Document:

Exhibit 4.03

 

UFP TECHNOLOGIES, INC.

 

and

 

AMERICAN STOCK TRANSFER &
TRUST COMPANY, LLC, as Rights Agent

 

 

RIGHTS AGREEMENT

 

Dated as of March 20, 2009

 

 

Table of Contents

 

	
  Section 1.

  	
  Certain Definitions

  	
  3

  
	
  Section 2.

  	
  Appointment of Rights Agent

  	
  7

  
	
  Section 3.

  	
  Issue of Right Certificates

  	
  7

  
	
  Section 4.

  	
  Form of Right Certificates

  	
  9

  
	
  Section 5.

  	
  Countersignature and Registration

  	
  10

  
	
  Section 6.

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

  	
  10

  
	
  Section 7.

  	
  Exercise of Rights, Purchase Price; Expiration Date of Rights

  	
  11

  
	
  Section 8.

  	
  Cancellation and Destruction of Right Certificates

  	
  12

  
	
  Section 9.

  	
  Availability of Shares of Preferred Stock

  	
  12

  
	
  Section 10.

  	
  Preferred Stock Record Date

  	
  13

  
	
  Section 11.

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

  	
  14

  
	
  Section 12.

  	
  Certificate of Adjusted Purchase Price or Number of Shares

  	
  21

  
	
  Section 13.

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

  	
  22

  
	
  Section 14.

  	
  Fractional Rights and Fractional Shares

  	
  25

  
	
  Section 15.

  	
  Rights of Action

  	
  26

  
	
  Section 16.

  	
  Agreement of Right Holders

  	
  26

  
	
  Section 17.

  	
  Right Certificate Holder Not Deemed a Stockholder

  	
  27

  
	
  Section 18.

  	
  Concerning the Rights Agent

  	
  27

  
	
  Section 19.

  	
  Merger or Consolidation or Change of Name of Rights Agent

  	
  28

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  28

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  30

  
	
  Section 22.

  	
  Issuance of New Right Certificates

  	
  31

  
	
  Section 23.

  	
  Redemption

  	
  31

  
	
  Section 24.

  	
  Exchange

  	
  32

  
	
  Section 25.

  	
  Notice of Certain Events

  	
  33

  
	
  Section 26.

  	
  Notices

  	
  34

  
	
  Section 27.

  	
  Supplements and Amendments

  	
  34

  
	
  Section 28.

  	
  Successors

  	
  35

  
	
  Section 29.

  	
  Benefits of this Agreement

  	
  35

  
	
  Section 30.

  	
  Determinations and Actions by the Board of Directors

  	
  35

  
	
  Section 31.

  	
  Severability

  	
  35

  
	
  Section 32.

  	
  Governing Law

  	
  35

  
	
  Section 33.

  	
  Counterparts

  	
  35

  
	
  Section 34.

  	
  Descriptive Headings

  	
  36

  

 

 

RIGHTS AGREEMENT

 

Rights Agreement, dated as of March 20,
2009 (“Agreement”), between UFP Technologies, Inc., a Delaware corporation
(the “Company”), and American Stock Transfer & Trust Company, LLC, a
New York state limited liability trust company, as Rights Agent (the “Rights
Agent”).

 

The Board of Directors of the Company has
authorized and declared a dividend of one preferred share purchase right (a “Right”)
for each share of Common Stock (as hereinafter defined) of the Company
outstanding as of the Close of Business (as defined below) on March 20,
2009 (the “Record Date”), each Right representing the right to purchase one
one-thousandth (subject to adjustment) of a share of Preferred Stock (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earlier of
the Distribution Date and the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section 22.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

(f)            “Common
Stock” when used with reference to the Company shall mean the Common Stock,
presently par value $0.01 per share, of the Company.  “Common Stock” when used with reference to
any Person other than the Company shall mean the common stock (or, in the case
of an unincorporated entity, the equivalent equity interest) 

 

5

 

with the greatest voting power of such other
Person or, if such other Person is a Subsidiary (as such term is hereinafter
defined) of another Person, the Person or Persons which ultimately control such
first-mentioned Person.

 

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

 

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

 

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

 

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

 

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

 

(l)            “Exempt
Person” shall mean (i) the Company or any Subsidiary of the Company, in
each case including, without limitation, in its fiduciary capacity, or any
employee benefit plan of the Company or of any Subsidiary of the Company, or
any entity or trustee holding Common Stock for or pursuant to the terms of any
such plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the Company; (ii) Jeff
Bailly, any members of his immediate family or any of his or their Affiliates
or Associates; and (iii) an underwriter or underwriters which become the
Beneficial Owner of 15% or more of the Common Stock then outstanding in
connection with an underwritten public offering with a view to the public
distribution of such Common Stock.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 2.               Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable.

 

Section 3.               Issue
of Right Certificates.

 

(a)           Until
the Close of Business on the earlier of (i) the tenth day after the Stock
Acquisition Date or (ii) the tenth Business Day (or such later date as may
be determined by action of the Board of Directors of the Company prior to such
time as any 

 

7

 

Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than an Exempt Person) of, or of
the first public announcement of the intention of such Person (other than an
Exempt Person) to commence, a tender or exchange offer the consummation of
which would result in any Person (other than an Exempt Person) becoming the
Beneficial Owner of shares of Common Stock aggregating 15% or more of the
Common Stock then outstanding (the earlier of such dates being herein referred
to as the “Distribution Date”, provided, however, that if either
of such dates occurs after the date of this Agreement and on or prior to the
Record Date, then the Distribution Date shall be the Record Date), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock registered in the names of the holders
thereof and not by separate Right Certificates, and (y) the Rights will be
transferable only in connection with the transfer of Common Stock.  As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign
and the Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Stock as of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a “Right
Certificate”), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. 
As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.

