Document:

EXHIBIT 10.1

 

AUGUST TECHNOLOGY CORPORATION

AMENDED 1998 DIRECTOR COMPENSATION PLAN

 

Amendment to Schedule 1 – effective January 1, 2005

 

Section
1.b.ii.5 of Schedule 1 is amended to delete “compensation not to exceed 4
special meetings per year.”

 

Section
1.b.ii of Schedule 1 is amended by adding a new subsection 6 to read as
follows:

 

6.             $10,000/year to
lead director

 

All
other terms of the Amended 1998 Director Compensation Plan and Schedule 1
remain in effect.Exhibit 4.1

 

 

 

AUGUST TECHNOLOGY

 

CORPORATION

 

and

 

 

WELLS FARGO BANK, N.A.

 

Rights Agreement

 

Dated as of June 27, 2005

 

 

 

 

TABLE OF
CONTENTS

 

	
  Section 1.

  	
  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 Preferred Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Preferred Shares Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted Purchase Price
  or Number of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Consolidation, Merger, Statutory Share
  Exchange 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 Shareholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning
  the Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger
  or Consolidation or Change of Name of Rights Agent

  	
   

  

 

i

 

	
  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.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Governing
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Descriptive
  Headings

  	
   

  

 

	
  Exhibit A

  	
  -

  	
  Form of Certificate of Designations

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of Right Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  -

  	
  Summary of Rights to Purchase Preferred
  Shares

  

 

ii

 

Agreement, dated as of June 27, 2005, between August Technology Corporation, a
Minnesota corporation (the “Company”), and Wells Fargo Bank, N.A., as
rights agent (the “Rights Agent”).

 

The Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right (a “Right”)
for each Common Share (as hereinafter defined) of the Company outstanding at
the close of business on June 27,
2005 (the “Record Date”), each Right representing the right to purchase
one one-thousandth of a Preferred Share (as hereinafter defined), upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined).

 

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

 

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

 

(a)             “Acquiring
Person” shall mean any Person who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 10% or more of
the Common Shares of the Company then outstanding, but shall not include the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. 
Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” as the result of an acquisition of Common Shares by the Company which,
by reducing the number of Common Shares of

 

 

the Company
outstanding, increases the proportionate number of Common Shares of the Company
beneficially owned by such Person to 10% or more of the Common Shares of the
Company then outstanding; provided, however, that, if a Person
shall become the Beneficial Owner of 10% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed to be
an “Acquiring Person.”  Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an “Acquiring Person” for any
purposes of this Agreement. 
Notwithstanding anything in this Agreement to the contrary, neither
Rudolph, Merger Sub, nor any of their Affiliates or Associates shall be deemed
to be an Acquiring Person as a result, directly or indirectly, of (i) the
approval, execution, delivery or performance of the Merger Agreement, (ii) the
consummation of the Merger or any other transaction contemplated by the Merger
Agreement or (iii) the public announcement of any of the foregoing.

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

4

 

(g)           “Common
Shares” when used with reference to the Company shall mean the shares of
common stock of the Company, with a par value of $.01 per share solely for the
purposes of a statute or regulation imposing a tax or fee based upon the
capitalization of the Company.  “Common
Shares” when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.

 

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

 

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

 

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

 

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

 

(l)            “Merger”
shall mean the “Merger” as such term is defined in the Merger Agreement.

 

(m)          “Merger
Agreement” shall mean the Agreement and Plan of Merger, dated as of the
date of this Agreement, by and between the Company, Rudolph and Merger Sub, as
it may be amended from time to time.

 

(n)           “Merger
Sub” shall mean NS Merger Sub, Inc., a Minnesota corporation and
wholly owned subsidiary of Rudolph.

 

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

 

5

 

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

 

(q)           “Preferred
Shares” shall mean shares of Series A Junior Participating Preferred
Stock of the Company, with a par value of $.01 per share solely for the
purposes of a statute or regulation imposing a tax or fee based upon the
capitalization of the Company, having the rights and preferences set forth in
the Form of Certificate of Designations attached to this Agreement as Exhibit A.

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)            “Rudolph”
shall mean Rudolph Technologies, Inc., a corporation organized under the
law of Delaware.

