Document:

Exhibit
10.1

LARIAT
SERVICES, INC.

P.O BOX
10209

AMARILLO,
TX  79116-0209

 

 

October 20, 2005

 

 

Clayton Williams Energy, Inc.                                           VIA FAX 

Attention: Mel Riggs

6 Desta Drive

Suite 6500

Midland, Texas 79705

 

Re: Drilling Rig Joint Venture (LARCLAY, LLC)

 

Dear Mel:

 

This letter, when executed by Clayton
Williams Energy, Inc. (“CWEI”), will constitute a binding agreement between
Lariat Services, Inc. (“Lariat”) and Williams to form an entity LARCLAY, LLC (“LARCLAY”)
to acquire at least 12 drilling rigs.  It
is contemplated that the parties will execute further agreements, including
Regulations to LARCLAY, an Operating Agreement between LARCLAY and Lariat,
which will operate the equipment, and other necessary documents to consummate
the transaction.

 

1.              THE
ENTITY

 

Though we may decide to acquire additional
equipment, we will form an entity to acquire drilling rigs from the
manufacturer in China.  The name of the
entity will be LARCLAY, LLC.  The
ownership will be 50% CWEI and 50% Lariat. The sole relationship of the parties
is one of members in LARCLAY.  Except as
set forth herein, neither party shall owe any duty to the other for business
opportunities arising in connection with the drilling rigs, such as for
drilling, exploring or operating.

 

2.              THE
EQUIPMENT

 

Although additional equipment may
subsequently be acquired, LARCLAY shall initially acquire four 1,300 hp, six
1000 hp and two 2000 hp drilling rigs.   Eight of the rigs will have 5,000 psi BOPs,
and four of the rigs will have 10,000 psi BOPs. 
The rigs shall be ordered for construction through Linggas, Limited and
are expected to be delivered in Houston, within six to twelve months from
order.  Attached hereto as schedule 1 is
the preferred order of construction of rigs, however the manufacturing process
may dictate the order the equipment is delivered.  Once the rigs are delivered in the United
States, the parties recognize that the additional work will be necessary to
assemble and outfit them to make ready for use, including the installation of
motors, electrical works, plumbing, 

 

 

and mud pumps, which assembly and
installation may be performed at the delivery point or such other place as is
reasonable under the circumstances.  The
parties understand that this additional work may take as much as thirty days to
complete depending on the circumstances. 
Lariat shall be responsible with consultation with CWEI for the drafting
and negotiation of the contracts for the construction of the rigs, the
decisions with respect to the equipping and outfitting of the rigs, inspection
during the construction phase and arranging shipment to the states.  Costs incurred by Lariat in connection with
the foregoing shall be borne proportionately by Lariat and CWEI.  It is understood that concurrently with the
acquisition of the rigs contemplated herein, Lariat may acquire for its own
benefit rigs to be used in the conduct of its business.

 

3.              DEPLOYMENT
AND PRICING OF THE EQUIPMENT

 

It is contemplated that the equipment will be
utilized primarily on CWEI owned or operated properties or prospects.  The equipment will be priced at not less than
current market rates, and subject to changes in the market; provided if long
term contracts are required by the lender in order to obtain financing for the
rigs, any such contracts thus executed shall not be subject to the
foregoing.  Initially it is expected that
the two 2000HP rigs and two of the 1000HP 
rigs will go to the Northern Louisiana, one of the 1000 HP rigs might be
deployed to Colorado, depending upon delivery, one of the 1000HP rigs might be
deployed in the Giddings area of Texas and the remainder of the rigs are to be
deployed to West Texas.  CWEI and its
affiliates, shall have a preference for rig availability for drilling of its
prospects; provided that such preference shall not result in a breach of a
drilling contract with a third party. 
This preference shall include arrangements for the use of the rig to
earn an interest in a well or lease. 
There shall be no duty of the party having such arrangement to offer to
the other party.   At delivery of each
rig, CWEI shall provide Lariat a rig utilization schedule showing the
anticipated wells to be drilled with such rig during the following three
months. The schedule shall be updated monthly, or more often if necessary such
that necessary arrangements can be made for the efficient movement of the
rig.  CWEI shall notify Lariat promptly
upon learning that a CWEI location will not be available upon the completion of
the well then being drilled by such well, and shall give the estimated date
when such the rig shall be needed.  In
such event, Lariat shall attempt to contract the rig out to a third party for
the duration of time that the rig shall not be needed by CWEI

 

4.              FUNDING
THE PARTNERSHIP AND FINANCING THE EQUIPMENT

 

Other than funding the formation of LARCLAY,
neither party shall be required to make any additional capital contributions to
the joint venture.  It is hoped that
LARCLAY will be able to obtain 100% financing of the construction of the rigs
and the initial equipping thereof.  Such
debt and the financing costs thereof are referred to herein as the “Financing
Obligation”. The financing will be for a period of three years.  Lariat will cooperate with CWEI in exploring
all financing options, though it will be CWEI’s ultimate responsibility to
acquire financing for the construction and equipping the rigs acquired.   In the event 

 

2

 

that LARCLAY is unable to finance 100% of the
equipment, CWEI invest or loan LARCLAY the balance necessary on the same terms
as the primary financing.