 

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

 

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

 

8

 

This certificate also evidences
and entitles the holder hereof to certain Rights as set forth in a Rights
Agreement between UFP Technologies, Inc. (the “Company”) and American
Stock Transfer & Trust Company, LLC, as Rights Agent, dated as of March 20,
2009 and as amended from time to time (the “Rights Agreement”), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company.  Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.  The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.  Under
certain circumstances, as set forth in the Rights Agreement, Rights owned by or
transferred to any Person who is or becomes an Acquiring Person (as defined in
the Rights Agreement) and certain transferees thereof will become null and void
and will no longer be transferable.

 

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

 

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

 

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

 

9

 

Section 5.               Countersignature
and Registration.

 

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

 

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

 

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

 

(a)           Subject
to the provisions of this Agreement, at any time after the Distribution Date
and prior to the Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase.  Any registered holder desiring
to transfer, split up, combine or exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office or agency of the Rights Agent
designated for such purpose.  Thereupon
the Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so
requested.  The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

 

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

 

10

 

to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

 

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

 

(a)           Except
as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date, and thereafter the registered holder of any Right
Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the time (the “Expiration
Date”) that is the earliest of (i) the Close of Business on March 19,
2019 (the “Final Expiration Date”), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the “Redemption Date”) or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.

 

(b)           The
Purchase Price shall be initially $25 for each one one-thousandth of a share of
Preferred Stock purchasable upon the exercise of a Right.  The Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities or property
to be acquired upon exercise of a Right shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) of
this Section 7.

 

(c)           Except
as otherwise provided herein, upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the aggregate Purchase Price for the shares of
Preferred Stock to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance
with Section 9 hereof, in cash or by certified check, cashier’s check or
money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock, or make available if the Rights Agent is the transfer agent
for the Preferred Stock, certificates for the number of shares of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) requisition from a
depositary agent appointed by the Company depositary receipts representing
interests in such number of one one-thousandths of a share of Preferred Stock
as are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent), and the Company hereby directs any such depositary agent to
comply with such request, (ii) when appropriate, requisition from the

 

11

 

Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii) promptly
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.

 

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

 

(e)           Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported transfer or exercise of
Rights pursuant to Section 6 hereof or this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of assignment or form of election to purchase set forth
on the reverse side of the Right Certificate surrendered for such transfer or
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) thereof as the Company shall
reasonably request.

 

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

 

Section 9.               Availability
of Shares of Preferred Stock.

 

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

 

(b)           So
long as the shares of Preferred Stock issuable upon the exercise of Rights may
be listed or admitted to trading on any national securities exchange, or quoted
on NASDAQ, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed or 

 

12

 

admitted to trading on such exchange, or
quoted on NASDAQ, upon official notice of issuance upon such exercise.

 

(c)           From
and after such time as the Rights become exercisable, the Company shall use its
best efforts, if then necessary to permit the issuance of shares of Preferred
Stock upon the exercise of Rights, to register and qualify such shares of
Preferred Stock under the Securities Act and any applicable state securities or
“Blue Sky” laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of the date as of which the Rights are no longer exercisable
for such securities and the Expiration Date. 
The Company may temporarily suspend, for a period of time not to exceed
90 days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective.  Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.  Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Securities Act shall
have been declared effective, unless an exemption therefrom is available.

 

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

 

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

 

Section 10.             Preferred
Stock Record Date.  Each Person in
whose name any certificate for Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase 

 

13

 

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

 

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

 

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

 

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

 

14

 

adjustment as
appropriate in accordance with Section 11(f) hereof.  Notwithstanding anything in this Agreement to
the contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after the
Flip-In Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the Flip-In Event pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has the purpose or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void without any further
action and any holder of such Rights shall thereafter have no rights whatsoever
with respect to such Rights under any provision of this Agreement.  The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.  From and after the Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the provisions
of this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be canceled.  From
and after the occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii).

 

(iii)          The Company may at
its option substitute for a share of Common Stock issuable upon the exercise of
Rights in accordance with the foregoing subparagraph (ii) a number of
shares of Preferred Stock or fraction thereof such that the current per share
market price of one share of Preferred Stock multiplied by such number or
fraction is equal to the current per share market price of one share of Common
Stock.  In the event that there shall not
be sufficient shares of Common Stock issued but not outstanding or authorized
but unissued to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Board of Directors of the Company shall,
with respect to such deficiency, to the extent permitted by applicable law and
any material agreements then in effect to which the Company is a party, (A) determine
the excess (such excess, the “Spread”) of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right in accordance with the
foregoing subparagraph (ii) (the “Current Value”) over (2) the
Purchase Price (as adjusted in accordance with the foregoing subparagraph
(ii)), and (B) with respect to each Right (other than Rights which have
become void pursuant to the foregoing subparagraph (ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance
with the foregoing subparagraph (ii) upon exercise of the Right and
payment of the Purchase Price (as adjusted in accordance therewith), (1) cash,
(2) a reduction in such Purchase Price, (3) shares of Preferred Stock
or other equity securities of the Company (including, without limitation,
shares or fractions of shares of preferred stock which, by virtue of having 