 

(y)           “Shares
Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such.  Notwithstanding anything in this Agreement to
the contrary, a Shares Acquisition Date shall not be deemed to have occurred
solely as the result directly or indirectly, of (i) the approval,
execution, delivery or performance of the Merger Agreement, (ii) the
consummation of the Merger or any other transaction

 

6

 

contemplated by
the Merger Agreement or (iii) the public announcement of any of the foregoing.

 

(z)            “Subsidiary”
of any Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

 

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

 

(bb)         “Trading
Day” shall have the meaning set forth in Section 11(d) 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,
also be the holders of the Common Shares of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.

 

Section 3.               Issue of Right Certificates.  (a)  Until the earlier of (i) the
fifteenth day after the Shares Acquisition Date or (ii) the fifteenth
Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
of the Company for or pursuant to the terms of any such plan) of a tender or
exchange offer the consummation of which would result in any Person becoming
the Beneficial Owner of Common Shares of the

 

7

 

Company
aggregating 10% or more of the then outstanding Common Shares of the Company
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to
as the “Distribution Date”; provided, however, that
notwithstanding anything in this Agreement to the contrary, a Distribution Date
shall not be deemed to have occurred solely as the result, directly or
indirectly, of (i) the approval, execution, delivery or performance of the
Merger Agreement, (ii) the consummation of the Merger or any other
transaction contemplated by the Merger Agreement or (iii) the public
announcement of any of the foregoing), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares of the Company registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares of
the Company.  As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares of the Company as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of Exhibit B
hereto (a “Right Certificate”), evidencing one Right for each Common
Share so held.  As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

 

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

 

8

 

Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.  With respect to certificates for Common
Shares of the Company outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of Rights attached
thereto.  Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares of the Company outstanding on
the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Shares of the Company represented thereby.

 

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

 

This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in an Agreement between August Technology Corporation and Wells
Fargo Bank, N.A., dated as of June 27, 2005, as it may be amended from
time to time  (the “Agreement”), the
terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of August Technology
Corporation.  Under certain circumstances,
as set forth in the Agreement, such Rights (as defined in the Agreement) will
be evidenced by separate certificates and will no longer be evidenced by this
certificate.  August Technology
Corporation will mail to the holder of this certificate a copy of the Agreement
without charge after receipt of a written request therefor.  As set forth in the Agreement, Rights
beneficially owned by any Person (as defined in the Agreement) who becomes an
Acquiring Person (as defined in the Agreement) become null and void.

 

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

 

9

 

shall also constitute the transfer of the Rights
associated with the Common Shares of the Company represented thereby.  In the event that the Company purchases or
acquires any Common Shares of the Company after the Record Date but prior to
the Distribution Date, any Rights associated with such Common Shares of the
Company shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares of the
Company which are no longer outstanding.

 

(d)           Nothing
in this Agreement shall be construed to give any holder of Rights or any other
Person any legal or equitable rights, remedies or claims under this Agreement
by virtue of (i) the approval, execution, delivery or performance of the
Merger Agreement, (ii) the consummation of the Merger or any other
transaction contemplated by the Merger Agreement or (iii) the public
announcement of any of the foregoing.

 

Section 4.               Form of Right
Certificates.  The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto, and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any applicable rule or
regulation made pursuant thereto or with any applicable rule or regulation
of any stock exchange or the National Association of Securities Dealers, Inc.,
or to conform to usage.  Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the price per one one-thousandth of a
Preferred Share set forth therein (the “Purchase Price”), but the number
of such

 

10

 

one
one-thousandths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

 

Section 5.               Countersignature and
Registration.  The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature and shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature.  The Right
Certificates shall be 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 individual who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be signed on behalf
of the Company by any individual who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any
such individual was not such an officer.

 

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

 

11

 

Section 6.               Transfer, Split Up,
Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.  Subject
to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or
that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent.  Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right Certificate or Right Certificates,
as the case may be, as so requested.  The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.

 

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

 

12

 

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) 
The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in part,
at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a Preferred
Share as to which the Rights are exercised, at or prior to the earliest of (i) the
earlier of (a) the Close of Business on June 1, 2006; provided,
however, that the Company reserves and shall have the right to extend this
date past June 1, 2006 if the Merger Agreement is still in effect on that
date and (b) immediately prior to the Effective Time (as defined in the
Merger Agreement)(such earlier date, the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.