 

After the construction and the initial
equipping of the rigs, each party shall be responsible for its proportionate
share of all capital for the repair and maintenance of the rigs.  If CWEI determines prior to use of any rig
that it does not need such rig in connection with its drilling program, then it
shall promptly notify Lariat who shall have the option of buying such rig under
the same terms in which LARCLAY is purchasing the rig.  In the event of such a purchase, CWEI shall
be reimbursed for any costs or consideration made for the purchase of the
rig.  At any time subsequent to a rig
being utilized in the field, a member of LARCLAY wishes to sell a LARCLAY rig,
the other member of LARCLAY shall have a preferential right to buy such rig
under the same terms and conditions as the offer acceptable to LARCLAY.  Should LARCLAY receive an offer from an
unaffiliated third party for the sale of a rig acceptable to one member but not
acceptable to the other, the rig shall be sold at the terms of such offer with
the preferential rights available to the members.  Notwithstanding the foregoing, during the
first eighteen months from the date hereof, no rig(s) shall be offered for sale
or shall an offer for the sale of a rig be considered except in those
situations in which CWEI has determined that it no longer needs the rig(s) in
its drilling program, and the rig(s) is not being profitably marketed by Lariat.

 

5.              OPERATION
OF THE EQUIPMENT

 

Lariat will operate the equipment under its
name.  LARCLAY will be charged its
pro-rata share of Lariat’s reasonable overhead (based on the number of LARCLAY
rigs, divided by the total number of Lariat operated rigs).  In addition, Lariat, through its affiliate,
Alsate Management and Investment Company, will provide accounting
services.  Lariat will be responsible for
staffing decisions on the equipment. 
Lariat shall be responsible for obtaining insurance coverage for the
equipment and general liability coverage at competitive rates. Such insurance
shall be issued by rated companies acceptable to CWEI, and if required by the
lender. Prior to payment of all debt associated with the construction and
equipping of the rigs, any insurance proceeds attributable to the loss of a rig
shall be applied to the financing debts.  
The drilling crews shall be employed by Lariat and covered by Lariat’s
corporate policy, with LARCLAY reimbursing Lariat for its share of
premiums.  Lariat will bill LARCLAY for
payroll, benefits, and bonuses of the employees directly employed on the
equipment.  Lariat shall operate the rigs
in a good and workmanlike in accordance with industry standards, and shall
maintain the rigs in good working order; provided, however, Lariat shall not
undertake any single repair or maintenance reasonably estimated to exceed
$50,000 without the consent of CWEI.

 

6.              DISTRIBUTIONS

 

Prior to Payment of Debt.  LARCLAY shall amortize financing costs of
100% of the equipment cost over a three year time frame.  Cash from operations shall first be applied

 

3

 

to direct operating costs, employee wages and
benefits and then to the debt and interest thereon.  Without the mutual consent of the parties, no
distribution of cash shall be made to a member until all debt obligations with
respect to all rigs acquired shall have been satisfied.

 

Subsequent to Payment of
Debt.  After payment of debt incurred
in connection with the Financing Obligation mutually agreed working capital
shall be maintained.  After satisfaction
of direct operating costs, Lariat overhead and working capital needs, cash
shall be distributed to each party on the basis of its ownership in LARCLAY.

 

7.              DISSOLUTION
LARCLAY 

 

 If at
any time following eighteen months either party is dissatisfied with the
operations of LARCLAY, then that party may call for dissolution of the
company.  If LARCLAY is dissolved, to the
extent possible, the equipment will be distributed in kind.  For example, if there is an even number of
equivalent rigs, CWEI would receive half of the rigs and Lariat would receive
half of the rigs.  It is agreed by the
parties that the drilling crew will go with each rig and the parties agree that
they will not solicit employees of the other company upon dissolution.  If either party calls for the dissolution of
LARCLAY, then any remaining portion of the Financing Obligation together with
any other debt obligations or disproportionate capital contributions shall be
borne equally by the parties and any prepayment penalty shall be borne solely
by the party requesting the dissolution.

 

In the event that Lariat sells all or
substantially all of its assets to a non-affiliated company or there is a
change in control of Lariat, then LARCLAY shall at CWEI’s election be
dissolved.  In such event, the assets of
the company shall be distributed as follows:

•                  After payment of the
Financing Obligations, other debt obligations, if any, and disproportionate
capital contributions: as set forth above.

