Document:

Exhibit
4.1

 

 

 

 

 

 

EZENIA! INC.

 

 

AND

 

 

COMPUTERSHARE TRUST
COMPANY, N.A.

 

 

AS RIGHTS AGENT

 

 

SHAREHOLDER RIGHTS
AGREEMENT

 

 

DATED AS OF APRIL 15,
2008

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1. Certain Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  11

  
	
   

  	
   

  	
   

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

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 8. Cancellation and Destruction of
  Right Certificates

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 9. Reservation and Availability of
  Preferred Stock

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 10. Preferred Stock Record Date

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 11. Adjustment of Exercise Price,
  Number and Kind of Shares or Number of Rights

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 12. Certificate of Adjusted
  Exercise Price or Number of Shares

  	
   

  	
  23

  
	
   

  	
   

  	
   

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

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 14. Fractional Rights and
  Fractional Shares

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 15. Rights of Action

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 16. Agreement of Right Holders

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 17. Right Certificate Holder Not
  Deemed a Shareholder

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 18. Concerning the Rights Agent

  	
   

  	
  28

  
	
   

  	
   

  	
   

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

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 20. Duties of Rights Agent

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 21. Change of Rights Agent

  	
   

  	
  32

  

 

i

 

	
  Section 22. Issuance of New Right
  Certificates

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 23. Redemption

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 24. Exchange

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 25. Notice of Certain Events

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 26. Notices

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 27. Supplements and Amendments

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 28. Successors

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 29. Determinations and Actions by
  the Board of Directors

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 30. Benefits of this Agreement

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 31. Severability

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 32. Governing Law

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 33. Counterparts

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 34. Descriptive Headings

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 35. Force Majeure

  	
   

  	
  39

  

 

 

 

	
  Exhibit A —

  	
   

  	
  Certificate of Designations of Series D Junior
  Participating Cumulative Preferred Stock

  
	
   

  	
   

  	
   

  
	
  Exhibit B —

  	
   

  	
  Form of Right Certificate

  

 

ii

 

 

SHAREHOLDER RIGHTS AGREEMENT

 

Agreement, dated as of April 15, 2008, between Ezenia! Inc., a
Delaware corporation (the “Company”), and Computershare Trust Company, N.A., a
federally chartered trust company (the “Rights Agent”).

 

 

W I T N E S S E T H

 

 

WHEREAS, the Board of Directors of the Company desires
to provide shareholders of the Company with the opportunity to benefit from the
long-term prospects and value of the Company and to ensure that shareholders of
the Company receive fair and equal treatment in the event of any proposed
takeover of the Company;

 

WHEREAS, on April 15, 2008, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as such term is
hereinafter defined) for each outstanding share of Common Stock, par value
$0.01 per share, of the Company (the “Common Stock”) outstanding as of April 16,
2008 (the “Record Date”), and authorized the issuance of one Right for each
share of Common Stock of the Company issued (whether or not originally issued
or sold from the Company’s treasury, except in the case of treasury shares
having associated Rights) between the Record Date and the earlier of the
Distribution Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one
ten-thousandth of a share of Series D Junior Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth on Exhibit D hereto, upon the terms and subject to the
conditions hereinafter set forth (the “Rights”); and

 

WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof.

 

NOW, THEREFORE, 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 meanings indicated:

 

(a)                                  “Acquiring Person” shall mean any
Person (as such term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and Associates (as such term
is hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 15% or more of the shares of Common Stock of
the Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, (iii) any
employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company or (iv) any Person holding shares of Common
Stock of the Company organized, appointed or established by the Company or any
Subsidiary of the Company for or pursuant to the terms of any such employee
benefit plan or compensation arrangement (the Persons described in clauses (i) through
(iv) above are 

 

 

referred to herein
as “Exempt Persons”); provided, however, that the term “Acquiring
Person” shall not include any Grandfathered Person, unless such Grandfathered
Person becomes the Beneficial Owner of a percentage of the shares of Common
Stock of the Company then outstanding equal to or exceeding such Grandfathered
Person’s Grandfathered Percentage.

 

Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” as the result of an acquisition by the Company of Common Stock of the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares Beneficially Owned by such Person to 15%  (or in the case of a Grandfathered Person,
the Grandfathered Percentage applicable to such Grandfathered Person) or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% (or
in the case of a Grandfathered Person, the Grandfathered Percentage applicable
to such Grandfathered Person) or more of the shares of Common Stock of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any additional
shares (other than pursuant to a stock split, stock dividend or similar
transaction) of Common Stock of the Company and immediately thereafter be the
Beneficial Owner of 15% (or in the case of a Grandfathered Person, the
Grandfathered Percentage applicable to such Grandfathered Person) or more of
the shares of Common Stock of the Company then outstanding, then such Person
shall be deemed to be an “Acquiring Person.”

 

In addition, notwithstanding the foregoing, and notwithstanding
anything to the contrary provided in the Agreement including without limitation
in Sections 1(jj), 3(a) or 27, a Person shall not be an “Acquiring Person”
if the Board of Directors of the Company determines at any time that a Person
who would otherwise be an “Acquiring Person,” has become such without intending
to become an “Acquiring Person,” and such Person divests as promptly as
practicable (or within such period of time as the Board of Directors of the
Company determines is reasonable) a sufficient number of shares of Common Stock
of the Company so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this Section 1(a).

 

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

 

(c)                                  “Affiliate” and “Associate”
shall have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations (the “Rules”) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date
of this Agreement; provided, however, that no Person who is a
director or officer of the Company shall be deemed an Affiliate or an Associate
of any other director or officer of the Company solely as a result of his or
her position as director or officer of the Company.

 

(d)                                 A Person shall be deemed the “Beneficial
Owner” of, and shall be deemed to “Beneficially Own” and have “Beneficial
Ownership” of, any securities:

 

(i)                                     which such Person or any of such Person’s
Affiliates or Associates, directly or indirectly, Beneficially Owns (as
determined pursuant to Rule 13d-3 of the Rules under the Exchange
Act, as in effect on the date of this Agreement);

 

2

 

(ii)                                  which such Person or any of such Person’s
Affiliates or Associates, directly or indirectly, has:

 

(A)                              the right to acquire (whether or not such
right is exercisable immediately or only after the passage of time or upon the
satisfaction of any conditions or both) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the “Beneficial Owner” of, or to “Beneficially Own” or have “Beneficial
Ownership” of, (1) securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange; (2) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event; or (3) securities issuable
upon exercise of Rights from and after the occurrence of a Triggering Event,
which Rights were acquired by such Person or any of such Person’s Affiliates or
Associates prior to the Distribution Date or pursuant to Sections 3(a), 11(i) or
22 hereof; or

 

(B)                                the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “Beneficially Own” or have “Beneficial Ownership” of, any security under
this clause (B) if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to a written
proxy or consent solicitation statement filed with the Securities and Exchange
Commission in accordance with the Rules of the Exchange Act and (2) is
not also then reportable by such person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or

 

(C)                                the right to dispose of pursuant to any
agreement, arrangement or understanding (whether or not in writing) (other than
customary arrangements with and between underwriters and selling group members
with respect to a bona fide public offering of securities); or

 

(iii)                               which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or consent as
described in clause (B) of Section 1(d)(ii) hereof) or disposing
of any securities of the Company;

 

3

 

provided, however, that (1) no Person
engaged in business as an underwriter of securities shall be deemed the
Beneficial Owner of any securities acquired through such Person’s participation
as an underwriter in good faith in a firm commitment underwriting until the
expiration of forty (40) days after the date of such acquisition; (2) no
Person who is a director or an officer of the Company shall be deemed, as a
result of his or her position as director or officer of the Company, the
Beneficial Owner of any securities of the Company that are Beneficially Owned
by any other director or officer of the Company; and (3) Khoa D. Nguyen
shall not be deemed to Beneficially Own any shares of Common Stock of the
Company underlying any equity awards granted to Mr. Nguyen following the
Grandfathered Time by the Board of Directors of the Company or the Compensation
Committee thereof or any shares of Common Stock of the Company acquired by Mr. Nguyen
upon the vesting or exercise of such awards (collectively, “New Equity Awards”)
to the extent that such Beneficial Ownership would cause Mr. Nguyen to be an
Acquiring Person under this Agreement.

 

For all purposes of this Agreement, the phrase “then outstanding,” when
used with reference to the percentage of the then outstanding securities
Beneficially Owned by a Person, shall mean the number of securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to Beneficially Own
hereunder.

 

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

 

(f)                                    “Certificate of Incorporation”
when used in reference to the Company shall mean the Second Amended and Restated
Certificate of Incorporation, as may be amended from time to time, of the
Company.

 

(g)                                 “Close of Business” on any given
date shall mean 5:00 p.m., Boston, Massachusetts time, on such date; provided,
however, that if such date is not a Business Day it shall mean 5:00 p.m.,
Boston, Massachusetts time, on the next succeeding Business Day.

 

(h)                                 “Common Stock” when used in
reference to the Company shall mean the common stock, par value $0.01 per
share, of the Company or any other shares of capital stock of the Company into
which such stock shall be reclassified or changed.  “Common Stock” when used with reference to
any Person other than the Company organized in corporate form shall mean (i) the
capital stock or other equity interest of such Person with the greatest voting
power, (ii) the equity securities or other equity interest having power to
control or direct the management of such Person or (iii) if such Person is
a Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person and which have issued any such outstanding capital
stock, equity securities or equity interest. 
“Common Stock” when used with reference to any Person not organized in
corporate form shall mean units of beneficial interest which (x) shall
represent the right to participate generally in the profits and losses of such
Person (including without limitation any flow-through tax benefits resulting
from an ownership interest in such Person) and (y) shall be entitled to
exercise the greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove or otherwise replace the general
partner or partners.