 

(b)           The
Purchase Price for each one one-thousandth of a Preferred Share purchasable
pursuant to the exercise of a Right shall initially be $27.00, and shall be
subject to adjustment from time to time as provided in Section 11 or 13
hereof, and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)           Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase
Price for the shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder

 

13

 

of such Right Certificate in accordance with Section 9
hereof by certified check, cashier’s check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
any such transfer agent to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent of the Preferred Shares with such depositary
agent) and the Company hereby directs such depositary agent to comply with such
request; (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14
hereof; (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate.

 

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

 

Section 8.               Cancellation and Destruction
of Right Certificates.  All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it,

 

14

 

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 destroy
cancelled Right Certificates after any Securities and Exchange Commission
required retention period and shall deliver a certificate of destruction
thereof to the Company.

 

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

 

The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any Preferred Shares 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 Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by

 

15

 

the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company’s reasonable
satisfaction that no such tax is due.

 

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

 

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

 

(a)           (i)            In the event the Company shall at
any time after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding

 

16

 

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

 

(ii)           Subject
to Section 24 hereof, in the event any Person becomes an Acquiring Person,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal
the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of the Company (determined pursuant
to Section 11(d) hereof) on the date of the occurrence

 

 

17

 

of such
event.  In the event that any Person
shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.

 

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

 

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

 

18

 

equal to the
current per share market price of one Common Share as of the date of issuance
of such Preferred Shares or fraction thereof.

 

(b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares (“equivalent preferred shares”)) or
securities convertible into Preferred Shares or equivalent preferred shares at
a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share market price
of the Preferred Shares (as defined in Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of Preferred Shares
which the aggregate offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.  In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall

 

19

 

be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and holders
of the Rights.  Such adjustment shall be
made successively whenever such a record date is fixed; and, in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

 

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

 

20

 

event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

 

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

 

21

 

the over-the-counter market, as reported as of 4:00 P.M.
Eastern time by NASDAQ or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors of the
Company.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business, or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

 

(ii)           For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set forth
in Section 11(d)(i).  If the
Preferred Shares are not publicly traded, the “current per share market price”
of the Preferred Shares shall be conclusively deemed to be the current per
share market price of the Common Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand
(1000).  If neither the Common Shares nor
the Preferred Shares are publicly held or so listed or traded, “current per
share market price” shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.

 

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

 

22

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

24

 

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

 

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

 

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

 

25

 

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

 

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

 

26

 

whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.

 

Section 12.             Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 or 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares and the Securities and Exchange Commission a copy of such
certificate and (c) if such adjustment occurs at any time after the Distribution
Date, mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.

 

Section 13.             Consolidation, Merger, Statutory
Share Exchange or Sale or Transfer of Assets or Earning Power.  In the event, directly or indirectly, at any
time after a Person has become an Acquiring Person, (a) the Company shall
consolidate with, or merge with and into, any other Person, (b) any Person
shall consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, (c) the Company shall effect a
statutory share exchange with the outstanding Common Shares of the Company
being exchanged for stock or other securities of any other Person, money or
other property or (d) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its

 

27

 

wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such other Person (determined pursuant
to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, share exchange, sale or transfer; (ii) the issuer
of such Common Shares shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, share exchange, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the
term “Company” shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9
hereof) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares of the Company thereafter deliverable
upon the exercise of the Rights.  The
Company shall not consummate any such consolidation, merger, share exchange,
sale or transfer unless, prior thereto, the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing.  The Company shall not enter
into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants,

 

28

 

instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. 
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

 

Section 14.             Fractional Rights and Fractional
Shares.  (a)  The Company shall
not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. 
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. 
For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable.  The closing price for any day
shall be the last sale price, regular way, reported at or prior to 4:00 P.M.
Eastern time or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, as of 4:00 P.M. Eastern
time in either case, as reported in the principal consolidated transaction
reporting system with respect to securities listed 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 as of 4:00 P.M. Eastern time 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

 

29

 

average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company.  If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.

 

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

 

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

 

30

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

32

 

Section 18.                                      Concerning the Rights Agent.  The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder, and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
outside 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 in the premises.

 

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

 

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

 

33

 

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.

 

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:

 

34

 

(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 any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such certificate.

 

(c)                                  The
Rights Agent 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

 

35

 

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 (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully
paid and nonassessable.