•                  Prior to payment of all debt
obligations:  At CWEI’s election (i) each
party pays one-half of: the remaining Financing Obligation, other debt
obligations, if any, and any disproportionate capital contributions, and Lariat
shall pay any pre-payment penalties; or (ii) CWEI continues the debt facility
in LARCLAY and Lariat, in the event of a change in control, or the purchaser,
in the event of an asset sale, becomes responsible for one-half of: the
remaining Financing Obligation, other debt obligations, if any, as payments may
become due, and any disproportionate capital contributions.

 

 

8.   PREFERENTIAL
RIGHT.

 

In the event that either party wants to sell
its Membership interest in the LARCLAY, the nonselling party shall have a
preferential right to purchase such interest for the same terms as the selling
party is willing to contract to sell to a third party.

 

4

 

                9.   PRESS
RELEASES.

 

No press releases shall be issued by either
party without the consent of the other party, except when such a release shall
be required by law.

 

 

If this letter properly sets forth our
general agreement, please sign below.

 

Sincerely,

 

Lariat Services, Inc.

 

	
  /s/ M. Malone Mitchell, 3rd

  	
   

  	
   

  

 

N. Malone Mitchell, 3rd

President

 

 

Clayton Williams Energy, Inc.

 

	
  By:

  	
  /s/ Mel G. Riggs   

  	
   

  	
   

  
	
   

  	
  Mel Riggs, Chief Financial
  Officer

  	
   

  	
   

  

 

5

 

Schedule 1

Preferred
Order of Construction

 

1.               1350HP

2.               1000HP

3.               1000HP

4.               1000HP

5.               1350HP

6.               1000HP

7.               1350HP

8.               1000HP

9.               1350HP

10.         1000HP

 

The two large 2000 HP rigs will be ordered
under a separate contract from the above, and it is preferred to have these
rigs as soon as possible.

 

6Exhibit 4.1

 

ALIGN TECHNOLOGY, INC.

 

and

 

EquiServe Trust Company, N.A.

 

 

 

PREFERRED STOCK RIGHTS AGREEMENT

 

Dated as of October 25, 2005

 

 

TABLE OF CONTENTS

 

 

	
  Section 1.

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issuance of Rights
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Rights
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and
  Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of Rights; Exercise
  Price; Expiration Date of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation and Destruction
  of Rights Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Reservation and Availability
  of Preferred Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted
  Exercise Price or Number of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional
  Rights and Fractional Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of Action

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement
  of Rights Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Rights
  Certificate Holder Not Deemed a Stockholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning
  the Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or
  Consolidation or Change of Name of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of
  Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of
  Rights Agent

  	
   

  

 

ii

 

	
  Section 22.

  	
  Issuance of
  New Rights 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.

  	
  Determinations
  and Actions by the Board of Directors, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Benefits of
  this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 35.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Certificate of Designation

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  Form of
  Rights Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  Summary
  of Rights

  	
   

  

 

iii

 

PREFERRED STOCK RIGHTS AGREEMENT

 

This Preferred Stock Rights Agreement is dated as of October 25,
2005, between Align Technology, Inc., a Delaware corporation, (the “Company”),
and EquiServe Trust Company, N.A. (the “Rights Agent”).

 

On October 25, 2005, (the  “Rights Dividend Declaration Date”),
the Board of Directors of the Company authorized and declared a dividend of one
Preferred Share Purchase Right (a  “Right”) for each Common Share
(as hereinafter defined) of the Company outstanding as of the Close of Business
(as hereinafter defined) on November 22, 2005 (the “Record
Date”), each Right representing the right to purchase one
one-thousandth (0.001) of a share of Series A Participating Preferred
Stock (as such number may be adjusted pursuant to the provisions of this
Agreement), having the rights, preferences and privileges set forth in the form
of Certificate of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock attached hereto as Exhibit A, upon
the terms and subject to the conditions herein set forth, and further
authorized and directed the issuance of one Right (as such number may be
adjusted pursuant to the provisions of this Agreement) with respect to each
Common Share that shall become outstanding between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined), and in certain circumstances after the Distribution Date.

 

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

 

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

 

(a)                                  “Acquiring Person” shall mean any
Person, who or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 15% or more of the Common Shares then
outstanding, but shall not include the Company, any Subsidiary of the Company
or any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of
any such plan.  Notwithstanding the foregoing, no Person shall be deemed
to be an Acquiring Person as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be deemed
to be an Acquiring Person unless upon becoming the Beneficial Owner of such
additional Common Shares of the Company such Person does not beneficially own

 

 

15% or more of the Common Shares of the Company then
outstanding.  Notwithstanding the
foregoing, (i) if the Company’s Board of Directors determines in good
faith that a Person who would otherwise be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned a percentage of the Common Shares that would
otherwise cause such Person to be an “Acquiring Person,” as defined pursuant to
the foregoing provisions of this paragraph (a), or (B) such Person was
aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be or to have become an “Acquiring
Person” for any purposes of this Agreement including, without limitation Section 1(gg)
hereof; and (ii) if, as of the date hereof, any Person is the Beneficial
Owner of 15% or more of the Common Shares outstanding, such Person shall not be
or become an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), unless and until such time as such Person
shall become the Beneficial Owner of additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), unless, upon becoming the
Beneficial Owner of such additional Common Shares, such Person is not then the
Beneficial Owner of 15% or more of the Common Shares then outstanding.