 

4

 

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

 

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

 

(k)                                  “Depositary Agent” shall have the
meaning set forth in Section 7(c) hereof.

 

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

 

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

 

(n)                                 “Exempt Person” shall have the
meaning set forth in the definition of “Acquiring Person.”

 

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

 

(p)                                 “Expiration Date” and “Final
Expiration Date” shall have the meanings set forth in Section 7(a) hereof.

 

(q)                                 “Fair Market Value” of any
securities or other property shall be as determined in accordance with Section 11(d) hereof.

 

(r)                                    “Grandfathered Percentage” shall
mean, with respect to any Grandfathered Person, the percentage of the
outstanding shares of Common Stock of the Company that such Grandfathered
Person, together with all Affiliates and Associates of such Grandfathered
Person, Beneficially Owns as of the Grandfathered Time, plus an additional 1⁄2%;
provided, however, that, in the event any Grandfathered Person shall sell,
transfer, or otherwise dispose of any outstanding shares of Common Stock of the
Company after the Grandfathered Time, the Grandfathered Percentage shall,
subsequent to such sale, transfer or disposition, mean, with respect to such
Grandfathered Person, the lesser of (i) the Grandfathered Percentage as in
effect immediately prior to such sale, transfer or disposition or (ii) the
percentage of outstanding shares of Common Stock of the Company that such
Grandfathered Person Beneficially Owns immediately following such sale,
transfer or disposition, plus an additional 1⁄2%. Notwithstanding anything to the
contrary provided in this Agreement, the Grandfathered Percentage for Khoa D.
Nguyen shall be determined without regard to any New Equity Awards Beneficially
Owned by Mr. Nguyen under this Agreement.

 

(s)                                  “Grandfathered Person” shall mean
any one or more of the following Persons: (i) Khoa D. Nguyen and (ii) any
other Person who or which, together with all Affiliates and Associates of such
Person, is, as of the Grandfathered Time, the Beneficial Owner of 15% or more
of the shares of Common Stock of the Company then outstanding.  Notwithstanding anything to the contrary
provided in this Agreement, any Grandfathered Person who after the
Grandfathered Time becomes the Beneficial Owner of less than 15% of the shares
of Common Stock of the Company then outstanding shall cease to be a
Grandfathered Person and shall be subject to all of the provisions of this
Agreement in the same manner as any Person who is not and was not a
Grandfathered Person (which determination shall be made for Mr. Nguyen without
regard to any New Equity Awards that Mr. Nguyen may be deemed to Beneficially
Own hereunder).

 

5

 

(t)                                    “Grandfathered Time” shall mean 9:15 a.m.,
Boston, Massachusetts time, on April 16, 2008.

 

(u)                                 “Group” shall have the meaning set
forth in clause (b) of the definition of “Person.”

 

(v)                                 “Person” shall mean (a) an
individual, a corporation, a partnership, a limited liability company, an
association, a joint stock company, a trust, a business trust, a government or
political subdivision, any unincorporated organization, or any other
association or entity including any successor (by merger or otherwise) thereof
or thereto, and (b) a “group” as that term is used for purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.

 

(w)                               “Preferred Stock” shall mean
shares of Series D Junior Participating Cumulative Preferred Stock, par
value $0.01 per share, of the Company having the rights and preferences set
forth in the form of Certificate of Designations attached hereto as Exhibit A.

 

(x)                                   “Preferred Stock Equivalents”
shall have the meaning set forth in Section 11(b) hereof.

 

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

 

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

 

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

 

(bb)                          “Registered Common Stock” shall
have the meaning set forth in Section 13(b) hereof.

 

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

 

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

 

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

 

(ff)                                “Section 13 Event” shall mean
any event described in clauses (x), (y) or (z) of Section 13(a) hereof.

 

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

 

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

 

6

 

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

 

(jj)                                  “Stock Acquisition Date” shall
mean the date of the first public announcement (which for purposes of this definition
shall include, without limitation, the issuance of a press release or the
filing of a publicly-available report or other document with the Securities and
Exchange Commission or any other governmental agency) by the Company, acting
pursuant to a resolution adopted by the Board of Directors of the Company, or
by an Acquiring Person, subject in each case to the last paragraph of Section 1(a),
that an Acquiring Person has become such.

 

(kk)                            “Subsidiary” shall mean, with
reference to any Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power sufficient, in the
absence of contingencies, to elect a majority of the board of directors or
other persons performing similar functions of such corporation or other entity
are at the time directly or indirectly Beneficially Owned or otherwise
controlled by such Person either alone or together with one or more Affiliates
of such Person.

 

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

 

(mm)                      “Triggering Event” shall mean any Section 11(a)(ii) Event
or any Section 13 Event.

 

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 (as hereinafter defined in Section 3(a))
also be the holders of the Common Stock of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or
desirable.  In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agent and any Co-Rights Agents shall be as the Company shall determine.  The Company shall give ten (10) days’
prior written notice to the Rights Agent of the appointment of one or more
Co-Rights Agents and the respective duties of the Rights Agent and any such
Co-Rights Agents.  The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agent.

 

Section 3.  Issue of Right Certificates.

 

(a)                                  From the date hereof until the earlier of
(i) the Close of Business on the tenth calendar day after the Stock
Acquisition Date or (ii) the Close of Business on the tenth Business Day
(or such later calendar day, if any, as the Board of Directors of the Company
may determine in its sole discretion) after the date a tender or exchange offer
by any Person, other than an Exempt Person, is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act, or any
successor rule, if, upon consummation thereof, such Person could become the
Beneficial Owner of 15% (or in the case of a Grandfathered Person, the
Grandfathered Percentage applicable to such Grandfathered Person) or more of
the shares of Common Stock of the Company then outstanding (including any such
date which is after the date 

 

7

 

of this Agreement
and prior to the issuance of the Rights) (the earliest of such dates being
herein referred to as the “Distribution Date”), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for the Common Stock of the Company registered in the names of the
holders of the Common Stock of the Company (which certificates for Common Stock
of the Company shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company.  As soon as practicable after
the Distribution Date, the Rights Agent will, at the Company’s expense send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
certificates, in substantially the form of Exhibit B hereto (the “Right
Certificates”), evidencing one Right for each share of Common Stock of the
Company so held, subject to adjustment as provided herein.  In the event that an adjustment in the number
of Rights per share of Common Stock of the Company has been made pursuant to Section 11(o) hereof,
the Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of
the Right Certificates, so that Right Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights.  As of and after the Close of
Business on the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.

 

(b)                                 With respect to certificates for the
Common Stock of the Company issued prior to the Close of Business on the Record
Date, the Rights will be evidenced by such certificates for the Common Stock of
the Company on or until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), and the registered holders of the
Common Stock of the Company also shall be the registered holders of the
associated Rights.  Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the transfer of any of the certificates for the Common Stock of the
Company outstanding prior to the date of this Agreement shall also constitute
the transfer of the Rights associated with the Common Stock of the Company represented
by such certificate.

 

(c)                                  Certificates for the Common Stock of the
Company issued after the Record Date, but prior to the earlier of the
Distribution Date or the Expiration Date, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form set
forth below:

 

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Rights Agreement between Ezenia!
Inc. and Computershare Trust Company, N.A. (or any successor thereto), as
Rights Agent, dated as of April 15, 2008, as amended, restated, renewed,
supplemented or extended 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 offices of Ezenia! Inc. and the stock transfer
administration office of the Rights Agent. 
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.  Ezenia!
Inc. may redeem the Rights 

 

8

 

at a redemption price of $0.01 per Right, subject to adjustment, under
the terms of the Rights Agreement. 
Ezenia! Inc. will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. 
Under certain circumstances, Rights issued to or held by Acquiring
Persons or any Affiliates or Associates thereof (as defined in the Rights
Agreement), and any subsequent holder of such Rights, may become null and
void.  The Rights shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification, if any, to the issuance to such holder, or
the exercise by such holder, of the Rights in such jurisdiction shall not have
been obtained or be obtainable.

 

With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock of the Company represented by such
certificates shall be evidenced by such certificates alone until the earlier of
the Distribution Date or the Expiration Date, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock of the Company represented by such certificates.  In the event that the Company purchases or
acquires any shares of Common Stock of the Company after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock of
the Company shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
of the Company which are no longer outstanding. 
The failure to print the foregoing legend on any such certificate
representing Common Stock of the Company or any defect therein shall not affect
in any manner whatsoever the application or interpretation of the provisions of
Section 7(e) hereof.

 

Section 4.  Form of Right Certificates.

 

(a)                                  The Right Certificates (and the forms of
election to purchase shares and of assignment and certificate to be printed on
the reverse thereof) shall each be substantially in the form of Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law, rule or
regulation or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to customary
usage.  The Right Certificates shall be
in a machine printable format and in a form reasonably satisfactory to the
Rights Agent.  Subject to the provisions
of Section 11 and Section 22 hereof, the Right Certificates, whenever
distributed, shall be dated as of the Record Date, shall show the date of
countersignature, and on their face shall entitle the holders thereof to
purchase such number of one ten-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (the “Exercise Price”),
but the number of such shares and the Exercise Price shall be subject to
adjustment as provided herein.