 

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

 

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

 

36

 

(h)                                 The
Rights Agent and any shareholder, 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 that reasonable care was exercised in the selection
and continued employment thereof.

 

Section 21.                                      Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and 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 Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified

 

37

 

in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(which holder shall, with such notice, submit such holder’s Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of
the United States or of the State of Minnesota (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of Minnesota), in good standing, having an
office in the State of Minnesota, 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 or (b) an affiliate of a corporation described in clause (a) of
this sentence.  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose.  Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

38

 

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

 

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

 

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights pursuant to paragraph (a) of this Section 23, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price.  The
Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption.  Within 10 days after such action of the Board
of Directors of the Company ordering the redemption of the Rights, the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior

 

39

 

to
the Distribution Date, on the registry books of the transfer agent for the Common
Shares.  Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.  Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.

 

Section 24.                                      Exchange.  (a) 
The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter
referred to as the “Exchange Ratio”). 
Notwithstanding the foregoing, the Board of Directors of the Company
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding Common Shares
for or pursuant to the terms of any such plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding.

 

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the

 

40

 

number
of such Rights held by such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected, and, in the event of any partial exchange, the number
of Rights which will be exchanged.  Any partial
exchange shall be effected pro  rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

 

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

 

(d)                                 The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common

 

41

 

Shares.  In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a
whole Common Share.  For the purposes of
this paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

 

Section 25.                                      Notice of Certain Events.  (a)  In case the Company shall, at any
time after the Distribution Date, propose (i) to pay any dividend payable
in stock of any class to the holders of the Preferred Shares or to make any
other distribution to the holders of the Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of the Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of the Preferred
Shares (other than a reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation, merger or share
exchange into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or

 

42

 

warrants, or the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of the Preferred Shares for purposes of
such action, and, in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.

 

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

 

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

 

August Technology
Corporation

4900 West 78th
Street

Bloomington,
Minnesota  55435

Attention:  Stan Piekos

Facsimile:  952-820-0060

Telephone:  952-820-0080

 

43

 

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:

 

Wells
Fargo Bank, N.A.

c/o
Wells Fargo Shareowner Services 

161 North Concord Exchange

South St. Paul, MN  55075-1139

Attention:  August Technology
Corporation Account Manager

 

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.  The Company may from time to time supplement
or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that, from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.

 

44

 

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

 

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

 

(b)  The Board of
Directors of the Company shall have the exclusive power and total and complete
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or the Company or necessary or
advisable in the administration of this Agreement, including without limitation
the right and power to interpret this Agreement and to make conclusively all
determinations deemed necessary or advisable for the administration of this
Agreement.  All such acts, calculations,
interpretations and determinations (including, for the purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith (x) shall be final,
conclusive and binding on the Company, the Rights Agent and the holders of the
Rights and all other parties and (y) not subject the Board of Directors to any
liability to the holders of the Rights or any other party.

 

Section 30.                                      Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void or

 

45

 

unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.

 

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

 

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

 

[ Remainder of this page left blank
intentionally – Signature page follows ]

 

46

 

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

 

	
  Attest:

  	
   

  	
  AUGUST TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stanley D. Piekos

  	
   

  	
  By:

  	
  /s/ Jeff O’Dell

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Stanley D. Piekos

  	
   

  	
  Name:

  	
  Jeff O’Dell

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Secretary

  	
   

  	
  Title:

  	
  Chairman of the Board

  

 

 

	
  Attest:

  	
   

  	
  WELLS
  FARGO BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Susan J. Roeder

  	
   

  	
  By:

  	
  /s/ Peggy Sime

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Susan J. Roeder

  	
   

  	
  Name:

  	
  Peggy Sime

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Assistant Secretary 

  	
   

  	
  Title:

  	
  Officer

  

 

 

 

Exhibit A

 

FORM

 

of

 

CERTIFICATE OF DESIGNATIONS, REFERENCES AND RIGHTS

 

of

 

SERIES A JUNIOR PARTICIPATING PREFERRED SHARES

 

of

 

AUGUST TECHNOLOGY CORPORATION

 

 

I, Stanley D. Piekos, the
Secretary of August Technology Corporation, a corporation organized and
existing under the Business Corporation Act of the State of Minnesota (hereinafter
called the “Corporation”), in accordance with the provisions of Section 302A.401
thereof, DO HEREBY CERTIFY:

