system then in use;

 

(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 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 or Common Stock Equivalents of such Principal Party at
less than the then current market price per share thereof (determined pursuant
to Section 11(d) hereof) or securities exercisable for, or convertible
into, Common Stock or Common Stock Equivalents 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 shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.

 

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

 

Section 14.  Fractional
Rights and Fractional Shares.

 

(a)                                  The Company shall not be required to issue
fractions of Rights (except prior to the Distribution Date in accordance with Section 11(n)
hereof) or to distribute Right Certificates which evidence fractional
Rights.  In lieu of such fractional
Rights, there shall be

 

22

 

paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the purposes
of this Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company.  If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.

 

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

 

(c)                                  The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock upon the exercise or exchange of
Rights.  In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined in
accordance with Section 14(a) hereof) for the Trading Day immediately
prior to the date of such exercise or exchange.

 

23

 

(d)                                 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 or exchange 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 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), 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 Stock) in the
manner provided therein 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 Stock;

 

(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 Stock 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 Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to Section 7(e)
hereof, shall be affected by any notice to the contrary.

 

Section 17.  Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Stock or any other securities of the Company which may
at any time be issuable on the exercise or exchange of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of

 

24

 

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 shall have been exercised or exchanged in accordance with the provisions
hereof.

 

Section 18.  Concerning
the Rights Agent.

 

(a)                                  The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the 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 shall be protected and shall
incur no liability for, or in respect of any action taken, suffered or omitted
by it in connection with, its administration of this Agreement in reliance upon
any Right Certificate or certificate for the Preferred Stock or Common Stock or
for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

 

25

 

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 shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof.  In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

(e)                                          The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights 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 shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any 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.

 

(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 Chief Executive Officer or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered 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 shall be taken or such omission shall be effective.  The Rights Agent shall 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 shall not be less than five Business Days after the
date any officer of the Company actually receives such application unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

 

27

 

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

 

(i)                                             The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided 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) or a transferee thereof, the Rights
Agent shall 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 Stock or Preferred Stock by registered or certified mail, and, following
the Distribution Date, to the holders of the Right Certificates by first-class
mail.  The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock 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 shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or the laws of any state of the
United States or the District of Columbia, in good standing, having an office
in the State of California or the State of New York, 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 shall be vested with the same powers, rights, duties
and responsibilities as if it had been

 

28

 

originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock 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, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

Section 22.  Issuance of New Right Certificates.  Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such forms as may be approved
by its Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement.  In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company may with respect to shares
of Common Stock 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 of Directors of the Company may, at any time prior to the Flip-In Event,
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 in respect of the Common Stock
after the date hereof (the redemption price being hereinafter referred to as
the “Redemption Price”).  The redemption
of the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.  The Redemption Price shall be payable, at the
option of the Company, in cash, shares of Common Stock, or such other form of
consideration as the Board of Directors shall determine.

 

(b)                                         Immediately
upon the action of the Board of Directors ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23 (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. 
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption.  Within 10 days after such action of the Board
of Directors ordering the redemption of the Rights (or such later time as the Board
of Directors may establish for the

 

29

 

effectiveness of
such redemption), the Company shall mail a notice of redemption to all the
holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
shall state the method by which the payment of the Redemption Price will be
made.

 

Section 24.  Exchange.

 

(a)                                          The
Board of Directors of the Company may, at its option, at any time after the
Flip-In Event, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring in respect of
the Common Stock after the date hereof (such amount per Right being hereinafter
referred to as the “Exchange Ratio”). 
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after an Acquiring Person shall
have become the Beneficial Owner of shares of Common Stock aggregating 50% or
more of the shares of Common Stock then outstanding.  From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged
pursuant to this Section 24(a).  The
exchange of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.

 

(b)                                         Immediately
upon the effectiveness of the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio.  The Company shall promptly give
public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company shall
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 shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.

 

(c)                                          The
Company may at its option substitute, and, in the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit an exchange of Rights for Common Stock as contemplated in
accordance

 

30

 

with this Section 24,
the Company shall substitute to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon exchange of a
Right, a number of shares of Preferred Stock or fraction thereof (or Equivalent
Preferred Shares, as such term is defined in Section 11(b)) such that the
current per share market price (determined pursuant to Section 11(d)
hereof) of one share of Preferred Stock (or Equivalent Preferred Share)
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the date of such exchange.