 

(b)                                 Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights Beneficially Owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any Associate or 

 

9

 

Affiliate of an
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights, the shares of
Common Stock of the Company associated with such Rights or the Company or (B) a
transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(e) hereof, and any Right Certificate
issued pursuant to Section 6, Section 11 or Section 22 upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall have deleted therefrom the second sentence
of the existing legend on such Right Certificate and in substitution therefor
shall contain the following legend:

 

The Rights represented by this Right Certificate are or were
Beneficially Owned by a Person who was or became an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement).  This Right
Certificate and the Rights represented hereby may become null and void under
certain circumstances as specified in Section 7(e) of the Rights
Agreement.

 

The Company shall give notice to the Rights Agent promptly after it
becomes aware of the existence and identity of any Acquiring Person or any
Associate or Affiliate thereof.  The
Company shall instruct the Rights Agent in writing of the Rights which should
be so legended.  The failure to print the
foregoing legend on any such Right Certificate or any defect therein shall not
affect in any manner whatsoever the application or interpretation of the
provisions of Section 7(e) hereof.

 

Section 5.  Countersignature and Registration.

 

(a)                                  The Right Certificates shall be executed
on behalf of the Company by its Chairman of the Board of Directors, or its
President or any Vice President and by its Treasurer or any Assistant
Treasurer, or by its Secretary or any Assistant Secretary, either manually or
by facsimile signature, and shall have affixed thereto the Company’s seal or a
facsimile thereof which shall be attested to by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature.  The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned, and such countersignature upon
any Right Certificate shall be conclusive evidence, and the only evidence, that
such Right Certificate has been duly countersigned as required hereunder.  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
an authorized signatory of 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 Certificates may be signed on 

 

10

 

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 Rights Agreement any
such person was not such an officer.

 

(b)                                 Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at one of its offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, 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 Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business
on the Expiration Date, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Certificates, entitling the registered holder to purchase a like number of one
ten-thousandths of a share of Preferred Stock (or following a Triggering Event,
Common Stock of the Company, cash, property, debt securities, Preferred Stock
or any combination thereof, including any such securities, cash or property
following a Section 13 Event) as the Right Certificate or Certificates
surrendered then entitled such holder to purchase and at the same Exercise
Price.  Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Certificates to be transferred, split up, combined or exchanged,
with the form of assignment and certificate duly executed, at the office or
offices of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate until the registered holder shall
have completed and signed the certificate contained in the form of assignment
on the reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.  Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates, as the case may be, as so requested.  The Company may require payment by the
registered holder of a Right Certificate, 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)                                 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 satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, the Company will execute and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

 

11

 

 

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

 

(a)                                  Subject to Section 7(e) hereof,
the registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the
aggregate Exercise Price for the total number of one ten-thousandths of a share
of Preferred Stock (or other securities, cash or other assets, as the case may
be) as to which such surrendered Rights are then exercised, at or prior to the
earlier of (i) the Close of Business on the tenth anniversary of the
Record Date (the “Final Expiration Date”), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”)
or (iii) the time at which such Rights are exchanged as provided in Section 24
hereof (the “Exchange Date”) (the earliest of (i), (ii) or (iii) being
herein referred to as the “Expiration Date”). 
Except as set forth in Section 7(e) hereof and notwithstanding
any other provision of this Agreement, any Person who prior to the Distribution
Date becomes a record holder of shares of Common Stock of the Company may
exercise all of the rights of a registered holder of a Right Certificate with
respect to the Rights associated with such shares of Common Stock of the
Company in accordance with the provisions of this Agreement, as of the date
such Person becomes a record holder of shares of Common Stock of the Company.

 

(b)                                 The Exercise Price for each one
ten-thousandth of a share of Preferred Stock pursuant to the exercise of a
Right shall initially be Three United States Dollars (U.S. $3.00), shall be
subject to adjustment from time to time as provided in Section 11 and Section 13
hereof and shall be payable in lawful money of the United States of America in
accordance with Section 7(c) below.

 

(c)                                  As promptly as practicable following the
Distribution Date, the Company shall deposit with a corporation, trust, bank or
similar institution in good standing organized under the laws of the United
States or any State of the United States, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by a federal or state authority (such institution is
hereinafter referred to as the “Depositary Agent”), certificates representing
the shares of Preferred Stock that may be acquired upon exercise of the Rights
and the Company shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts representing
interests in the shares of Preferred Stock so deposited.  Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by payment
of the Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) by certified check
or bank draft payable to the order of the Company or by money order, the Rights
Agent shall, subject to Section 20(k) and Section 14(b) hereof,
thereupon promptly (i) requisition from the Depositary Agent (or make
available, if the Rights Agent is the Depositary Agent) depositary receipts or
certificates for the number of one ten-thousandths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes the
Depositary Agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash, if any, 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 

 

12

 

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 of each certificate
or depositary receipts promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate. 
In the event that the Company is obligated to issue other securities
(including Common Stock of the Company) of the Company, pay cash or distribute
other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash or other
property are available for distribution by the Rights Agent, if and when
appropriate.  The payment of the Exercise
Price may be made by certified or bank check payable to the order of the
Company, or by money order or wire transfer of immediately available funds to
the account of the Company (provided that notice of such wire transfer shall be
given by the holder of the related Right to the Rights Agent).

 

(d)                                 In case the registered holder of any
Right Certificate shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered 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, from and after the first occurrence of a Section 11(a)(ii) Event
or Section 13 Event, any Rights Beneficially Owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any Associate or Affiliate of an
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such or (iii) a transferee of an Acquiring Person (or of any Associate or
Affiliate of an Acquiring Person) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights, the shares of
Common Stock of the Company associated with such Rights or the Company, or (B) a
transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall be null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise.  The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any Affiliates
or Associates of an Acquiring Person or any transferee of any of them
hereunder.

 

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

 

13

 

Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates 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 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.

 

Section 9. 
Reservation
and Availability 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 authorized and issued 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 and exercisable
Rights.  Upon the occurrence of any
events resulting in an increase in the aggregate number of shares of Preferred
Stock issuable upon exercise of all outstanding Rights in excess of the number
then reserved, the Company shall make appropriate increases in the number of
shares so reserved.

 

(b)                                 The Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares of
Preferred Stock issued or reserved for issuance to be listed, upon official
notice of issuance, upon the principal national securities exchange, if any,
upon which the Common Stock of the Company is listed or, if the principal
market for the Common Stock of the Company is not on any national securities
exchange, to be eligible for quotation on such system as the Common Stock of
the Company is then quoted.

 

(c)                                  The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date after the
occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, or as soon as required by
law following the Distribution Date, as the case may be, a registration
statement under the Securities Act of 1933, as amended (the “Securities Act”),
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus that at all times
meets the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities or (B) the
Expiration Date.  The Company will also
take such action as may be appropriate under, and which will ensure compliance
with, the securities or “blue sky” laws of the various states in connection
with the exercisability of the Rights. 
The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date determined in accordance with the provisions of
the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to
become effective.  Upon such suspension,
the Company shall issue a public announcement stating that the exercisability
of the 

 

14

 

Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect, in each case with prompt written notice to
the Rights Agent.  Notwithstanding any
such 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.

 

(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 the exercise of the Rights shall, at the time of
delivery of the certificates or depositary receipts for such shares (subject to
payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable.

 

(e)                                  The Company further covenants and agrees
that it will pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or delivery
of the Right Certificates or of any certificates for shares of Preferred Stock
and/or other property 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 or the issuance or delivery of other securities
or property to a person other than, or in respect of the issuance or delivery
of securities or other property in a name other than that of, the registered
holder of the Right Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for securities or other property in a name
other than that of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company’s satisfaction that no such tax is due.

 

Section 10. 
Preferred Stock Record Date.  Each
Person in whose name any certificate for Preferred Stock or other securities
(including any fraction of a share of Preferred Stock or such other securities)
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 or such other securities
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 Exercise 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 transfer books of the Company for the Preferred Stock or such other
securities, as applicable, are closed, such person shall be deemed to have
become the record holder of such shares of Preferred Stock or such other
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of the Company are open; and further provided,
however, that if delivery of shares of Preferred Stock or such other
securities is delayed pursuant to Section 9(c), such Person shall be
deemed to have become the record holder of such shares of Preferred Stock or
such other securities only when such shares or such other securities first
become deliverable.  Prior to the
exercise of the Right evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a shareholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

 

15

 

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

 

(a)                                  (i)                                     In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on the
Preferred 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 or (D) issue, change or alter any shares
of its capital stock in a reclassification or recapitalization of the Preferred
Stock (including any such reclassification or recapitalization in connection
with a consolidation or merger in which the Company is the continuing or
surviving Person), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Exercise Price in effect at the time of the
record date for such dividend or the effective time of such subdivision,
combination, reclassification or recapitalization, and the number and kind of
shares of capital stock issuable on such date or at such time, 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,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, reclassification or
recapitalization; provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of a Right.  If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)                                  Subject to the provisions of Section 24
hereof, in the event any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then, promptly following any such
occurrence (a “Section 11(a)(ii) Event”), proper provision shall be
made so that each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have a right to receive, upon exercise thereof at the then
current Exercise Price in accordance with the terms of this Agreement, in lieu
of a number of one ten-thousandths of a share of Preferred Stock, such number
of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying
the then current Exercise Price by the then number of one ten-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event, whether or not
such Right was then exercisable, and dividing that product by (y) 50% of
the Fair Market Value per share of Common Stock of the Company (determined
pursuant to Section 11(d)) on the date of the occurrence of a Section 11(a)(ii) Event
(such number of shares being referred to as the “Adjustment Shares”).