 

That pursuant to the
authority conferred upon the Board of Directors of the Corporation (hereinafter
called “the Board of Directors” or the “Board”) by the Amended and Restated
Articles of Incorporation of the Corporation, as amended to date (the “Articles
of Incorporation”), the Board of Directors on June     ,
2005, adopted the following resolution creating a series of thirty thousand
(30,000) shares of Preferred Stock, with a par value of $.01 per share solely
for the purposes of a statute or regulation imposing a tax or fee based upon
the capitalization of the Corporation, designated as Series A Junior
Participating Preferred Stock:

 

RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors in accordance with the provisions of the
Articles of Incorporation, the Board of Directors hereby creates a series of
Preferred Stock of the Corporation (the “Preferred Stock”), and hereby states
the designation and number of shares, and fixes the relative rights and
preferences of the shares of such series as follows:

 

Series A Junior Participating Preferred Stock:

 

Section 1.                                            Designation and Amount.  The shares of such series shall be designated
as “Series A Junior Participating Preferred Stock”
(the “Series A Preferred Stock”) and the number of shares constituting the
Series A Preferred Stock shall be thirty thousand (30,000).  Such number of shares may, unless prohibited
by the Articles of Incorporation or by applicable law of the State of
Minnesota, be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series A Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into Series A Preferred
Stock.

 

A-1

 

Section 2.                                            Dividends and Distributions.

 

(A)                              Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock of the
Corporation, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred
to herein as a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $10 or (b) subject to
the provision for adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or a fraction of a share of Series A Preferred
Stock.  In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

 

(B)                                The
Corporation shall declare a dividend or distribution on the Series A
Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

 

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding Series A Preferred
Stock from the Quarterly Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and

 

A-2

 

before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.  The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.

 

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

 

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

 

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

 

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

 

Section 4.                                            Certain Restrictions.

 

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

 

A-3

 

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

 

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

 

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

 

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

 

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

 

Section 5.                                            Reacquired Shares. 
Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Articles of Incorporation, or
in any other Certificate of Designations creating a series of Preferred Stock
or any similar stock or as otherwise required by law.

 

Section 6.                                            Liquidation, Dissolution or Winding Up.  Upon any liquidation, dissolution or winding
up of the Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, provided

 

A-4

 

that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of shares of Common Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up.  In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

 

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

 

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

 

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

 

Section 10.                                      Amendment.  The
Articles of Incorporation of the Corporation shall not be amended in any manner
which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative

 

A-5

 

vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.

 

[ Remainder of this page left blank
intentionally – Signature page follows ]

 

A-6

 

IN WITNESS WHEREOF, this
Certificate of Designations is executed on behalf of the Corporation by its
Chairman of the Board and attested by its Secretary this     
th day June, 2005.

 

 

	
  Attest:

  	
   

  	
  AUGUST TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Stanley D. Piekos

  	
   

  	
  Name:

  	
  Jeff O’Dell

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Secretary 

  	
   

  	
  Title:

  	
  Chairman of the Board

  

 

 

Exhibit B

 

Form of Right Certificate

 

	
  Certificate No. R-

  	
         Rights

  	
   

  

 

NOT EXERCISABLE
AFTER THE FINAL EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) OR SUCH EARLIER DATE AS THE BOARD OF DIRECTORS ORDERS REDEMPTION OR
EXCHANGE OF THE RIGHTS.  THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT ONE-TWENTIETH OF ONE
CENT PER RIGHT (SUBJECT TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT.  UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE
ACQUIRED BENEFICIALLY BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME
NULL AND VOID.

 

Right Certificate

 

AUGUST TECHNOLOGY CORPORATION

 

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 that certain Rights Agreement, dated as of June 27,
2005 (the “Rights Agreement”), between August Technology Corporation, a
Minnesota corporation (the “Company”), and Wells Fargo Bank, N.A. (the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Agreement) and prior to the Final Expiration
Date (as such term is defined in the Rights Agreement) at the principal office
of the Rights Agent, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, with a par value of $.01 per share solely for
the purposes of a statute or regulation imposing a tax or fee based upon the
capitalization of the Company, of the Company (the “Preferred Shares”), at a
purchase price of $27.00 per one one-thousandth of a Preferred Share (the “Purchase
Price”), upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.  The
number of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of June 27, 2005, based on the Preferred Shares as
constituted at such date.  As provided in
the Rights Agreement, the Purchase Price and the number of one one-thousandths
of a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.