 

15

 

dividend,
voting and liquidation rights substantially comparable to those of the shares
of Common Stock, are deemed in good faith by the Board of Directors of the
Company to have substantially the same value as the shares of Common Stock
(such shares of Preferred Stock and shares or fractions of shares of Preferred
Stock are hereinafter referred to as “Common Stock Equivalents”), (4) debt
securities of the Company, (5) other assets, or (6) any combination
of the foregoing, having a value which, when added to the value of the shares
of Common Stock issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in such
Purchase Price), where such aggregate value has been determined by the Board of
Directors of the Company upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors of the Company; provided,
however, that if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the Flip-In Event (the date of the Flip-In Event being the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, to the extent permitted
by applicable law and any material agreements then in effect to which the
Company is a party, upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number or fractions of shares of
Preferred Stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread.  If, upon the occurrence of the Flip-In Event,
the Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, then, if the Board of
Directors of the Company so elects, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called the “Substitution
Period”).  To the extent that the Company
determines that some action need be taken pursuant to the second and/or third
sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof,
that such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such second sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current per share market
price (as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger
Date and the per share or fractional value of any “Common Stock Equivalent”
shall be deemed to equal the current per share market price of the Common
Stock.  The Board of Directors of the
Company may, but shall not be required to, establish procedures to allocate the
right to receive shares of Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).

 

(b)           In
case the Company shall fix a record date for the issuance of rights, 

 

16

 

options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock (“Equivalent
Preferred Shares”)) or securities convertible into Preferred Stock or
Equivalent Preferred Shares at a price per share of Preferred Stock or
Equivalent Preferred Shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred
Shares) less than the then current per share market price of the Preferred
Stock (determined pursuant to Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock and Equivalent Preferred Shares outstanding on such
record date plus the number of shares of Preferred Stock and Equivalent
Preferred Shares which the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of shares of Preferred Stock and Equivalent
Preferred Shares outstanding on such record date plus the number of additional
shares of Preferred Stock and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be offered
are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right.  In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent.  Shares of Preferred Stock and
Equivalent Preferred Shares owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

 

(c)           In
case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b) hereof),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then current per share
market price of the Preferred Stock (determined pursuant to Section 11(d) hereof)
on such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock, and the denominator of
which shall be such 

 

17

 

current per share market price (determined
pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

 

(d)           (i) Except
as otherwise provided herein, for the purpose of any computation hereunder, the
“current per share market price” of any security (a “Security” for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security.  The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported by the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices on NASDAQ or in the over-the-counter market, as
reported by NASDAQ or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the Company.  The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.

 

(ii)           For the purpose of
any computation hereunder, if the Preferred Stock is publicly traded, the “current
per share market price” of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i).  If the Preferred Stock is not publicly traded
but the Common Stock is publicly traded, the “current per share market price”
of the Preferred Stock shall be conclusively deemed to be the current per share
market price of the Common Stock as determined pursuant to Section 11(d)(i) multiplied
by the then applicable Adjustment Number (as defined in and determined in
accordance with the Certificate of Designation for the Preferred Stock).  If 

 

18

 

neither the
Common Stock nor the Preferred Stock is publicly traded, “current per share
market price” shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.

 

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

 

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

 

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

 

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

 

(i)            The
Company may elect on or after the date of any adjustment of the Purchase Price
pursuant to Sections 11(b) or 11(c) hereof to adjust the number of
Rights, in substitution for any adjustment in the number of one one-thousandths
of a share of Preferred Stock purchasable upon the exercise of a Right.  Each of the Rights outstanding 

 

19

 

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

 

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

 

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

 

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

 

20

 

the event requiring such adjustment.

 

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

 

(n)           Anything
in this Agreement to the contrary notwithstanding, in the event that at any
time after the date of this Agreement and prior to the Distribution Date, the
Company shall (i) declare and pay any dividend on the Common Stock payable
in Common Stock or (ii) effect a subdivision, combination or consolidation
of the Common Stock (by reclassification or otherwise than by payment of a
dividend payable in Common Stock) into a greater or lesser number of shares of
Common Stock, then, in each such case, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered thereafter,
shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

 

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

 

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

 

21

 

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

 

(a)                                  In the event, directly or
indirectly, at any time after the Flip-In Event (i) the Company shall
consolidate with or shall merge into any other Person, (ii) any Person shall
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all
or part of the Common Stock shall be changed into or exchanged for stock or
other securities of any other Person (or of the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more wholly-owned Subsidiaries
of the Company), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of a Right (other than Rights which
have become void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof),
in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock or Common Stock of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares
of Common Stock of the Principal Party (as such term is hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by dividing the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof)
by 50% of the current per share market price of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; provided,
however, that the Purchase Price (as theretofore adjusted in accordance
with Section 11(a)(ii) hereof) and the number of shares of Common
Stock of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(f) hereof
to reflect any events occurring in respect of the Common Stock of such
Principal Party after the occurrence of such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (C) the
term “Company” shall thereafter be deemed to refer to such Principal Party; and
(D) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock in
accordance with Section 9 hereof) in connection with such consummation of
any such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; provided that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price
as provided in this Section 13(a), such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had such
holder, at the time of such transaction, owned the Common Stock of the
Principal Party receivable upon the exercise of a Right pursuant to this Section 13(a),
and such Principal Party shall take such steps (including, but not limited to,
reservation of shares of 

 

22

 

stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property.