 

(iii)                               In lieu of issuing any shares of Common
Stock of the Company in accordance with Section 11(a)(ii) hereof, the
Company, acting by or pursuant to a resolution of the Board of Directors of the
Company, may, and in the event that the number of shares of Common Stock of the
Company which are authorized by the 

 

16

 

Company’s Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company, acting by or pursuant to a resolution of the Board of Directors of
the Company, shall:  (A) determine
the excess of (X) the Fair Market Value of the Adjustment Shares issuable
upon the exercise of a Right (the “Current Value”) over (Y) the Exercise
Price attributable to each Right (such excess being referred to as the “Spread”)
and (B) with respect to all or a portion of each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for the Adjustment Shares, upon payment
of the applicable Exercise Price, (1) Common Stock of the Company or
equity securities, if any, of the Company other than Common Stock of the
Company (including without limitation shares, or units of shares, of Preferred
Stock that the Board of Directors of the Company has determined to have the
same value as shares of  Common Stock of
the Company (such shares of Preferred Stock being referred to herein as “Common
Stock Equivalents”)), (2) cash, (3) a reduction in the Exercise
Price, (4) Preferred Stock Equivalents which the Board of Directors of the
Company has deemed to have the same value as shares of Common Stock of the
Company, (5) debt securities of the Company, (6) other assets or
securities of the Company or (7) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company after receiving the
advice of a nationally recognized investment banking firm selected by the Board
of Directors of the Company; provided, however, that if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event and (y) the date
on which the Company’s right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Exercise Price, shares
of Common Stock of the Company (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread.  If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock of the Company could be authorized for
issuance upon exercise in full of the Rights, the 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 shareholder approval for the authorization of such additional shares
(such period, as it may be extended, being referred to herein as the “Substitution
Period”).  To the extent that the Company
determines that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof.  In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and a public
announcement at such time as the suspension is no longer in effect.   For purposes of this Section 11(a)(iii),
the value of the Common Stock 

 

17

 

of the Company and of the Preferred Stock shall be the
Fair Market Value (as determined pursuant to Section 11(d) hereof)
per share of the Common Stock of the Company and the Preferred Stock,
respectively, on the Section 11(a)(ii) Trigger Date, the value of any
Common Stock Equivalent shall be deemed to have the same value as the Common
Stock of the Company on such date and the value of any Preferred Stock
Equivalent shall be deemed to have the same value as the Preferred Stock on
such date.

 

(b)                                 If the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Preferred Stock (or
securities having the same or more favorable rights, privileges and preferences
as the shares of Preferred Stock (“Preferred Stock Equivalents”)) or securities
convertible into Preferred Stock or Preferred Stock Equivalents at a price per
share of Preferred Stock or per share of Preferred Stock Equivalents (or having
a conversion price per share, if a security convertible into Preferred Stock or
Preferred Stock Equivalents) less than the Fair Market Value (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or Preferred Stock Equivalents to
be offered (and the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Fair Market Value and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and Preferred Stock Equivalents 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 a Right be less than the
aggregate par value of the shares of stock of the Company issuable upon
exercise of a 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 the Fair
Market Value thereof determined in accordance with Section 11(d) hereof.  Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation.  Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the Exercise
Price shall be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed.

 

(c)                                  If the Company shall fix a record date
for the making of a distribution to all holders of 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, cash (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11(b)), the Exercise Price to be
in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Fair Market Value (as determined pursuant
to Section 11(d) hereof) per one ten-thousandth of a share of
Preferred Stock on such record date, less the Fair Market Value (as determined
pursuant

 

18

 

to Section 11(d) hereof)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such convertible securities, subscription rights or warrants
applicable to one ten-thousandth of a share of Preferred Stock and the denominator
of which shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one ten-thousandth of a share of Preferred Stock; provided, however,
that in no event shall the consideration to be paid upon the exercise of a
Right be less than the aggregate par value of the shares of stock of the
Company issuable upon exercise of a Right. 
Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would be in effect
if such record date had not been fixed.

 

(d)                                 For the purpose of this Agreement, the “Fair
Market Value” of any share of Preferred Stock, Common Stock or any other stock
or any Right or other security or any other property shall be determined as
provided in this Section 11(d).

 

(i)                                     In the case of a publicly-traded stock or
other security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such stock or per unit of such
other 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 Fair Market Value per share of any share of stock is
determined during a period following the announcement by the issuer of such
stock of (x) a dividend or distribution on such stock payable in shares of
such stock or securities convertible into shares of such stock or (y) any
subdivision, combination or reclassification of such stock, and prior to the
expiration of the 30 Trading Day period after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the Fair Market Value shall
be properly adjusted to take into account ex-dividend trading.  The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the securities 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 such security is listed or admitted to trading;
or, if not listed or admitted to trading on any national securities exchange,
the last quoted price (or, if not so quoted, the average of the last quoted
high bid and low asked prices) in the over-the-counter market, as reported by
the National Association of Securities Dealers Automated Quotation System (“NASDAQ”)
or such other system then in use; or, if on any such date no bids for such
security are 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
such security selected by the Board of Directors of the Company.  If on any such date no market maker is making
a market in such security, the Fair Market Value of such security on such date shall
be determined reasonably and with utmost good faith to the holders of the
Rights by the Board of Directors of the Company, provided, however,
that if at the time of such determination there is an Acquiring Person, the
Fair Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm 

 

19

 

selected by the Board of Directors of the Company,
which determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights.  The term “Trading Day” shall
mean a day on which the principal national securities exchange on which such
security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day.

 

(ii)                                  If a security is not publicly held or not
so listed or traded, “Fair Market Value” shall mean the fair value per share of
stock or per other unit of such security, determined reasonably and in good
faith to the holders of the Rights by the Board of Directors of the Company; provided,
however, that if at the time of such determination there is an Acquiring
Person, the Fair Market Value of such security on such date shall be determined
by a nationally recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights; provided, however, that for the purposes
of making any adjustment provided for by Section 11(a)(ii) hereof,
the Fair Market Value of a share of Preferred Stock shall not be less than the
product of the then Fair Market Value of a share of Common Stock multiplied by
the higher of the then Dividend Multiple or Vote Multiple (as both of such
terms are defined in the Certificate of Designations attached as Exhibit A
hereto) applicable to the Preferred Stock and shall not exceed 105% of the
product of the then Fair Market Value of a share of Common Stock multiplied by
the higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock.

 

(iii)                               In the case of property other than
securities, the Fair Market Value thereof shall be determined reasonably and in
good faith to the holders of Rights by the Board of Directors of the Company; provided,
however, that if at the time of such determination there is an Acquiring
Person, the Fair Market Value of such property on such date shall be determined
by a nationally recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights.

 

(e)                                  Anything herein to the contrary
notwithstanding, no adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Exercise 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-millionth of a share of
Common Stock of the Company or hundred-millionth of a share of Preferred Stock,
as the case may be, or to such other figure as the Board of Directors of the
Company may deem appropriate. 
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 (3) years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.

 

(f)                                    If as a result of any provision of Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital 

 

20

 

stock of the
Company other than Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in Section 11(a),
(b), (c), (d), (e), (g) through (k) and (m), inclusive, 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 Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise Price, the number of
one ten-thousandths of a share of Preferred Stock (or other securities or
amount of cash or combination thereof) 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
Exercise Price as a result of the calculations made in Section 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Exercise
Price, that number of one ten-thousandths of a share of Preferred Stock
(calculated to the nearest hundred-millionth) as the Board of Directors of the
Company determines is appropriate to preserve the economic value of the Rights,
including, by way of example, that number obtained by (i) multiplying (x) the
number of one ten-thousandths of a share of Preferred Stock for which a Right
may be exercisable immediately prior to this adjustment by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.

 

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

 

21

 

and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Exercise Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.

 

(j)                                     Irrespective of any adjustment or change
in the Exercise Price or the number of one ten-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Exercise Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder without prejudice to any adjustment
or change.

 

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

 

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

 

(m)                               Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Exercise Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in its good faith judgment the
Board of Directors of the Company 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 Fair Market Value,
issuance wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred Stock,
stock dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders
of its Preferred Stock, shall not be taxable to such shareholders.

 

(n)                                 The Company covenants and agrees that it
shall not, at any time after the Distribution Date and so long as the Rights
have not been redeemed pursuant to Section 23 hereof or exchanged pursuant
to Section 24 hereof, (i) consolidate with (other than a Subsidiary
of the Company in a transaction that complies with the proviso at the end of
this sentence), (ii) merge with or into, or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction or a series
of related 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 or Persons (other than the Company and/or any of its
Subsidiaries in one or more 

 

22

 

transactions each
of which complies with the proviso at the end of this sentence) if (x) at
the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments outstanding or agreements or
arrangements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, or (y) prior
to, simultaneously with or immediately after such consolidation, merger or sale
the shareholders of a Person who constitutes, or would constitute, the “Principal
Party” for the purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates; provided, however, that, subject to the following
sentence, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, or merge with or into, or sell
or transfer assets or earning power to, any other Subsidiary of the
Company.  The Company further covenants
and agrees that after the Distribution Date it will not, except as permitted by
Section 23 or Section 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 substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.