 

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
offices of the Rights Agent.

 

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

 

Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (i) may, but are not required
to, be redeemed by the Company at a redemption price of one-twentieth of one
cent per Right or (ii) may, but are not required to, be exchanged in whole
or in part for Preferred Shares or shares of the Company’s Common Stock.

 

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

 

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

 

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

 

B-2

 

WITNESS the facsimile signature of the proper officers
of the Company.  Dated as of           ,       .

 

 

	
  Attest:

  	
   

  	
  AUGUST TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
  COUNTERSIGNED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WELLS
  FARGO BANK, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  

 

 

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)

  	
   

  
	
  this Right Certificate,
  together with all right, title and interest therein, and does hereby 

  	
   

  
	
  irrevocably constitute
  and appoint

  	
   

  	
   Attorney, to transfer the within

  	
   

  
	
  Right Certificate on
  the books of the within-named Company, with full power of 

  	
   

  
	
  substitution.

  	
   

  
							

 

 

	
  Dated: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Medallion
Guaranteed:

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if
holder desires to exercise

Rights represented by the Right Certificate.)

 

To:  AUGUST TECHNOLOGY CORPORATION

 

	
  The undersigned hereby irrevocably elects to
  exercise 

  	
   

  	
  Rights represented by this Right Certificate

  
	
  to purchase the Preferred Shares issuable upon the exercise of such
  Rights and requests that certificates for such Preferred Shares be issued in
  the name of:

  

 

Please insert social
security

or other identifying number

 

	
   

  	
   

  
	
  (Please print name and address)

  
	
   

  	
   

  
	
   

  	
   

  

 

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

 

Please insert social
security

or other identifying number

 

	
   

  	
   

  
	
  (Please print name and address)

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

Signature Guaranteed:

 

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

 

 

The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the 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, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.

 

 

Exhibit C

 

SUMMARY OF RIGHTS
TO PURCHASE

PREFERRED SHARES

 

Introduction

 

On June 27, 2005, the Board of Directors of our
Company, August Technology Corporation, a Minnesota corporation, declared
a dividend of one preferred share purchase right (a “Right”) for each outstanding
share of common stock, no par value per share. 
The dividend is payable on June 27, 2005 to the shareholders of
record at the close of business on that date.

 

Our Board has adopted
this Rights Agreement to protect stockholders from coercive or otherwise unfair
takeover tactics.  In general terms, it
works by imposing a significant penalty upon any person or group which acquires
10% or more of our outstanding common stock without the approval of our
Board.  The Rights Agreement should not
interfere with any merger or other business combination approved by our Board.

 

On
June 27, 2005, the
Company, along with Rudolph Technologies, Inc. (“Rudolph”), a Delaware
corporation, and NS Merger Sub, Inc. (“Merger Sub”), a Minnesota
corporation and a wholly owned subsidiary of Rudolph, also entered into an
Agreement and Plan of Merger 
(the “Merger Agreement”). 
Under the terms of the agreement, each Company shareholder will receive
either $10.50 per share in cash or $10.50 per share in Rudolph stock (based
upon the exchange ratio pursuant to the agreement of 0.7625x and the closing
price of Rudolph stock on June 27, 2005), reflecting an aggregate
consideration of approximately $193 million. 
Each Company shareholder will have the option to elect to receive cash
or stock, subject to proration and allocation, based on the total cash and
shares available in the merger.  The
agreement requires that the total consideration for the transaction will
include a minimum of $37.2 million and a maximum of $60.0 million of cash
subject to shareholder election.

 

The
Rights Agreement provides that neither the execution of the Merger Agreement nor
the consummation of the Merger or other transactions contemplated by the Merger
Agreement will entitle holders of the Rights to exercise the Rights or entitle
any other persons or entities to any legal or equitable rights, remedies or
claims under the Rights Agreement.  In particular,
for the purposes of the Rights Agreement: (i) neither Rudolph, nor Merger
Sub nor any of their affiliates or associates shall be deemed to be an Acquiring
Person; (ii) a Shares Acquisition Date shall not be deemed to have occurred;
and (iii) a Distribution Date shall not be deemed to have occurred, solely
by virtue of the approval, execution, delivery or performance of the Merger
agreement, the consummation of the Merger or any transaction contemplated by
the Merger Agreement or the public announcement of any of the foregoing.