 

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

 

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

 

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

 

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

 

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates has (A) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to
be the Beneficial Owner of, or to beneficially own,

 

2

 

(1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (2) securities which
a Person or any of such Person’s Affiliates or Associates may be deemed to have
the right to acquire pursuant to any merger or other acquisition agreement
between the Company and such Person (or one or more of its Affiliates or
Associates) if such agreement has been approved by the Board of Directors of
the Company prior to there being an Acquiring Person; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security under this Section 1(d)(ii)(B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

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

 

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

 

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

 

(g)                                 “Common Stock Equivalents” shall
have the meaning set forth in Section 11(a)(iii) hereof.   “Common Shares”
when used with reference to the Company shall mean the shares of Common Stock
of the Company, par value at $0.0001 per share. 
Common Shares when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.

 

3

 

(h)                                 “Company” shall mean Company, a
Delaware corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

(q)                                 “Final Expiration Date” shall mean November 22,
2015.

 

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

 

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

 

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

 

(u)                                 “Preferred Shares” shall mean shares
of Series A Participating Preferred Stock, par value $0.0001 per share, of
the Company.

 

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

 

5

 

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

 

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

 

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

 

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

 

(aa)                            “Rights Agent” shall mean (i) EquiServe
Trust Company, N.A., (ii) its successor or replacement as provided in
Sections 19 and 21 hereof or (iii) any additional Person appointed
pursuant to Section 2 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

Section 3.                                            Issuance
of Rights Certificates.

 

(a)                                  Until
the Distribution Date, (i) the Rights will be evidenced (subject to the
provisions of Sections 3(b) and 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates and (ii) the right to receive Rights
Certificates will be transferable only in connection with the transfer of
Common Shares.  Until the earlier of the Distribution Date or the
Expiration Date, the surrender for transfer of certificates for Common Shares
shall also constitute the surrender for transfer of the Rights associated with
the Common Shares represented thereby. 
As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate evidencing one Right
for each Common Share so held, subject to adjustment as provided herein.  In the event that an adjustment in the number
of Rights per Common Share has been made pursuant to Section 11 hereof,
then at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers

 

7

 

of Rights are distributed and cash is paid in lieu of
any fractional Rights (in accordance with Section 14(a) hereof).  As of the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of Common Shares, and the holders of such Rights Certificates
as listed in the records of the Company or any transfer agent or registrar for
the Rights shall be the record holders thereof.

 

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

 

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

 

THIS CERTIFICATE ALSO
EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
RIGHTS AGREEMENT BETWEEN THE COMPANY AND EQUISERVE TRUST COMPANY, N.A., AS THE
RIGHTS AGENT, DATED AS OF OCTOBER 25, 2005 (THE “RIGHTS AGREEMENT”), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR.  UNDER CERTAIN CIRCUMSTANCES
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO
IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY
OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL
AND VOID.

 

With respect to such certificates containing the
foregoing legend, until the earlier of the Distribution Date or the Expiration
Date, the Rights associated with the Common Shares represented by such

 

8

 

certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.

 

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

 

Section 4.                                            Form of
Rights Certificates.

 

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

 

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

 

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

 

9

 

CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.

 

Section 5.                                            Countersignature
and Registration.

 

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

 

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

 

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

 

(a)                                  Subject
to the provisions of Sections 7(e), 14 and 24 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase.  Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office of the Rights Agent designated for such
purpose.  Neither the Rights Agent nor
the Company shall be obligated to take

 

10

 

any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably
request.  Thereupon the Rights Agent
shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested.  The
Company may require payment from the registered holder 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 Rights Certificates.

 

(b)                                 Upon
receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security 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 Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the registered
holder in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.

 

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

 

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

 

(b)                                 The
Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable
pursuant to the exercise of a Right shall initially be $37.00, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)                                  Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Exercise
Price for the number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the
case may be) to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Rights Certificate in accordance with
Section 9(e) hereof, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights

 

11

 

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

 

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

 

(e)                                  Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (a  “Post-Event Transferee”), (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Company’s
Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this Section 7(e) (a
 “Pre-Event
Transferee”) or (iv) any subsequent transferee

 

12

 

receiving transferred Rights from a Post-Event
Transferee or a Pre-Event Transferee, either directly or through one or more
intermediate transferees, shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. 
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights Certificates or to
any other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any of such Acquiring Person’s Affiliates,
Associates or transferees hereunder.