 

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

 

(p)                                 The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the
extent so exercised and neither such exercise nor any exchange of Rights
pursuant to Section 24 shall otherwise affect the rights of holders of
Right Certificates under this Rights Agreement, including rights to purchase
securities of the Principal Party following a Section 13 Event which has
occurred or may thereafter occur, as set forth in Section 13 hereof.  Upon exercise of a Right Certificate under Section 11(a)(ii),
the Rights Agent shall return such Right Certificate duly marked to indicate
that such exercise has occurred.

 

Section 12. 
Certificate of Adjusted Exercise Price or Number of Shares.  Whenever an adjustment is made as provided in
Section 11 or Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Preferred Stock and the
Common Stock of the Company a copy of such certificate 

 

23

 

and (c) mail
a brief summary thereof to each holder of a Right Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock of the Company) in accordance with Section 26 hereof.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein and
shall not be deemed to have knowledge of any such adjustment unless and until
it shall have received such certificate.

 

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

 

(a)                                  In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof),
and the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which is not prohibited by the proviso at the end of
the first sentence of Section 11(n) hereof) shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock of the Company shall be
changed into or exchanged for stock or other securities of any other Person or
cash or any other property, or (z) the Company shall sell, mortgage or
otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one transaction or a series of related 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 or
Persons (other than the Company or any Subsidiary of the Company in one or more
transactions, each of which is not prohibited by the proviso at the end of the
first sentence of Section 11(n) hereof), then, and in each such case,
proper provision shall be made so that:  (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall
have the right to receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradable Common Stock of the Principal Party (as hereinafter defined in Section 13(b)),
free and clear of rights of call or first refusal, liens, encumbrances,
transfer restrictions or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Exercise Price by the number
of one ten-thousandths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13
Event (without taking into account any adjustment previously made pursuant to Section 11(a)(ii) or
11(a)(iii) hereof), and dividing that product by (2) 50% of the Fair
Market Value (determined pursuant to Section 11(d) hereof) per share
of the Common Stock of such Principal Party on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale, mortgage or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term “Company” shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such
Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock to permit exercise of all outstanding Rights in
accordance with this Section 13(a) and the making of payments in cash
and/or other securities in accordance with Section 11(a)(iii) hereof)
in connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights.

 

24

 

 

(b)           “Principal Party”
shall mean

 

(i)            in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a),
the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of Common Stock that has the
highest aggregate Fair Market Value (determined pursuant to Section 11(d)),
and if no securities are so issued, the Person that is the other party to the
merger or consolidation, or, if there is more than one such Person, the Person
the Common Stock of which has the highest aggregate Fair Market Value
(determined pursuant to Section 11(d)); and

 

(ii)           in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if
each Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the largest portion of
the assets or earning power cannot be determined, whichever Person the Common Stock
of which has the highest aggregate Fair Market Value (determined pursuant to Section 11(d));

 

provided, however, that in any such case
described in clauses (i) or (ii) of Section 13(b) hereof, (1) if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act (“Registered Common Stock”) or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary or Affiliate of
another Person who has Registered Common Stock outstanding, “Principal Party”
shall refer to such other Person; (2) if the Common Stock of such Person
is not Registered Common Stock or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person but is not a direct
or indirect Subsidiary of another Person which has Registered Common Stock
outstanding, “Principal Party” shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, “Principal Party”
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate Fair Market Value (determined
pursuant to Section 11(d)); and (4) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons has Registered Common Stock outstanding, “Principal
Party” shall refer to whichever ultimate parent entity is the corporation
having the greatest shareholders’ equity or, if no such ultimate parent entity
is a corporation, “Principal Party” shall refer to whichever ultimate parent
entity is the entity having the greatest net assets.

 

(c)           The Company shall
not consummate any such consolidation, merger, sale or transfer unless prior
thereto (x) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock, which have not been issued or reserved
for issuance, to permit the exercise in full of the Rights in accordance with
this Section 13, and (y) the Company and each Principal Party and
each other Person who may become a Principal Party as a result of 

 

 

25

 

such
consolidation, merger, sale or transfer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in Section 13(a) and
(b) and further providing that, as soon as practicable after the date of
any consolidation, merger, sale or transfer of assets mentioned in Section 13(a),
the Principal Party at its own expense will:

 

(i)            prepare and file a registration
statement under the Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form,
cause such registration statement to become effective as soon as practicable
after such filing and cause such registration statement to remain effective
(with a prospectus that at all times meets the requirements of the Securities
Act) until the Expiration Date;

 

(ii)           qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate;

 

(iii)          list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on
NASDAQ or such other system on which the Common Stock of the Company is then
traded; and

 

(iv)          deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for registration
on Form 10 under the Exchange Act.

 

(d)           In case the
Principal Party which is to be a party to a transaction referred to in this Section 13
has a provision in any of its authorized securities or in its certificate of
incorporation or By-laws or other instrument governing its affairs, which
provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal
Party at less than the then current Fair Market Value (determined pursuant to Section 11(d))
or securities exercisable for, or convertible into, Common Stock of such
Principal Party at less than such Fair Market Value, or (ii) providing for
any special payment, tax or similar provisions in connection with the issuance
of the Common Stock of such Principal Party pursuant to the provisions of this Section 13,
then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

 

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

 

26

 

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 as provided in Section 11(o) hereof, or to distribute Right
Certificates which evidence fractional Rights. 
If the Company elects not to issue such fractional Rights, the Company
shall pay, in lieu of such fractional Rights, 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 Fair Market
Value of a whole Right, as determined pursuant to Section 11(d) hereof.

 

(b)           The Company shall
not be required to issue fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one ten-thousandth of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of one ten-thousandth of a share of Preferred
Stock).  In lieu of fractional shares of
Preferred Stock that are not integral multiples of one ten-thousandth of a
share of Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the Fair Market Value of one
ten-thousandth of a share of Preferred Stock. 
For purposes of this Section 14(b), the Fair Market Value of one
ten-thousandth of a share of Preferred Stock shall be determined pursuant to Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise.

 

(c)           The holder of a
Right by the acceptance of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.

 

Section 15. 
Rights of Action.  All rights of
action in respect of this Agreement, other than rights of action vested in the
Rights Agent pursuant to Sections 18 and 20 hereof, are vested in the
respective registered holders of the Right Certificates (or, prior to the
Distribution Date, the registered holders of the Common Stock of the Company);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock of the Company), 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 of the Company), may, in such
registered holder’s own behalf and for such registered holder’s own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Right evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. 
Without limiting the foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder of
any Person subject to this Agreement. 
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys’ fees, incurred by them in any action to enforce
the provisions of 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:

 

 

27

 

(a)           prior to the
Distribution Date, each Right will be transferable only simultaneously and
together with the transfer of shares of Common Stock of the Company;

 

(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 offices of the Rights
Agent designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer;

 

(c)           subject to Sections
6(a) and 7(f), the Company and the Rights Agent may deem and treat the
person in whose name a Right Certificate (or, prior to the Distribution Date,
the associated certificate representing Common Stock of the Company) 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 associated certificate representing Common Stock of the
Company made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and, subject to the last sentence of Section 7(e),
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and

 

(d)           notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as the
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligations;
provided, however, that the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.

 

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

 

Section 18.  Concerning the Rights Agent.

 

(a)           The Company agrees
to pay to the Rights Agent such compensation as shall be agreed to in writing
between the Company and the Rights Agent for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and attorney fees and disbursements and other disbursements incurred
in the administration and execution of this Agreement and the exercise and
performance of its duties hereunder.  The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence,
bad faith or willful misconduct on 

 

28

 

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.  The provisions
of this Section 18(a) shall survive the expiration of the Rights and
the termination of this Agreement.

 

(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 representing
Common Stock of the Company, Preferred Stock, or other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it in good faith and without negligence to be
genuine and to be signed and executed by the proper Person or Persons.

 

(c)           The Rights Agent
shall not be liable for consequential damages under any provision of this
Agreement or for any consequential damages arising out of any act or failure to
act hereunder.

 

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

 

(a)           Any corporation into
which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be
a party, or any corporation succeeding to the corporate trust or shareholder
services business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided 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 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 expressly imposed
by this Agreement upon the following terms and conditions, by all 

 

29

 

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

 

(b)           Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of “Fair Market
Value”) be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof shall be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman of the Board of Directors, a
Vice Chairman of the Board of Directors, the President, a Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company and delivered to the Rights Agent. 
Any 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 only for its own gross negligence, bad faith or
willful misconduct.

 

(d)           The Rights Agent
shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the 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 7(e) hereof) or any adjustment required under the
provisions of Sections 11, 13 or 23(c) hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of a
certificate describing any such adjustment furnished in accordance with Section 12
hereof), nor shall it be responsible for any determination by the Board of
Directors of the Company of the Fair Market Value of the Rights or Preferred
Stock pursuant to the provisions of Section 14 hereof; 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 Common Stock of the Company or
Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether or not any shares of Common Stock of the Company
or Preferred Stock will, when so issued, be validly authorized and issued,
fully paid and nonassessable.

 

30

 

(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 and certificates delivered pursuant to any
provision hereof from any person believed by the Rights Agent to be the
Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, the President, a Vice President, the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the Company, and is
authorized 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 to
be taken by it in good faith in accordance with instructions of any such
officer.  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 or after which such
action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in 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 shareholder, director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and
freely as though it were not the 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.