 

Section 25.  Notice of Certain Events.

 

(a)                                          In
case the Company shall 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 or combination of
outstanding Preferred Stock), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or consolidation
of the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for the
purposes of such dividend or distribution or offering of rights or warrants, or
the date on which such liquidation, dissolution, winding up, reclassification,
subdivision, combination or consolidation is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 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 Stock and/or Preferred
Stock, whichever shall be the earlier.

 

(b)                                         In
case any event described in Section 11(a)(ii) or Section 13 shall
occur then the Company shall 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 Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.

 

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

 

31

 

	
   

  	
  Theravance, Inc.

  	
   

  
	
   

  	
  901 Gateway Boulevard

  	
   

  
	
   

  	
  South San Francisco,
  California 94080

  	
   

  
	
   

  	
  Attention: Chief
  Executive Officer

  	
   

  

 

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

 

	
   

  	
  American Stock Transfer
  & Trust Company

  	
   

  
	
   

  	
  59 Maiden Lane

  	
   

  
	
   

  	
  Plaza Level

  	
   

  
	
   

  	
  New York, New York
  10038

  	
   

  
	
   

  	
  Attention:  Executive Vice-President

  	
   

  

 

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

 

Section 27.  Supplements and Amendments.  Except as provided in the penultimate
sentence of 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 shall 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 provided in the penultimate sentence of this Section 27,
the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights, provided that no such supplement or amendment may (a) 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), (b) cause this Agreement
again to become amendable other than in accordance with this sentence or (c)
cause the Rights again to become redeemable. 
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price.  Upon the delivery of a certificate from an
appropriate officer of the Company which states that the supplement or
amendment is in compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment, provided that any
supplement or amendment that does not amend Sections 18, 19, 20 or 21 hereof in
a manner adverse to the Rights Agent shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights Agent.

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

	
   

  	
  THERAVANCE, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rick E Winningham

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Rick E Winningham

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  American Stock Transfer
  & Trust Company,

  as Rights Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herbert Lemmer

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Herbert Lemmer

  	
   

  	
   

  
	
   

  	
  Title:

  	
    General
  Counsel

  	
   

  	
   

  
												

 

 

Signature
Page to Rights Agreement

 

 

Exhibit A

 

Amended and
Restated Certificate of Incorporation

 

A-1

 

Exhibit B

 

Form of Right
Certificate

 

Certificate No. R-            

 

NOT EXERCISABLE AFTER OCTOBER 8,
2014 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 IS OR
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

 

THERAVANCE, INC.

 

This certifies that                                                         
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of October 8,
2004, as the same may be amended from time to time (the “Rights Agreement”),
between Theravance, Inc., a Delaware corporation (the “Company”), and American
Stock Transfer & Trust Company, as Rights Agent (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 October 8, 2014 at the office or agency of the Rights Agent designated
for such purpose, or of its successor as Rights Agent, one one-thousandth of a
fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $0.01 per share (the “Preferred Stock”), of the Company at a
purchase price of $209.25 per one
one-thousandth 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-thousandths 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-thousandths 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.

 

B-1

 

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 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 the Company’s Common Stock, par
value $0.01 per share, or shares of Preferred Stock.

 

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

 

B-2

 

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

 

WITNESS the facsimile
signature of the proper officers of the Company and its corporate seal.  Dated as of                        ,
20    .

 

	
   

  	
  THERAVANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Rick E Winningham,
  Chief Executive Officer

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Bradford J. Shafer,
  Senior Vice President,

  	
   

  
	
  General Counsel and
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  American Stock Transfer
  & Trust Company,

  as Rights Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Herbert
  Lemmer, General Counsel

  	
   

  
					

 

B-3

 

Form of Reverse
Side of Right Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by
the registered holder if such

holder desires to transfer the Right Certificate)

	
  FOR VALUE
  RECEIVED

  	
   

  	
  hereby sells, assigns
  and transfers unto

  
	
   

  
	
  (Please print
  name and address of transferee)

  

 

              
Rights 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 bank, trust company, broker, dealer or other eligible
institution participating in a recognized signature guarantee medallion
program.