 

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

 

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

 

Section 9.                                            Reservation
and Availability of Preferred Shares.

 

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

 

(b)                                 If
the Company shall hereafter list any of its Preferred Shares on a national
securities exchange, then so long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be listed on such
exchange, the Company shall use its best efforts to cause, from and

 

13

 

after such time as the Rights become exercisable (but
only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.

 

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

 

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

 

(e)                                  The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights Certificates or of
any Preferred Shares (or other securities of the Company) upon the exercise of
Rights.  The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of
certificates or depository receipts for the Preferred Shares (or other
securities of the Company) in a name other than that of, the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise or to
issue or to deliver any certificates or depository receipts for Preferred
Shares (or other securities of the

 

14

 

Company) upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established
to the Company’s satisfaction that no such tax is due.

 

Section 10.                                      Record
Date.  Each Person in whose name any certificate for a number of
one-thousandths (0.001) of a Preferred Share (or other securities of the
Company) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of Preferred Shares (or other
securities of the Company) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Total Exercise Price with respect to which
the Rights have been exercised (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the transfer books of the
Company are open.  Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not
be entitled to any rights of a holder of Preferred Shares (or other securities
of the Company) for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

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

 

(a)                                  (i)                                     Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares (by reverse stock split or otherwise) into a smaller number of Preferred
Shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event, except as otherwise provided in this Section 11
and Section 7(e) hereof: (1) the Exercise Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the  “Adjustment
Fraction”), the numerator of which shall be the total number of
Preferred Shares (or shares of capital stock issued in such reclassification of
the Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares outstanding
immediately prior to such time; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (2) the number of one-thousandths
(0.001) of a

 

15

 

Preferred Share (or share of such other capital stock)
issuable upon the exercise of each Right shall equal the number of
one-thousandths (0.001) of a Preferred Share (or share of such other capital
stock) as was issuable upon exercise of a Right immediately prior to the
occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i),
multiplied by the Adjustment Fraction; provided, however, that, no such
adjustment shall be made pursuant to this Section 11(a)(i) to the
extent that there shall have simultaneously occurred an event described in
clause (A), (B), (C) or (D) of Section 11(n) with a
proportionate adjustment being made thereunder.  Each Common Share that
shall become outstanding after an adjustment has been made pursuant to this Section 11(a)(i) shall
have associated with it the number of Rights, exercisable at the Exercise Price
and for the number of one-thousandths (0.001) of a Preferred Share (or shares
of such other capital stock) as one Common Share has associated with it
immediately following the adjustment made pursuant to this Section 11(a)(i).

 

(ii)                                  Subject
to Section 24 of this Agreement, in the event that a Triggering Event
shall have occurred, then promptly following such Triggering Event each holder
of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive for each Right, upon exercise thereof in
accordance with the terms of this Agreement and payment of the Exercise Price
in effect immediately prior to the occurrence of the Triggering Event, in lieu
of a number of one-thousandths (0.001) of a Preferred Share, such number of
Common Shares of the Company as shall equal the quotient obtained by
dividing (A) the product obtained by multiplying (1) the Exercise
Price in effect immediately prior to the occurrence of the Triggering Event by (2) the
number of one-thousandths (0.001) of a Preferred Share for which a Right was
exercisable (or would have been exercisable if the Distribution Date had
occurred) immediately prior to the first occurrence of a Triggering Event, by (B) fifty
percent (50%) of the Current Per Share Market Price for Common Shares on
the date of occurrence of the Triggering Event; provided, however,
that the Exercise Price and the number of Common Shares of the Company so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof to reflect any
events occurring in respect of the Common Shares of the Company after the
occurrence of the Triggering Event.

 

(iii)                               In
lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof,
the Company may, if the Company’s Board of Directors determines that such
action is necessary or appropriate and not contrary to the interest of holders
of Rights and, in the event that the number of Common Shares which are
authorized by the Company’s Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights, or if any
necessary regulatory approval for such issuance has not been obtained by the
Company, the Company shall:  (A) determine
the excess of (1) the value of the Common Shares issuable upon the
exercise of a Right (the  “Current Value”) over (2) the
Exercise Price (such excess, the  “Spread”) and (B) with
respect to each Right, make adequate provision to substitute for such Common
Shares, upon exercise of the Rights, (1) cash, (2) a reduction in the
Exercise Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of preferred stock
which the Company’s Board of Directors has deemed to have the same value as
Common Shares (such shares or units of shares of preferred stock are herein
called  “Common
Stock Equivalents”)), except to the extent that the Company has
not obtained any necessary stockholder or regulatory approval for such
issuance,

 

16

 

(4) debt securities
of the Company, except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (5) other
assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Company’s Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Company’s Board of
Directors; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of
a Triggering Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the  “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Exercise Price, Common Shares
(to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance,
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread.  If the Company’s
Board of Directors shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights or that any necessary regulatory approval for
such issuance will be obtained, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares or take
action to obtain such regulatory approval (such period, as it may be extended,
the  “Substitution
Period”).  To
the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights and
(y) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of additional
shares, to take any action to obtain any required regulatory approval and/or to
decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. 
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect.  For purposes of
this Section 11(a)(iii), the value of the Common Shares shall be the
Current Per Share Market Price of the Common Shares on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Shares on such date.