 

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

 

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

 

31

 

Section 21.  Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days’ notice in writing mailed to the Company by first class mail, provided,
however, that in the event the transfer agency relationship in effect
between the Company and the Rights Agent with respect to the Common Stock of
the Company terminates, the Rights Agent will be deemed to have resigned
automatically on the effective date of such termination.  The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause), effective immediately or on
a specified date, by written notice given to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock of the Company and Preferred Stock, and by giving notice to the holders
of the Right Certificates by any means reasonably determined by the Company to
inform such holders of such removal (including without limitation, by including
such information in one or more of the Company’s reports to shareholders or
reports or filings with the Securities and Exchange Commission).  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of
the United States, the State of Delaware or the State of New York (or of any
other state of the United States so long as such corporation is authorized to
do business as a banking institution in the State of Delaware or the State of
New York), in good standing, which is authorized under such laws to exercise
stock transfer or corporate trust 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
$10,000,000 or (b) an Affiliate of a Person described in clause (a) of
this sentence.  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose.  Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock of the Company and the Preferred Stock, and give notice to the
holders of the Right Certificates by any means reasonably determined by the
Company to inform such holders of such appointment (including without
limitation, by including such information in one or more of the Company’s
reports to shareholders or reports or filings with the Securities and Exchange
Commission).  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 form as may be approved
by the Board of
Directors of the Company to reflect any adjustment or change in the Exercise
Price per share and the 

 

32

 

number or kind or
class of shares of stock 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 shares of Common Stock of the Company following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to shares of Common Stock of the
Company so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise, conversion or exchange
of securities hereafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that
(i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.

 

Section 23.  Redemption.

 

(a)           The Board of
Directors of the Company may, at its option, redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock dividend declared or paid, any
subdivision or combination of the outstanding shares of Common Stock of the
Company or any similar event occurring after the date of this Agreement (such
redemption price, as adjusted from time to time, being hereinafter referred to
as the “Redemption Price”).  The Rights
may be redeemed only until the earlier to occur of (i) the time at which
any Person becomes an Acquiring Person or (ii) the Final Expiration Date.

 

(b)           Immediately upon the
action of the Board of Directors of the Company ordering the redemption of the
Rights in accordance with Section 23 hereof, 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 for each Right so held. 
Promptly after the action of the Board of Directors of the Company ordering
the redemption of the Rights in accordance with Section 23 hereof, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to the Rights
Agent and to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock of the Company.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  The Company promptly shall mail
a notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.  Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth in this Section 23
or Section 24 hereof or in connection with the purchase of shares of
Common Stock of the Company prior to the Distribution Date.

 

 

33

 

(c)           The Company may, at
its option, pay the Redemption Price in cash, shares of Common Stock of the
Company (based on the Fair Market Value of the Common Stock of the Company as
of the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors of the Company.

 

Section 24.  Exchange.

 

(a)           (i)            The Board of Directors of the
Company may, at its option, at any time on or after the occurrence of a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock of the Company at an exchange ratio of one share of
Common Stock of the Company per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the “Section 24(a)(i) Exchange
Ratio”).  Notwithstanding the foregoing,
the Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock of the Company.

 

(ii)           Notwithstanding the foregoing, the
Board of Directors of the Company may, at its option, at any time on or after
the occurrence of a Section 11(a)(ii) Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock of the Company at an exchange ratio specified in the
following sentence, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this
Agreement.  Subject to the adjustment
described in the foregoing sentence, each Right may be exchanged for that
number of shares of Common Stock of the Company obtained by dividing the Spread
(as defined in Section 11(a)(iii)) by the then Fair Market Value per one
ten-thousandth of a share of Preferred Stock on the earlier of (x) the
date on which any person becomes an Acquiring Person or (y) the date on
which a tender or exchange offer by any Person (other than an Exempt Person) is
first published or sent or given within the meaning of Rule 14d-4(a) of
the Exchange Act or any successor rule, if upon consummation thereof such
Person could become an Acquiring Person (such exchange ratio being referred to
herein as the “Section 24(a)(ii) Exchange Ratio”).  Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Stock of the Company.

 

(b)           Immediately upon the
action of the Board of Directors of the Company ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights
pursuant to Section 11(a)(ii) shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock of the Company equal to the number of such Rights held by such
holder multiplied by the Section 24(a)(i) Exchange Ratio or the Section 24(a)(ii) Exchange
Ratio, as applicable; provided, however, that the holder of a
Right exchanged 

 

34

 

pursuant to this Section 24
shall continue to have the right to purchase securities or other property of
the Principal Party following a Section 13 Event that has occurred or may
thereafter occur.  The Company shall
promptly give notice of any such exchange in accordance with Section 26
hereof and shall promptly mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  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 of
the Company 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 null
and void pursuant to the provisions of Section 7(e) hereof) held by
each holder of Rights.

 

(c)           In any exchange
pursuant to this Section 24, the Company, at its option, may substitute
Preferred Stock (or Preferred Stock Equivalent, as such term is defined in Section 11(b) hereof)
for Common Stock of the Company exchangeable for Rights, at the initial rate of
one ten-thousandth of a share of Preferred Stock (or Preferred Stock
Equivalent) for each share of Common Stock of the Company, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock of the Company shall have
the same voting rights as one share of Common Stock of the Company.

 

(d)           In the event that
there shall not be sufficient shares of Common Stock of the Company or
Preferred Stock (or Preferred Stock Equivalents) issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock of the Company
or Preferred Stock (or Preferred Stock Equivalent) for issuance upon exchange
of the Rights.

 

(e)           The Company shall
not be required to issue fractions of Common Stock of the Company or to
distribute certificates which evidence fractional shares of Common Stock of the
Company.  If the Company elects not to
issue such fractional shares of Common Stock of the Company, the Company shall
pay, in lieu of such fractional shares of Common Stock of the Company, to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock of the Company would otherwise be issuable,
an amount in cash equal to the same fraction of the Fair Market Value of a
whole share of Common Stock of the Company. 
For the purposes of this paragraph (e), the Fair Market Value of a
whole share of Common Stock of the Company shall be the closing price of a
share of Common Stock of the Company (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

 

Section 25.  Notice of Certain Events.

 

(a)           In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to
make any other distribution to the holders of Preferred Stock (other than a
regular periodic cash 

 

35

 

dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the
holders of 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, or (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect
any consolidation or merger into or with, or to effect any sale, mortgage or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale, mortgage or other transfer), in one transaction or a series of related
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than a
Subsidiary of the Company in one or more transactions each of which is not
prohibited by the proviso at the end of the first sentence of Section 11(n) hereof),
or (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Stock of the
Company payable in Common Stock of the Company or to effect a subdivision,
combination or consolidation of the Common Stock of the Company (by
reclassification or otherwise than by payment of dividends in Common Stock of
the Company) then in each such case, the Company shall give to each holder of a
Right Certificate and to the Rights Agent, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock of the
Company 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 twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock of the
Company and/or Preferred Stock, whichever shall be the earlier; provided,
however, no such notice shall be required pursuant to this Section 25
as a result of any Subsidiary of the Company effecting a consolidation or
merger with or into, or effecting a sale or other transfer of assets or
earnings power to, any other Subsidiary of the Company in a manner not
inconsistent with the provisions of this Agreement.

 

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

 

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

 

Ezenia! Inc.

14 Celina Avenue

Suite 17

Nashua, NH  03063

 

36

 

Facsimile No.: (603)
880-4795

Attention: Chief
Financial Officer

 

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

 

Computershare Trust
Company, N.A.

250 Royall Street

Canton, MA  02021

Facsimile No.:
781.575.4210

Attention: Client
Administration

 

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

 

Section 27. 
Supplements and Amendments.  Prior
to the occurrence of a Section 11(a)(ii) Event, the Company and the
Rights Agent shall, if the Board of Directors of the Company so directs,
supplement or amend any provision of this Agreement as the Board of Directors
of the Company may deem necessary or desirable without the approval of any
holders of certificates representing shares of Common Stock of the
Company.  From and after the occurrence
of a Section 11(a)(ii) Event, the Company and the Rights Agent shall,
if the Board of Directors of the Company so directs, supplement or amend this
Agreement without the approval of any holder of Right Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to
change or supplement the provisions hereof in any manner which the Board of
Directors of the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or any Affiliate or Associate of an Acquiring Person);
provided, however, that from and after the occurrence of a Section 11(a)(ii) Event
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and the benefits to, the holders of
Rights (other than an Acquiring Person or any Affiliate or Associate of an
Acquiring Person).  Without limiting the
foregoing, the Company may at any time prior to the occurrence of a Section 11(a)(ii) Event
amend this Agreement to lower the threshold set forth in Section 1(a) to
not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding Common Stock of the Company then known by the
Company to be Beneficially Owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Stock of the Company
for or pursuant to the terms of any such plan) and (ii) 10%.  Upon the delivery of such certificate from 

 

37

 

an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27,
the Rights Agent shall execute such supplement or amendment, and any failure of
the Rights Agent to so execute such supplement or amendment shall not affect
the validity of the actions taken by the Board of Directors of the Company
pursuant to this Section 27.  Prior
to the occurrence of a Section 11(a)(ii) Event, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock of the Company. 
Notwithstanding any other provision hereof, the Rights Agent’s consent
must be obtained regarding any amendment or supplement pursuant to this Section 27
which alters the Rights Agent’s rights or duties.