 

(b)                                 “Principal Party” shall mean:

 

(i)                                     in
the case of any transaction described in (i) or (ii) of the first
sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which the shares of Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer the shares of Common Stock of which have the greatest aggregate market
value of shares outstanding, or (B) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the shares of
Common Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the
consolidation; and

 

(ii)                                  in
the case of any transaction described in (iii) of the first sentence of Section 13(a) hereof,
the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons is the issuer of Common Stock having the
greatest aggregate market value of shares outstanding;

 

provided, however,
that in any such case described in the foregoing clause (b)(i) or (b)(ii),
if the Common Stock of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term “Principal Party” shall refer to such other Person, or (2) if
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which is and has been so registered, the term “Principal
Party” shall refer to whichever of such Persons is the issuer of Common Stock
having the greatest aggregate market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to
the total of such interests.

 

(c)                                  The Company shall not consummate
any consolidation, merger, sale or transfer referred to in Section 13(a) hereof
unless prior thereto the Company and the Principal Party involved therein shall
have executed and delivered to the Rights Agent an agreement confirming that
the requirements of Sections 13(a) and (b) hereof shall 

 

23

 

promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Agreement as
the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and
(b) hereof and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:

 

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

 

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

 

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

 

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

 

(d)                                 In case the Principal Party has
a provision in any of its authorized securities or in its certificate of
incorporation or by-laws or any other instrument governing its affairs, which
provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock or Common Stock
Equivalents of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock or Common Stock
Equivalents of such Principal Party at less than such then current market
price, or (ii) providing for any special payment, tax or similar provision
in connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized securities shall be 

 

24

 

redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.

 

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

 

Section 14.                                      Fractional
Rights and Fractional Shares.

 

(a)                                  The Company shall not be
required to issue fractions of Rights (except prior to the Distribution Date in
accordance with Section 11(n) hereof) or to distribute Right
Certificates which evidence fractional Rights. 
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. 
For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.  The closing price
for any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices on NASDAQ or in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board of Directors of the
Company.  If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.

 

(b)                                 The Company shall not be
required to issue fractions of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock) or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share 

 

25

 

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

 

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

 

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

 

Section 15.                                      Rights of
Action.  All rights of action in
respect of this Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), on his own behalf
and for his own benefit, may enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate (or, prior to the Distribution Date, such Common Stock) in the
manner provided therein and in this Agreement. 
Without limiting the foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person subject to this Agreement.

 

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

 

26

 

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

 

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

 

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

 

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

 

Section 18.                                      Concerning the
Rights Agent.

 

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

 

(b)                                 The Rights Agent shall be
protected and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for the
Preferred Stock or Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, 

 

27

 

consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Whenever in the performance of
its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact 

 

28

 

or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the President and the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

 

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

 

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

 

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

 

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

 

(g)                                 The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any person reasonably believed by the Rights Agent
to be one of the President or the Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.  Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Agreement and the date on
and/or 

 

29

 

after which such action shall be taken or
such omission shall be effective.  The
Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not be less
than five Business Days after the date any officer of the Company actually
receives such application unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.

 

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

 

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

 

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

 

Section 21.                                      Change of
Rights Agent.  The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days’ notice in writing mailed to the Company and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. 
The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock or
Preferred Stock by registered or certified mail, and, following the
Distribution Date, to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the 

 

30

 

registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or the laws of any state of the
United States or the District of Columbia, in good standing, having an office
in The Commonwealth of Massachusetts or the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million.  After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred Stock, and, following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

Section 22.                                      Issuance of
New Right Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such forms as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company may with respect to shares of Common Stock so
issued or sold pursuant to (i) the exercise of stock options, (ii) under
any employee plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale.

 

Section 23.                                      Redemption.

 

(a)                                  The Board of Directors of the
Company may, at any time prior to the Flip-In Event, redeem all but not less
than all the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring in respect of the Common Stock after the date hereof (the
redemption price being hereinafter referred to as the “Redemption Price”).  The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company in its sole discretion may establish.  The Redemption Price shall be payable, at the
option of the Company, in cash,

 

31

 

shares of Common Stock, or such other form of
consideration as the Board of Directors of the Company shall determine.

 

(b)                                 Immediately upon the action of
the Board of Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23 (or at such later time
as the Board of Directors of the Company may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price.  The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption.  Within 10 days after such
action of the Board of Directors of the Company ordering the redemption of the
Rights (or such later time as the Board of Directors of the Company may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock.  Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of redemption shall state the method by which the payment of the
Redemption Price will be made.

 

Section 24.                                      Exchange.

 

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

 

(b)                                 Immediately upon the
effectiveness of the action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio.  The Company shall promptly 

 

32

 

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

 

(c)                                  The Company may at its option
substitute, and, in the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit an
exchange of Rights for Common Stock as contemplated in accordance with this Section 24,
the Company shall substitute to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon exchange of a
Right, a number of shares of Preferred Stock or fraction thereof (or Equivalent
Preferred Shares, as such term is defined in Section 11(b)) such that the
current per share market price (determined pursuant to Section 11(d) hereof)
of one share of Preferred Stock (or Equivalent Preferred Share) multiplied by
such number or fraction is equal to the current per share market price of one
share of Common Stock (determined pursuant to Section 11(d) hereof)
as of the date of such exchange.