 

(b)                                 In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling such holders (for a period expiring within
forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Shares) less than the then Current Per Share Market Price of the
Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record
date, plus the number of Preferred Shares or Equivalent Shares, as the case may
be, which the

 

17

 

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

 

(c)                                  In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the making of a distribution to all holders of the Preferred
Shares or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any,
or a dividend payable in Preferred Shares) or subscription rights, options or
warrants (excluding those referred to in Section 11(b)), then, in each
such case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current Per
Share Market Price of a Preferred Share or an Equivalent Share on such record
date, less the fair market value per Preferred Share or Equivalent Share (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a
Preferred Share or Equivalent Share, as the case may be, and the denominator of
which shall be such Current Per Share Market Price of a Preferred Share or Equivalent
Share on such record date; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been fixed.

 

(d)                                 Anything
herein to the contrary notwithstanding, no adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) of the Exercise Price; provided, however,
that any adjustments which by

 

18

 

reason of this Section 11(d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.  All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth (0.0001) of a Common Share or other share or one
hundred-thousandth (0.00001) of a Preferred Share, as the case may be.  Notwithstanding the first sentence of this Section 11(d),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.

 

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

 

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

 

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

 

(h)                                 The
Company may elect on or after the date of any adjustment of the Exercise Price
as a result of the calculations made in Section 11(b) or (c) to
adjust the number of Rights, in substitution for any adjustment in the number
of Preferred Shares purchasable upon the exercise of a Right.  Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one-thousandths (0.001) of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth (0.00001)) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise Price.  The Company shall
make a public announcement of its election to adjust the

 

19

 

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 Exercise Price is adjusted or any day thereafter, but, if any
Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. 
If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(h), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Exercise
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

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

 

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

 

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

 

(l)                                     Anything
in this Section 11 to the contrary notwithstanding, prior to the
Distribution Date, the Company shall be entitled to make such reductions in the
Exercise Price, in

 

20

 

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

 

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

 

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

 

21

 

and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(n) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

Section 12.                                      Certificate
of Adjusted Exercise Price or Number of Shares.  Whenever an
adjustment is made as provided in Sections 11 and 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 Preferred Shares a
copy of such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate in accordance with Section 26 hereof.  Notwithstanding the foregoing sentence, the
failure of the Company to make such certification or give such notice shall not
affect the validity of such adjustment or the force or effect of the
requirement for such adjustment.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.

 

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

 

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

 

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

 

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

 

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

 

then, concurrent with and in each such case,

 

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

 

22

 

(50%) of the Current
Per Share Market Price of the Common Shares of such Principal Party on the date
of consummation of such Section 13 Event, provided, however, that
the Exercise Price and the number of Common Shares of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

Shares of which have the
greatest aggregate market value of shares outstanding or (y) if the Person
that is the other party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it survives) or (z) the
Person resulting from the consolidation; and

 

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

 

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

 

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

 

24

 

practicable after such
filing and use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with applicable
state securities laws;

 

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

 

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

 

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

 

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

 

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

 

25

 

 

previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of
the Principal Party would preclude or limit the exercisability of the Rights.

 

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

 

Section 14.                                      Fractional
Rights and Fractional Shares.

 

(a)                                  The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights.  In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the purposes
of this Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable, as
determined pursuant to the second sentence of Section 1(j) hereof.

 

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

 

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

 

26

 

Share (as determined pursuant to the second sentence
of Section 1(j) hereof) for the Trading Day immediately prior to the date
of such exercise.

 

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

 

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

 

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

 

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

 

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

 

Section 17.                                      Rights
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of
any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose to be

 

27

 

the holder of the Preferred Shares or any other securities
of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as specifically provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.

 

Section 18.                                      Concerning
the Rights Agent.

 

(a)                                  The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder.  The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross 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.  In no event will the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Rights Agent has been advised of
the possibility of such loss or damage.