 

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

 

Section 29.  Determinations and Actions by the Board of Directors.  The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors
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 and
computations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board of Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject any member of the Board
of Directors to any liability to the holders of the Rights or to any other
person.

 

Section 30.  Benefits of this Agreement.  Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock of the Company) 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, registered holders of the Common Stock of the Company).

 

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

 

38

 

Section 32.  Governing Law.  This Agreement, each Right 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
to be performed entirely within such State. 
The courts of the State of Delaware and of the United States of America
located in the State of Delaware (the “Delaware Courts”) shall have exclusive
jurisdiction over any litigation arising out of or relating to this Agreement
and the transactions contemplated hereby, and any Person commencing or
otherwise involved in any such litigation shall waive any objection to the
laying of venue of such litigation in the Delaware Courts and shall not plead
or claim in any Delaware Court that such litigation brought therein has been
brought in an inconvenient forum. Notwithstanding the foregoing, the Company
and the Rights Agent may mutually agree to a jurisdiction other than Delaware
for any litigation directly between the Company and the Rights Agent arising
out of or relating to this Agreement.

 

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

 

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

 

Section 35.  Force Majeure.  Notwithstanding anything to the contrary
contained herein, neither the Company nor the Rights Agent shall be liable for
any delay or failure in performance resulting directly from any act or event
beyond its reasonable control and without the fault or gross negligence of the
delayed or non-performing party that causes a sudden, substantial or widespread
disruption in business activities, including, without limitation, fire, flood,
natural disaster or act of God, strike or other industrial disturbance, war
(declared or undeclared), embargo, blockade, legal restriction, riot,
insurrection, act of terrorism, disruption in transportation, communications,
electric power or other utilities, or other vital infrastructure or any means
of disrupting or damaging internet or other computer networks or facilities
(each, a “Force Majeure Condition”); provided, that such delayed
or non-performing party shall use reasonable commercial efforts to resume
performance as soon as practicable.  If
any Force Majeure Condition occurs, the party delayed or unable to perform
shall give prompt written notice to the other party, stating the nature of the
Force Majeure Condition and any action being taken to avoid or minimize its
effect.

 

[Remainder of page intentionally left blank]

 

39

 

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

 

	
  ATTEST:

  	
   

  	
  EZENIA! INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lisa R. Haddad

  	
   

  	
  By:

  	
     /s/
  Khoa Nguyen

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Khoa Nguyen

  
	
   

  	
   

  	
   

  	
  Title: President and
  CEO

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  COMPUTERSHARE TRUST
  COMPANY, N.A.,

  
	
   

  	
   

  	
  as Rights Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dan Glennon

  	
   

  	
  By:

  	
     /s/
  Tyler Haynes

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Tyler Haynes

  
	
   

  	
   

  	
   

  	
  Title: Managing
  Director

  
									

 

 

 

Exhibit A

 

CERTIFICATE OF DESIGNATIONS

of

SERIES D JUNIOR PARTICIPATING CUMULATIVE

PREFERRED STOCK

of

EZENIA! INC.

 

Section 1.               Designation
and Amount.  The shares of such
series shall be designated as “Series D Junior Participating Cumulative
Preferred Stock” (the “Series D Preferred Stock”), and the number of
shares initially constituting such series shall be 50,000; provided, however,
that if more than a total of 50,000 shares of Series D Preferred Stock
shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to
the Shareholder Rights Agreement dated as of April 15, 2008, between the
Corporation and Computershare Trust Company, N.A., as Rights Agent (the “Rights
Agreement”), the Board of Directors of the Corporation, pursuant to Section 151(g) of
the General Corporation Law of the State of Delaware, may direct by resolution
or resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof,
providing for the total number of shares of Series D Preferred Stock
authorized to be issued to be increased (to the extent that the Certificate of
Incorporation then permits) to the largest number of whole shares (rounded up
to the nearest whole number) issuable upon exercise of such Rights.

 

Section 2.               Dividends
and Distributions.

 

(A)          (i)            Subject to the rights of the holders
of any shares of any series of preferred stock (or any similar stock) ranking
prior and superior to the Series D Preferred Stock with respect to dividends,
the holders of shares of Series D Preferred Stock, in preference to the
holders of shares of common stock and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year
(each such date being referred to herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series D Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provisions for adjustment hereinafter set forth,
10,000 times the aggregate per share amount of all cash dividends, and 10,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
common stock or a subdivision of the outstanding shares of common stock (by
reclassification or otherwise), declared on the common stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series D Preferred Stock.  The multiple of cash and non-cash dividends
declared on the common stock to which holders of the Series D Preferred
Stock are entitled, which shall be 10,000 initially but which shall be adjusted
from time to time as hereinafter provided, is hereinafter referred to as the “Dividend
Multiple.”  In the event the Corporation
shall at any time after April 16, 2008 (the “Rights Declaration Date”) (i) declare
or pay any dividend on common stock 

 

 

payable in shares of common stock, or (ii) effect
a subdivision or combination or consolidation of the outstanding shares of
common stock (by reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares of common
stock, then in each such case the Dividend Multiple thereafter applicable to
the determination of the amount of dividends which holders of shares of Series D
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied 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.

 

(ii)           Notwithstanding
anything else contained in this paragraph (A), the Corporation shall, out of
funds legally available for that purpose, declare a dividend or distribution on
the Series D Preferred Stock as provided in this paragraph (A) immediately
after it declares a dividend or distribution on the common stock (other than a
dividend payable in shares of common stock); provided that, in the event no
dividend or distribution shall have been declared on the common stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series D
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.

 

(B)           Dividends shall
begin to accrue and be cumulative on outstanding shares of Series D
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series D Preferred Stock, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series D Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series D Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix in accordance with applicable law a record date for the determination of
holders of shares of Series D Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be not
more than such number of days prior to the date fixed for the payment thereof
as may be allowed by applicable law.

 

Section 3.  Voting Rights.  In addition to any other voting rights
required by law, the holders of shares of Series D Preferred Stock shall
have the following voting rights:

 

(A)          Subject to the
provision for adjustment hereinafter set forth, each share of Series D
Preferred Stock shall entitle the holder thereof to 10,000 votes on all matters
submitted to a vote of the stockholders of the Corporation.  The number of votes which a holder of a share
of Series D Preferred Stock is entitled to cast, which shall initially be
10,000 but which may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the “Vote Multiple.” 
In the event the Corporation shall at any time after the Rights
Declaration Date 

 

2

 

(i) declare or pay any dividend on common stock
payable in shares of common stock, or (ii) effect a subdivision or
combination or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in shares of common
stock) into a greater or lesser number of shares of common stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series D Preferred
Stock shall be entitled shall be the Vote Multiple immediately prior to such
event multiplied by a fraction, the numerator of which is the number of shares
of common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.

 

(B)           Except as otherwise
provided herein or by law, the holders of shares of Series D Preferred
Stock and the holders of shares of common stock and the holders of shares of
any other capital stock of this Corporation having general voting rights, shall
vote together as one class on all matters submitted to a vote of stockholders
of the Corporation.

 

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

 

Section 4.  Certain
Restrictions.

 

(A)          Whenever dividends or
distributions payable on the Series D 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 D 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 D
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 D Preferred Stock, except dividends paid ratably on
the Series D Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;

 

(iii)          except as permitted
in subsection 4(A)(iv) below, redeem, purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series D
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series D Preferred Stock;
or

 

(iv)          purchase or
otherwise acquire for consideration any shares of Series D Preferred
Stock, or any shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series D
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all 

 

3

 

holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective Series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.

 

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

 

Section 5.  Reacquired
Shares.  Any shares of Series D
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof.  All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of preferred stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

 

Section 6.  Liquidation,
Dissolution or Winding Up.  Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (x) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series D Preferred Stock unless, prior thereto, the
holders of shares of Series D Preferred Stock shall have received an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, plus an amount equal to the
greater of (1) $10,000.00 per share or (2) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
10,000 times the aggregate amount to be distributed per share to holders of
common stock, or (y) to the holders of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the Series D
Preferred Stock, except distributions made ratably on the Series D
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. 
In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on common stock payable
in shares of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
aggregate amount per share to which holders of shares of Series D
Preferred Stock were entitled immediately prior to such event under clause (x) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately prior to
such event.

 

Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to
be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.

 

4

 

Section 7.  Consolidation,
Merger, etc.  In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of common stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series D Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 10,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of common stock is changed or exchanged,
plus accrued and unpaid dividends, if any, payable with respect to the Series D
Preferred Stock.  In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
or pay any dividend on common stock payable in shares of common stock, or (ii) effect
a subdivision or combination or consolidation of the outstanding shares of
common stock (by reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares of common
stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series D Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of common stock outstanding immediately after
such event and the denominator of which is the number of shares of common stock
that were outstanding immediately prior to such event.

 

Section 8.  Redemption.  The shares of Series D Preferred Stock
shall not be redeemable; provided, however, that the foregoing
shall not limit the ability of the Corporation to purchase or otherwise deal in
such shares to the extent otherwise permitted hereby and by law.

 

Section 9.  Ranking.  Unless otherwise expressly provided in the
Certificate of Incorporation or a Certificate of Designations relating to any
other series of preferred stock of the Corporation, the Series D Preferred
Stock shall rank junior to every other series of the Corporation’s preferred
stock previously or hereafter authorized, as to the payment of dividends and
the distribution of assets on liquidation, dissolution or winding up and shall
rank senior to the common stock.