 

 

(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 THERAVANCE, INC.:

 

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 delivered 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 bank, trust company, broker, dealer or other eligible
institution participating in a recognized signature guarantee medallion
program.

 

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.

 

B-6

 

Exhibit C

 

UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR 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 OF

THERAVANCE, INC.

 

On May 27, 2004, the
Board of Directors of Theravance, Inc. (the “Company”) declared a dividend of
one preferred share purchase right (a “Right”) for each outstanding share of
common stock, par value $0.01 per share, of the Company (the “Common Stock”).  The dividend is payable on October 8,
2004 (the “Record Date”) to the stockholders of record on that date.  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the “Preferred
Stock”) at a price of $209.25 per one one-thousandth of a share of Preferred
Stock (the “Purchase Price”), subject to adjustment.  The description and terms of the Rights are
set forth in a Rights Agreement dated as of October 8, 2004, as the same
may be amended from time to time (the “Rights Agreement”), between the Company
and American Stock Transfer & Trust Company, as Rights Agent (the “Rights
Agent”).

 

Until the earlier to
occur of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (with certain exceptions, an “Acquiring Person”)
has acquired beneficial ownership of 15% or more of the outstanding shares of
Common Stock or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any person or group
of affiliated persons becomes an Acquiring Person) following the commencement
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 15% or more of the outstanding shares of Common Stock (the earlier
of such dates being called the “Distribution Date”), the Rights will be
evidenced, with respect to any of the Common Stock certificates outstanding as
of the Record Date, by such Common Stock certificate together with this Summary
of Rights.

 

The Rights Agreement
provides that, until the Distribution Date (or earlier expiration of the
Rights), the Rights will be transferred with and only with the Common
Stock.  Until the Distribution Date (or
earlier expiration of the Rights), new Common Stock certificates issued after
the Record Date upon transfer or new issuances of Common Stock will contain a
notation incorporating the Rights Agreement by reference.  Until the Distribution Date (or earlier expiration
of the Rights), the surrender for transfer of any certificates for

 

C-1

 

shares of Common Stock
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 shares of Common Stock 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 Stock 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 October 8, 2014 (the “Final Expiration
Date”), unless the Final Expiration Date is advanced or 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 is 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 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 is subject to adjustment in the event of a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock 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 the greater of (a) $1.00 per share, and (b) an amount equal
to 1,000 times the dividend declared per share of Common Stock.  In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled
to a minimum preferential payment of the greater of (a) $10.00 per share (plus
any accrued but unpaid dividends), and (b) an amount equal to 1,000 times the
payment made per share of Common Stock. 
Each share of Preferred Stock will have 1,000 votes, voting together
with the Common Stock.  Finally, in the
event of any merger, consolidation or other transaction in which outstanding
shares of Common Stock are converted or exchanged, each share of Preferred
Stock will be entitled to receive 1,000 times the amount received per share of
Common Stock.  These rights are protected
by customary antidilution provisions.

 

Because of the nature of
the Preferred Stock’s dividend, liquidation and voting rights, the value of the
one one-thousandth interest in a share of Preferred Stock purchasable upon
exercise of each Right should approximate the value of one share of Common
Stock.

 

C-2

 

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 that number of shares of Common 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 provisions 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 of a Right that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction (or its parent) that
at the time of such transaction 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 earlier of one of
the events described in the previous paragraph or the acquisition by such
Acquiring Person of 50% or more of the outstanding shares of Common Stock, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by such Acquiring Person which will have become void), in whole or in
part, for shares of Common Stock or Preferred Stock (or a series of the Company’s
preferred stock having equivalent rights, preferences and privileges), at an
exchange ratio of one share of Common Stock, or a fractional share of Preferred
Stock (or other preferred stock) equivalent in value thereto, per Right.

 

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 or
Common Stock will be issued (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth 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 current market
price of the Preferred Stock or the Common Stock.

 

At any time prior to the
time an Acquiring Person becomes such, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the “Redemption Price”) payable, at the option of the Company, in cash, shares
of Common Stock or such other form of consideration as the Board of Directors
of the Company shall determine.  The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.  Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.

 

C-3

 

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

 

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

 

A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as an
Exhibit to a Registration Statement on Form S-1 dated June 10, 2004.  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.

 

C-4

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