 

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

 

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

 

(a)                                  Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such 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 Rights Certificates shall have
been countersigned but not

 

28

 

delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

 

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

 

Section 20.                                      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 Rights Certificates, by their
acceptance thereof, shall be bound:

 

(a)                                  The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the 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 (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Per Share Market Price) be proved or established by the Company prior
to taking 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 Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

 

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

 

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

 

29

 

(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 Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall
it be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or
any Rights Certificate or as to 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 Chief Financial Officer, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.  Any application by
the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be
effective.  The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five (5) Business
Days after the date on which any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

 

(h)                                 The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were

 

30

 

not Rights Agent under this Agreement.  Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.

 

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

 

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

 

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

 

Section 21.                                      Change
of Rights Agent.  The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon thirty (30)
days’ notice in writing mailed to the Company and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.  In the event the transfer agency relationship
in effect between the Company and the Rights Agent terminates, the Rights Agent
will be deemed to resign automatically on the effective date of such
termination; and any required notice will be sent by the Company.  The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his or her Rights Certificate for inspection by the
Company), then the registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  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

 

31

 

successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Shares and the Common Shares, and mail a notice thereof
in writing to the registered holders of the Rights Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

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

 

Section 23.                                      Redemption.

 

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

 

32

 

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

 

Section 24.                                      Exchange.

 

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

 

(b)                                 Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection 24(a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio.  The Company shall give
public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.  Any notice which is mailed in the manner
herein provided shall be deemed given,

 

33

 

whether or not the holder receives the notice.  Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged.  Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.

 

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

 

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

 

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

 

34

 

(f)                                    Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection 24(e) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of rights in exchange therefor as has been determined by
the Board of Directors in accordance with subsection 24(e) above. 
The Company shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange.  The Company
shall mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the transfer
agent for the Common Shares of the Company. 
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.  Each such notice of exchange will state the
method by which the exchange of the Rights will be effected.

 

Section 25.                                      Notice
of Certain Events.

 

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

 

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

 

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

 

Align Technology, Inc.

881 Martin Avenue

Santa Clara, California
95050

 

with a copy to:

Wilson Sonsini Goodrich &
Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California
94304-1050

Attention:  Chris F. Fennell

 

Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on

 

35

 

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:

 

EquiServe Trust Company,
N.A.

250 Royall Street

Canton, MA 02021

Attention: Client
Administration

 

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

 

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

 

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

 

Section 29.                                      Determinations
and Actions by the Board of Directors, etc.  For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Exchange Act.  The Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board, or the Company,

 

36

 

or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Agreement and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights
Certificates and all other parties and (y) with respect to claims
specifically arising from the Agreement, not subject the Board to any liability
to the holders of the Rights.

 

Section 30.                                      Benefits
of this Agreement.  Nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim pursuant to this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares).

 

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

 

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

 

37

 

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

 

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

 

Section 35.                                      Force
Majeure.  Notwithstanding anything to the contrary contained herein,
Rights Agent shall not be liable for any delays or failures in performance
resulting from acts beyond its reasonable control including, without
limitation, acts of God, terrorist acts, labor difficulties, war or civil
unrest.

 

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

 

	
  “COMPANY”

  	
  Align Technology, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eldon M. Bullington

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Eldon M. Bullington

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  “RIGHTS AGENT”

  	
  EquiServe Trust Company, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Norris L. Richardson, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Norris L. Richardson, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Relationship Manager

  	
   

  

 

38

 

EXHIBIT A

 

CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND
PRIVILEGES OF SERIES A PARTICIPATING PREFERRED STOCK OF ALIGN TECHNOLOGY, INC.

 

The undersigned, [          ],
does hereby certify:

 

1.                                       That
he/she is duly elected and acting                   
of Align Technology, Inc. a Delaware corporation (the  “Corporation”).

 

2.                                       That
pursuant to the authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors of the Corporation on October 25, 2005 adopted the
following resolutions creating a series of 200,000 shares of Preferred Stock
designated as Series A Participating Preferred Stock:

 

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

 

Section 1.                                            Designation
and Amount.  The shares of such
series shall be designated as “Series A
Participating Preferred Stock.” The Series A Participating
Preferred Stock shall have a par value of $0.0001 per share, and the number of
shares constituting such series shall be 200,000.

 

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

 

Section 3.                                            Dividends
and Distributions.

 

(a)                                  Subject
to the prior and superior right of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date
being referred to herein as a “Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of Series A
Participating Preferred Stock, in an amount per

 

 

share (rounded to the nearest cent) equal to 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A
Participating Preferred Stock.

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

Section 5.                                            Certain
Restrictions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

RESOLVED FURTHER, that the President, Chief Executive Officer or any
Vice President and the Secretary or any Assistant Secretary of this Corporation
be, and they hereby are, authorized and directed to prepare and file a
Certificate of Designation of Rights, Preferences and Privileges in accordance
with the foregoing resolution and the provisions of Delaware law and to take
such actions as they may deem necessary or appropriate to carry out the intent
of the foregoing resolution.”