 

Section 25.                                      Notice of
Certain Events.

 

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

 

33

 

the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Stock
and/or Preferred Stock, whichever shall be the earlier.

 

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

 

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

 

UFP Technologies, Inc.

172 East Main Street

Georgetown, MA  01833

Attention: Ronald J. Lataille

 

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

 

American Stock Transfer & Trust
Company, LLC

59 Maiden Lane

New York NY 10038

Attention: 
Corporate Trust Department

 

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

 

Section 27.                                      Supplements
and Amendments.  Except as provided
in the penultimate sentence of this Section 27, for so long as the Rights
are then redeemable, the Company may in its sole and absolute discretion, and
the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of the Rights.  At any time when the
Rights are no longer redeemable, except as provided in the penultimate sentence
of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights, provided that no such supplement or amendment may
(a) adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), (b) cause
this Agreement again to become amendable other than in 

 

34

 

accordance
with this sentence or (c) cause the Rights again to become
redeemable.  Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall
be made which changes the Redemption Price. 
Upon the delivery of a certificate from an appropriate officer of the
Company which states that the supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement
or amendment, provided that any supplement or amendment that does not
amend Sections 18, 19, 20 or 21 hereof or this Section 27 in a manner
adverse to the Rights Agent shall become effective immediately upon execution
by the Company, whether or not also executed by the Rights Agent.

 

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

 

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

 

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

 

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

 

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

 

Section 33.                                      Counterparts.  This Agreement may be executed in any number
of 

 

35

 

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.

 

[SIGNATURE
PAGE FOLLOWS]

 

36

 

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

 

	
   

  	
  UFP TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER

  
	
   

  	
  & TRUST COMPANY, LLC, as Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[Signature Page To Rights Agreement]

 

37

 

EXHIBIT A

 

AMENDED AND RESTATED CERTIFICATE OF
DESIGNATION

 

of

 

SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK

 

of

 

UFP TECHNOLOGIES, INC.

 

Pursuant to Section 151 of the General
Corporation Law

of the State of Delaware

 

UFP Technologies, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the “Corporation”), in accordance with the provisions of Section 103
thereof, DOES HEREBY CERTIFY:

 

That pursuant to the authority vested in the
Board of Directors of the Corporation (the “Board of Directors”) in accordance
with the provisions of the certificate of incorporation, as amended, of the
Corporation (the “Certificate of Incorporation”), the said Board of Directors,
effective as of March 20, 2009, adopted the following resolution creating
a series of 20,000 shares of Preferred Stock designated as “Series A
Junior Participating Preferred Stock”:

 

RESOLVED, that pursuant to the authority
vested in the Board of Directors of this Corporation in accordance with the
provisions of the Certificate of Incorporation, a series of Preferred Stock,
par value $0.01 per share, of the Corporation be and hereby is created, and
that the designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other rights of
the shares of such series and the qualifications, limitations and restrictions
thereof are as follows:

 

Series A
Junior Participating Preferred Stock

 

1.                                       Designation and Amount.  There shall be a series of Preferred Stock
that shall be designated as “Series A Junior Participating Preferred
Stock,” and the number of shares constituting such series shall be 20,000.  Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Junior
Participating  Preferred Stock to less
than the number of shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.

 

38

 

2.                                       Dividends and Distribution.

 

(A)                              Subject to the prior and
superior rights of the holders of any shares of any class or series of stock of
the Corporation ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock outstanding at the
close of business on the business day immediately preceding each Quarterly
Dividend Payment Date (as defined below) (or on such other record date as the
Board of Directors may specify), in preference to the holders of shares of any
class or series of stock of the Corporation ranking junior to the Series A
Junior Participating Preferred Stock in respect thereof, shall be entitled to
receive, when, as and if declared (except as provided in paragraph (B) below)
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
Junior Participating Preferred Stock (the “First Issuance Date”), in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $10.00
or (b) the sum of (x) the Adjustment Number (as defined  below) times the aggregate per share amount
of all cash dividends, and (y) the Adjustment Number times the fair value
(as determined by the Board of Directors) of the aggregate per share amount of
all non-cash dividends or other distributions payable in kind as provided
herein, other than a dividend payable in shares of Common Stock, par value
$0.01 per share, of the Corporation (the “Common Stock”) or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise), in
the case of clauses (x) and (y) declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or with respect to
the first Quarterly Dividend Payment Date following the First Issuance Date,
from (but not including) the Quarterly Dividend Payment Date immediately
preceding the First Issuance Date; provided, that to the extent the
holders of shares of Series A Junior Participating Preferred Stock are
entitled to payment of such dividend pursuant to clause (b) of this
sentence in whole or in part as a result of a non-cash dividend or distribution
referred to in clause (b)(y) above, such holders will receive per share of
Series A Junior Participating Preferred Stock, in lieu of the cash value
of such non-cash dividend or distribution, an amount of the securities or other
property equal to the Adjustment Number times the amount of such securities or
other property distributed per share of Common Stock.  The “Adjustment Number” shall initially be
1000.  In the event the Corporation shall
at any time (i) declare and pay any dividend on 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 Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

 

39

 

(B)                                The Board of Directors
shall declare a dividend or distribution on the Series A Junior
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); provided,
that no such dividend will be required to be declared until the aggregate
amount of cash dividends and the fair value of all non-cash dividends and
distributions on the Common Stock, in each case multiplied by the Adjustment Number,
during the period following the last Quarterly Dividend Payment Date (or, if
applicable, the Quarterly Dividend Payment Date preceding the First Issuance
Date), exceeds the amount set forth in clause (a) of paragraph (A) above.