 

For those interested in
the specific terms of the Rights Agreement as made between our Company and
Wells Fargo Bank, N.A., as the Rights Agent, on June 27, 2005, we provide
the following summary description. 
Please note, however, that this description is only a summary, and is
not complete, and should be read together with the entire Rights Agreement,
which has been filed with the Securities and Exchange Commission as an exhibit
to a Registration Statement on Form 8-A dated June 27,
2005.  A copy of the agreement is available
free of charge from our Company.

 

C-1

 

The Rights.  Our Board
authorized the issuance of a Right with respect to each outstanding share of
common stock on June 27, 2005.  The
Rights will initially trade with, and will be inseparable from, the common
stock.  The Rights are evidenced only by
the certificates that represent shares of common stock.  New Rights will accompany any new shares of
common stock we issue after June 27, 2005 until the Distribution Date described
below.

 

Exercise Price.  Each Right
will allow its holder to purchase from our Company one one-thousandth of a
share of Series A Junior Participating Preferred
Stock (“Preferred Share”) for $27.00, once the Rights become exercisable.  This portion of a Preferred Share will give
the shareholder approximately the same dividend, voting, and liquidation rights
as would one share of common stock. 
Prior to exercise, the Right does not give its holder any dividend,
voting, or liquidation rights.

 

Exercisability. 
The Rights will not be exercisable until

 

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

 

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

 

We refer to the date when the Rights become
exercisable as the “Distribution Date.” 
Until that date, the common stock certificates will also evidence the
Rights, and any transfer of shares of common stock will constitute a transfer
of Rights.  After that date, the Rights
will separate from the common stock and be evidenced by book-entry credits or
by Rights certificates that we will mail to all eligible holders of common
stock.  Any Rights held by an Acquiring
Person are void and may not be exercised.

 

Consequences of a Person or Group
Becoming an Acquiring Person.

 

•                  Flip In. 
If a person or group becomes an Acquiring Person, all holders of Rights
except the Acquiring Person may, for $27.00, purchase shares of our common
stock with a market value of $54.00, based on the market price of the common
stock prior to such acquisition.

 

•                  Flip Over. 
If our Company is later acquired in a merger or similar transaction
after the Rights Distribution Date, all holders of Rights except the Acquiring
Person may, for 

$27.00, purchase shares of the acquiring corporation with a market value of
$54.00 based on the market price of the acquiring corporation’s stock, prior to
such merger.

 

Preferred Share Provisions.

 

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

 

•                  will not be redeemable.

 

C-2

 

•                  will entitle holders to quarterly dividend payments of
$.01, or an amount equal to the dividend paid on one share of common stock,
whichever is greater.

 

•                  will entitle holders upon liquidation either to
receive $1 or an amount equal to the payment made on one share of common stock,
whichever is greater.

 

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

 

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

 

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

 

Expiration.  The Rights must be exercised at or prior to
the earliest of (i) the earlier of (a) the close of business on June 1,
2006; provided,
however, that the Company reserves and shall have the right to extend this
date past June 1, 2006 if the Merger Agreement is still in effect on that
date and (b) immediately prior to the Effective Time (as defined in
the Merger Agreement), (ii) the time at which the rights are redeemed
pursuant to Section 23 of the Rights Agreement, or (iii) the time at
which such Rights are exchanged as provided in Section 24 of the Rights
Agreement.

 

Redemption. 
Our Board may redeem the Rights for one-twentieth of one cent (or $0.0005)
per Right at any time before any person or group becomes an Acquiring
Person.  If our Board redeems any Rights,
it must redeem all of the Rights.  Once
the Rights are redeemed, the only right of the holders of Rights will be to
receive the redemption price of one-twentieth of one cent (or $0.0005) per
Right.  The redemption price will be
adjusted if we have a stock split or stock dividends of our common stock.

 

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

 

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

 

Amendments.  The terms of the Rights Agreement may be
amended by our Board without the consent of the holders of the Rights;
provided, however, that after a person or group becomes an Acquiring Person, our Board may not amend the agreement in a way that
adversely affects holders of the Rights.

 

C-3

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