 

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

 

Executed at Santa Clara, California on                            ,
2005.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  NAME

  
	
   

  	
  TITLE

  

 

5

 

EXHIBIT B

 

FORM OF RIGHTS CERTIFICATE

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER THE
EARLIER OF (i) NOVEMBER 22, 2015, (ii) THE DATE TERMINATED BY
THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO
THE RIGHTS AGREEMENT.  THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). 
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
RIGHTS AGREEMENT.]*

 

RIGHTS CERTIFICATE

 

ALIGN TECHNOLOGY, INC.

 

This certifies that                                                               ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of October 25,
2005, (the “Rights Agreement”), between
Align Technology, Inc., a Delaware corporation (the  “Company”), and EquiServe Trust
Company, N.A. (the “Rights Agent”), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., New York time, on
November 22, 2015 at the office of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one one-thousandth

 

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

 

 

(0.001) of a fully paid and non-assessable share of Series A
Participating Preferred Stock, par value $0.0001 per share (the “Preferred Shares”), of the Company,
at an Exercise Price of $37.00 per one-thousandth (0.001) of a Preferred Share
(the  “Exercise
Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate
duly executed.  The number of Rights
evidenced by this Rights Certificate (and the number of one-thousandths (0.001)
of a Preferred Share which may be purchased upon exercise hereof) set forth
above are the number and Exercise Price as of November 22, 2005 based on
the Preferred Shares as constituted at such date.  As provided in the Rights Agreement, the
Exercise Price and the number and kind of Preferred Shares or other securities
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.

 

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.  Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the above-mentioned office
of the Rights Agent.

 

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

 

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

 

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

 

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

 

2

 

provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.

 

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

 

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

 

 

	
  ATTEST:

  	
  ALIGN TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

Countersigned:

 

EQUISERVE TRUST COMPANY, N.A.

as Rights Agent

 

	
  By:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Its:

  	
   

  	
   

  

 

3

 

Form of Reverse Side of Rights Certificate

 

FORM OF
ASSIGNMENT

 

(To be executed by
the registered holder if such

holder desires to transfer the Rights Certificate)

 

FOR VALUE RECEIVED                             
hereby sells, assigns and transfers unto

 

(Please print name and address of transferee)

 

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

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
							

 

 

Signature Guaranteed:

 

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

 

 

CERTIFICATE

 

The undersigned hereby certifies by checking the
appropriate boxes that:

 

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

 

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

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
							

 

 

Signature Guaranteed:

 

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

 

 

Form of Reverse Side of Rights Certificate — continued

 

FORM OF
ELECTION TO PURCHASE

 

(To be executed if
holder desires to

exercise the Rights Certificate)

 

To:

 

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

 

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

 

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

 

Please insert social security

or other identifying number

 

 

(Please print name and address)

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
							

 

Signature Guaranteed:

 

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

 

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes
that:

 

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

 

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

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
							

 

Signature Guaranteed:

 

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

 

 

Form of Reverse Side of Rights Certificate — continued

 

NOTICE

 

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

 

 

EXHIBIT C

 

STOCKHOLDER RIGHTS PLAN

ALIGN TECHNOLOGY, INC.

 

Summary of Rights

 

	
  Distribution
  and Transfer of Rights;  Rights
  Certificate:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Distribution
  Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Preferred
  Stock Purchasable Upon Exercise of Rights:

  	
   

  	
  After the
  Distribution Date, each Right will entitle the holder to purchase for $37.00
  (the “Exercise Price”), a
  fraction of a share of the Company’s Preferred Stock with economic terms
  similar to that of one share of the Company’s Common Stock.

  
	
   

  	
   

  	
   

  
	
  Flip-In:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Flip-Over:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Exchange
  Provision:

  	
   

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

  

 

 

	
  Redemption
  of the Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Expiration
  of the Rights:

  	
   

  	
  The Rights
  expire on the earliest of (a) November 22, 2015 or (b) exchange
  or redemption of the Rights as described above.

  
	
   

  	
   

  	
   

  
	
  Amendment
  of Terms of Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Voting
  Rights:

  	
   

  	
  Rights will not
  have any voting rights.

  
	
   

  	
   

  	
   

  
	
  Anti-Dilution
  Provisions:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Taxes:

  	
   

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

  

 

The foregoing is a summary of certain principal terms
of the Stockholder Rights Plan only and is qualified in its entirety by
reference to the Preferred Stock Rights Agreement dated as of October 25,
2005 between the Company and EquiServe Trust Company, N.A. as Rights Agent (the
“Rights Agreement”).  The Rights Agreement may be amended from time
to time.  A copy of the Rights Agreement
was filed with the Securities and Exchange Commission as an Exhibit to a Form 8-K
dated October 27, 2005.  A copy of
the Rights Agreement is available free of charge from the Company.

 

2

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