 

(C)                                Dividends shall begin
to accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from (but not including) the Quarterly Dividend
Payment Date next preceding the First Issuance Date, unless such First Issuance
Date is a Quarterly Dividend Payment Date or is after the record date for such
Quarterly Dividend Payment Date and prior to such Quarterly Dividend Payment
Date, in which event such dividends shall begin to accrue and be cumulative
from (but not including) such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. 
Dividends paid on the shares of Series A Junior 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.

 

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

 

(A)                              Each share of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to a
number of votes equal to the Adjustment Number on all matters submitted to a
vote of the stockholders of the Corporation.

 

(B)                                Except as required by
law, by Section 3(C) and by Section 10 hereof, holders of Series A
Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.

 

(C)                                If, at the time of any
annual meeting of stockholders for the election of directors, the equivalent of
six quarterly dividends (whether or not consecutive) payable on any share or
shares of Series A Junior Participating Preferred Stock are in default,
the number of directors constituting the Board of Directors of the Corporation
shall be increased by two.  In addition
to voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A Junior
Participating Preferred Stock, voting separately as a class to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of stockholders
(and at each subsequent annual meeting of stockholders), unless all dividends
in arrears on the Series A Junior Participating Preferred Stock have been
paid or declared and set apart for payment prior thereto, to vote for the
election of two 

 

40

 

directors of the Corporation, the holders of
any Series A Junior Participating Preferred Stock being entitled to cast a
number of votes per share of Series A Junior Participating Preferred Stock
as is specified in paragraph (A) of this Section 3.  Each
such additional director shall not be a member of Class I, Class II
or Class III of the Board of Directors of the Corporation, but shall serve
until the next annual meeting of stockholders for the election of directors, or
until his successor shall be elected and shall qualify, or until his right to
hold such office terminates pursuant to the provisions of this Section 3(C).  Until the default in payments of all
dividends which permitted the election of said directors shall cease to exist,
any director who shall have been so elected pursuant to the provisions of this Section 3(C) may
be removed at any time, without cause, only by the affirmative vote of the
holders of the shares of Series A Junior Participating Preferred Stock at
the time entitled to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by the vote of such
holders.  If and when such default shall
cease to exist, the holders of the Series A Junior Participating Preferred
Stock shall be divested of the foregoing special voting rights, subject to
revesting in the event of each and every subsequent like default in payments of
dividends.  Upon the termination of the
foregoing special voting rights, the terms of office of all persons who may
have been elected directors pursuant to said special voting rights shall
forthwith terminate, and the number of directors constituting the Board of
Directors shall be reduced by two.  The
voting rights granted by this Section 3(C) shall be in addition to
any other voting rights granted to the holders of the Series A Junior
Participating Preferred Stock in this Section 3.

 

4.                                     Certain Restrictions.

 

(A)                              Whenever quarterly
dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior 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
Junior 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 Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior 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; or

 

(iii)                               purchase or otherwise
acquire for consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on

 

41

 

a parity with the Series A Junior 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 Series A
Junior Participating Preferred Stock, or to such holders and holders of any
such shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.

 

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

 

5.                                       Reacquired Shares. 
Any shares of Series A Junior Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired promptly after the acquisition thereof.  All such shares shall upon their retirement
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 any conditions and
restrictions on issuance set forth herein.

 

6.                                       Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received an amount per share (the “Series A
Liquidation Preference”) equal to the greater of (i) $25,000 plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) the Adjustment
Number times the per share amount of all cash and other property to be
distributed in respect of the Common Stock upon such liquidation, dissolution
or winding up of the Corporation.

 

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

 

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

 

42

 

7.                                       Consolidation, Merger, Etc.  In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the outstanding shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share equal to the
Adjustment Number 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.

 

8.                                       No Redemption. 
Shares of Series A Junior Participating Preferred Stock
shall not be subject to redemption by the Corporation.

 

9.                                       Ranking.  The
Series A Junior Participating Preferred Stock shall rank junior to all
other series of the Preferred Stock as to the payment of dividends and as to
the distribution of assets upon liquidation, dissolution or winding up, unless
the terms of any such series shall provide otherwise, and shall rank senior to
the Common Stock as to such matters.

 

10.                                 Amendment.  At
any time that any shares of Series A Junior Participating Preferred Stock
are outstanding, the Certificate of Incorporation of the Corporation shall not be
amended, by merger, consolidation or otherwise, which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds of the outstanding shares of Series A
Junior Participating Preferred Stock, voting separately as a class.

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

43

 

IN WITNESS WHEREOF, the undersigned has
executed this Certificate this 20th day of March, 2009.

 

 

	
   

  	
  UFP TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/Ronald J. Lataille

  
	
   

  	
  Name: Ronald J. Lataille

  
	
   

  	
  Title: Chief Financial Officer

  

 

 

[Signature Page to

Amended and Restated Certificate of
Designation

2009 Rights Agreement]

 

44

 

EXHIBIT B

 

Form of Right Certificate

 

Certificate No. R-________

 

NOT EXERCISABLE AFTER MARCH 19, 2019 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. 
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

RIGHT CERTIFICATE

 

UFP TECHNOLOGIES, 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 March 20,
2009, as the same may be amended from time to time (the “Rights Agreement”),
between UFP Technologies, Inc., a Delaware corporation (the “Company”),
and American Stock Transfer & Trust Company, LLC, as Rights Agent (the
“Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., New York City time, on March 19, 2019 at the office or
agency of the Rights Agent designated for such purpose, or of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred
Stock”), of the Company at a purchase price of $25 per one one-thousandth of a
share of Preferred Stock (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase
duly executed.  The number of Rights
evidenced by this Rights Certificate (and the number of one one-thousandths of
a share of Preferred Stock which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of March 20, 2009, based on the Preferred Stock as
constituted at such date.  As provided in
the Rights Agreement, the Purchase Price, the number of one one-thousandths of
a share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

 

45

 

This Right Certificate is subject to all of
the terms, provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and made
a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates.  Copies of the Rights
Agreement are on file at the principal executive offices of the Company and the
above-mentioned office or agency of the Rights Agent.  The Company will mail to the holder of this
Right Certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor.

 

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

 

Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate (i) may be redeemed by
the Company at a redemption price of $.01 per Right or (ii) may be
exchanged in whole or in part for shares of the Company’s Common Stock, par
value $0.01 per share, or shares of Preferred Stock.

 

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

 

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

 

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

 

46

 

WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal. 
Dated as of March 20, 2009.

 

	
   

  	
   

  	
  UFP TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  American Stock Transfer & Trust Company, LLC, as Rights
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
								

 

47

 

Form of Reverse Side of Right
Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if
such

holder desires to transfer the Right
Certificate)

 

FOR VALUE RECEIVED                                                     
hereby sells, assigns and transfers unto

__________________________________________________________________________

___________________________________________________________________________________________________________

(Please print name and address of transferee)

 

              
Rights represented by this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint

___________________________________________

Attorney, to transfer said Rights on the
books of the within-named Company, with full power of substitution.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

Signature Guaranteed:

 

Signatures must be guaranteed by a bank,
trust company, broker, dealer or other eligible institution participating in a
recognized signature guarantee medallion program.

 

                                                                                                                                                  

(To be completed)

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

48

 

Form of Reverse Side of Right
Certificate - continued

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate)

 

To UFP TECHNOLOGIES, INC.:

 

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

 

____________________________________________________________________________________________________________

(Please print name and address)

 

____________________________________________________________________________________________________________

 

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

 

Please insert social security

or other identifying number

 

____________________________________________________________________________________________________________

(Please print name and address)

 

____________________________________________________________________________________________________________

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

(Signature must conform to holder specified
on Right Certificate)

 

Signature Guaranteed:

 

Signature must be guaranteed by a bank, trust
company, broker, dealer or other eligible institution participating in a
recognized signature guarantee medallion program.

 

49

 

Form of Reverse Side of Right
Certificate - continued

 

____________________________________________________________________________________________________________

(To be completed)

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

____________________________________________________________________________________________________________

 

NOTICE

 

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

 

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

 

50

 

EXHIBIT C

 

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

 

SUMMARY OF RIGHTS TO PURCHASE

SHARES OF PREFERRED STOCK OF

UFP TECHNOLOGIES, INC.

 

On March 18, 2009, the Board of
Directors of UFP Technologies, Inc. (the “Company”) declared a dividend of
one preferred share purchase right (a “Right”) for each outstanding share of
common stock, par value $0.01 per share, of the Company (the “Common
Stock”).  The dividend is payable on March 20,
2009 (the “Record Date”) to the stockholders of record on that date.  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the
“Preferred Stock”) at a price of $25 per one one-thousandth of a share of
Preferred Stock (the “Purchase Price”), subject to adjustment.  The description and terms of the Rights are
set forth in a Rights Agreement dated as of March 20, 2009, as the same
may be amended from time to time (the “Rights Agreement”), between the Company
and American Stock Transfer & Trust Company, LLC, as Rights Agent (the
“Rights Agent”).

 

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

 

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

 

51

 

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

 

The Rights are not exercisable until the
Distribution Date.  The Rights will
expire on March 19, 2019 (the “Final Expiration Date”), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

 

The Purchase Price payable, and the number of
shares of Preferred Stock or other securities or property issuable, upon
exercise of the Rights is subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon the
grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the then-current market
price of the Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above).

 

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

 

Shares of Preferred Stock purchasable upon
exercise of the Rights will not be redeemable. 
Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of the greater
of (a) $10 per share, and (b) an amount equal to 1000 times the
dividend declared per share of Common Stock. 
In the event of liquidation, dissolution or winding up of the Company,
the holders of the Preferred Stock will be entitled to a minimum preferential
payment of the greater of (a) $25,000 per share (plus any accrued but
unpaid dividends), and (b) an amount equal to 1000 times the payment made
per share of Common Stock.  Each share of
Preferred Stock will have 1000 votes, voting together with the Common
Stock.  Finally, in the event of any
merger, consolidation or other transaction in which outstanding shares of
Common Stock are converted or exchanged, each share of Preferred Stock will be
entitled to receive 1000 times the amount received per share of Common
Stock.  These rights are protected by
customary antidilution provisions.

 

Because of the nature of the Preferred Stock’s
dividend, liquidation and voting rights, the value of the one one-thousandth
interest in a share of Preferred Stock 

 

52

 

purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.

 

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

 

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

 

At any time after any person or group becomes
an Acquiring Person and prior to the earlier of one of the events described in
the previous paragraph or the acquisition by such Acquiring Person of 50% or
more of the outstanding shares of Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such Acquiring Person which
will have become void), in whole or in part, for shares of Common Stock or
Preferred Stock (or a series of the Company’s preferred stock having equivalent
rights, preferences and privileges), at an exchange ratio of one share of
Common Stock, or a fractional share of Preferred Stock (or other preferred
stock) equivalent in value thereto, per Right.

 

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

 

At any time prior to the time an Acquiring
Person becomes such, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the “Redemption
Price”) payable, at the option of the Company, in cash, shares of Common Stock
or such other form of consideration as the Board of Directors of the Company
shall determine.  The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish.  Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.

 

53

 

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

 

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

 

A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated March 24, 2009.  A copy of the Rights Agreement is available
free of charge from the Company.  This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as the same may
be amended from time to time, which is hereby incorporated herein by reference.

 

54Exhibit 10.1

 

FIRST AMENDMENT TO

AMENDED AND RESTATED HEAD LEASE
AGREEMENT BETWEEN

THE SENECA NATION OF INDIANS

AND

SENECA NIAGARA FALLS GAMING
CORPORATION

 

THIS FIRST
AMENDMENT TO AMENDED AND RESTATED HEAD LEASE AGREEMENT (this “Amendment”)
is made by and between THE SENECA NATION OF
INDIANS (the “Landlord”) and SENECA NIAGARA FALLS
GAMING CORPORATION (“Tenant”) as of the 1st day of October, 2008 (the
“Effective Date”).

 

WHEREAS, Landlord and Tenant are parties to that certain Amended
and Restated Head Lease Agreement, effective as of October 1, 2007 (the “Head
Lease Agreement”), pursuant to which Tenant leases from Landlord land and
certain improvements on Landlord’s Niagara Falls Territory for use as the site
for the Seneca Niagara Casino and Hotel; and

 

WHEREAS, the parties desire to amend the Head Lease Agreement
to modify the Annual Rent described therein, in accordance with the terms and
conditions hereof.

 

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for such other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:

 

1.                                      The foregoing recitals are restated and incorporated
herein by reference and made a part hereof as though fully set forth herein.

 

2.                                      Section 1.03(a) of
the Head Lease Agreement is hereby deleted in its entirety and replaced with
the following:

 

(a)          Rent.  Commencing as of October 1, 2008, Tenant
shall pay directly to the Landlord, or Landlord’s representative if Tenant is
so notified, annual rent (“Annual Rent”) in the amount of Thirty-Six
Million Eighty-Six Thousand Five Hundred Dollars ($36,086,500.00), which will
be payable in equal monthly installments of Three Million Seven Thousand Two
Hundred and Eight Dollars and Thirty-Three Cents ($3,007,208.33) in advance on
the first day of each calendar month.  The Annual Rent may be increased in future
years, provided that no increase in Annual Rent hereunder may contravene, or
constitute a default under, any agreement, indenture, instrument or other
commitment legally binding upon Landlord and/or Tenant, or to which the
Premises are subject (“Commitments”). 
Any proposed increase to the prior year’s Annual Rent shall be jointly
reviewed by Landlord and Tenant for consistency with then-applicable
Commitments, with any such increase to be confirmed by the parties in writing
prior to its effectiveness.  The delay or
failure of either party in computing the Annual Rent increase or executing a
written statement of confirmation of such Annual Rent increase will not impair
the continuing obligation of Tenant to pay Annual Rent.  All amounts payable by Tenant pursuant to
this Lease Agreement, including, without limiting the foregoing, Annual Rent,
and any other sums, costs, expenses or deposits that Tenant in any of the
provisions of this Lease Agreement 

 

1

 

assumes or agrees to pay and/or deposit, shall constitute “Rent” under
this Lease.  Rent may be prepaid by
Tenant on a monthly, quarterly or semiannual basis with the consent of
Landlord.

 

3.                                      Capitalized
terms not otherwise defined herein are defined in the Head Lease Agreement.  Except as amended by this Amendment, all
other terms and conditions of the Head Lease Agreement are hereby ratified and
confirmed in all respects.  This
Amendment may be executed in counterparts, each of which shall be deemed to be
an original, but both of which when taken together shall constitute one and the
same instrument.  This Agreement will
become effective when one or more counterparts have been signed by each party and
delivered to the other party.

 

 

[Signature Page Follows]

 

2

 

IN WITNESS
WHEREOF, the parties hereto
have caused this Amendment to be executed and delivered as of the date first
written above.

 

 

	
   

  	
  SENECA NATION OF INDIANS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Barry E.
  Snyder, Sr.

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENECA
  NIAGARA FALLS GAMING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: E. Brian
  Hansberry

  
	
   

  	
  Title: President and
  CEO

  

 

 

[Signature Page to
First Amendment to Amended and Restated Head Lease Agreement]

 

3

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