 

Section 10.  Amendment.  The Certificate of Incorporation and this
Certificate of Designations shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the Series D
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of two-thirds or more of the outstanding shares of Series D
Preferred Stock, voting separately as a class.

 

Section 11.  Fractional
Shares.  Series D Preferred
Stock may be issued in whole shares or in any fraction of a share that is one
ten-thousandth (1/10,000th) of a share or any integral multiple of such
fraction, which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series D
Preferred Stock.  In lieu of fractional
shares, the Corporation may elect to make a cash payment as provided in the
Rights Agreement for fractions of a share other than one ten-thousandth
(1/10,000th) of a share or any integral multiple thereof.

 

5

 

Exhibit B

 

FORM OF RIGHT CERTIFICATE

 

Certificate
No. R-            
Rights

 

NOT EXERCISABLE AFTER APRIL 16, 2018 OR EARLIER IF NOTICE OF REDEMPTION
IS GIVEN.  THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF EZENIA! INC., AT $0.01 PER RIGHT, ON THE TERMS SET
FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN EZENIA! INC. AND
COMPUTERSHARE TRUST COMPANY, N.A., AS RIGHTS AGENT, DATED AS OF APRIL 15, 2008
(THE “RIGHTS AGREEMENT”).  UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

 

Right
Certificate

 

EZENIA! 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 Shareholder Rights Agreement dated as of April 15,
2008 (the “Rights Agreement”) between Ezenia! Inc. (the “Company”) and
Computershare Trust Company, N.A., 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 the close of business on April 16,
2018 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one ten-thousandth of a fully paid,
non-assessable share of the Series D Junior Participating Cumulative
Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of
$             per
one ten-thousandth of a share (the “Exercise Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase
and the related Certificate duly executed. 
The number of Rights evidenced by this Right Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and
the Exercise Price per share set forth above, are the number and Exercise Price
as of
              ,
based on the Preferred Stock as constituted at such date.

 

Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person or
Associate or Affiliate thereof, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a Person who, after such
transfer, became an Acquiring Person or an Affiliate or Associate of an 

 

6

 

Acquiring Person, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.

 

As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

 

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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights
Agreement.  Copies of the Rights
Agreement are on file at the principal office of the Company and the designated
office of the Rights Agent and are also available upon written request to the
Company or the Rights Agent.

 

This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or 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 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 Certificates for the number of
whole Rights not exercised.  If this
Right Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii) of
the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set
forth in the Rights Agreement.

 

Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for shares of the
Company’s Common Stock or Preferred Stock at an exchange ratio (subject to
adjustment) specified in the Rights Agreement.

 

Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $0.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors).

 

The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one ten-thousandth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts).  If the Company elects not to
issue such fractional shares, 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 shares of
Preferred Stock, Common Stock or any 

 

7

 

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

 

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

 

WITNESS the facsimile signature of the proper officers of the Company
as a document under corporate seal.

 

	
  Attested:

  	
   

  	
  EZENIA! INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  [Secretary or Assistant
  Secretary]

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  	
  [Chairman, Vice
  Chairman,

  
	
   

  	
   

  	
   

  	
   

  	
  President or Vice
  President]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPUTERSHARE TRUST COMPANY, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
										

 

 

8

 

[Form of Reverse Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

 

holder desires to transfer the Right Certificate.)

 

                FOR VALUE RECEIVED
                                                      
hereby sells, assigns and transfers unto
                                                                        
(Please print name and address of transferee)
                                                                        
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
                                      
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.

 

	
   

  	
  Dated:
                    ,    

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Signature Guaranteed:

  	
   

  	
   

  
					

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes
that:

 

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

 

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

 

	
   

  	
  Dated:
                    ,    

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

NOTICE

 

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

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to

exercise the Right Certificate.)

 

To
EZENIA! INC.:

 

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

 

	
  Please insert social
  security or other identifying taxpayer number:

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Please print name and address)

  

 

 

If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section 11(a)(ii) of
the Rights Agreement, a new Right Certificate for the balance of such Rights
shall be registered in the name of and delivered to:

 

	
  Please insert social
  security or other identifying taxpayer number:

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Please print name and address)

  

 

 

	
   

  	
  Dated:
                    ,    

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
						

 

 

 

CERTIFICATE

 

The undersigned hereby certifies by checking the appropriate boxes
that:

 

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

 

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

 

	
   

  	
  Dated:
                    ,    

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

 

NOTICE

 

The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.Exhibit 10.1

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT
(this “Agreement”) is made by
and between MEDECISION, INC., a Pennsylvania corporation (the “Company”) and TIMOTHY W. WALLACE (“Consultant”).

 

WHEREAS, the Company
desires to retain Consultant to provide certain services described herein, and Consultant
is willing to be so retained, subject to the terms of this Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and promises contained
herein, and intending to be bound hereby, the parties agree as follows:

 

1.             Duration of Agreement.  Consultant’s service under this Agreement will
commence on the date this Agreement is executed and will continue until
terminated by either party.  Either party
may terminate Consultant’s engagement with thirty days advance written notice.

 

2.             Services.  Consultant
is hereby retained to serve as the Company’s President, on an interim basis
pending the employment of a President (who may be Consultant), reporting
directly to the Company’s Chief Executive Officer or as otherwise directed by
the Board of Directors (the “Board”). 
Consultant will perform such duties as may be customarily incident to the
position of President and such other duties as may reasonably be assigned to
him from time to time by the Board; provided, however, that
Consultant will neither be required nor permitted to participate in the
preparation of the financial statements of the Company or any subsidiary of the
Company.  It is expected that, for the
duration of this engagement, the performance of services for the Company will
consume substantially all of Consultant’s business time.  Consultant therefore agrees not to accept
other engagements or engage in other activities that will interfere with his
performance of services hereunder.

 

3.             Fees.

 

3.1.        In
exchange for his services hereunder, the Company will pay Consultant a retainer
of $6,500 per week.  Such amount will be
paid in arrears, within seven days following the completion of the applicable
week.

 

3.2.        To
the extent Consultant continues to serve as a member of the Board during his
period of service hereunder and, but for his engagement hereunder, would be
entitled to receive cash compensation for such Board service, the Company will
make additional payments to Consultant hereunder in the same amount(s), at the
same time(s) and subject to the same conditions as the directors’ fees (excluding,
for this purpose, fees payable for service on a committee of the Board) that would
otherwise be payable to him under the Company’s Director compensation policies and
practices, as in effect from time to time.

 

4.             Independent Contractor Status.  The parties acknowledge and agree that Consultant
will act strictly in a professional consulting capacity as an
independent contractor for all purposes, including without limitation, federal,
state and local withholding, employment and payroll tax purposes, and will not
be considered an employee of the Company. 
Consultant further acknowledges that he will not be eligible to
participate in any retirement, welfare, or other employee benefit plan or
arrangement maintained by the Company or its affiliates and agrees not to claim
any such benefits, whether or
not this independent contractor relationship is re-characterized by a court or
taxing authority as an employment relationship.  Consultant will timely deposit all taxes
required to be paid with respect to compensation earned by him for the
performance of services for the Company or its affiliates, and will indemnify
the Company and its affiliates (including, for this purpose, the officers and
directors of the Company and its 

 

 

subsidiaries) from all claims, interest or penalties
relating to any alleged failure to withhold and/or remit such taxes on his
behalf.

 

5.             Office Space, Equipment and
Expenses.  While performing services
at a Company facility, appropriate office space, office equipment and
secretarial support will be provided to Consultant by the Company.  The Company will also reimburse
Consultant for reasonable business travel and business entertainment expenses
incurred directly in connection with his performance of services for the
Company, upon submission of proper receipts.  Except as otherwise described
above, Consultant will be responsible for his own business expenses.

 

6.             Termination of Engagement.  If Consultant’s engagement with the Company
ceases for any reason, the Company’s obligation to Consultant will be limited
solely to the payment of any amounts that have been become payable under Section 3
through the date of such cessation, but which then remain unpaid.  All compensation will cease at the time of
such cessation and Consultant agrees the Company will have no further liability
or obligation by reason of his service hereunder or the cessation of that
service.

 

7.             Proprietary Matter.  Except as permitted or directed by the
Company, Consultant will not during his engagement by the Company or at any
time thereafter divulge, furnish, disclose or make accessible (other than in
the ordinary course of the business of the Company) to anyone for use in any
way any confidential, secret, or proprietary knowledge or information of the
Company (“Proprietary Matter”) which Consultant has acquired or become
acquainted with or will acquire or become acquainted with, whether developed by
himself or by others, including, but not limited to, any trade secrets,
confidential or secret designs, processes, formulae, software or computer
programs, plans, devices or material (whether or not patented or patentable,
copyrighted or copyrightable) directly or indirectly useful in any aspect of
the business of the Company, any confidential customer, distributor or supplier
lists of the Company, any confidential or secret development or research work
of the Company, or any other confidential, secret or non-public aspects of the
business of the Company.  Consultant
acknowledges that the Proprietary Matter constitutes a unique and valuable
asset of the Company acquired at great time and expense by the Company, and
that any disclosure or other use of the Proprietary Matter other than for the
sole benefit of the Company would be wrongful and would cause irreparable harm
to the Company.  Both during and after his
engagement by the Company, Consultant will refrain from any acts or omissions
that would reduce the value of Proprietary Matter to the Company.  The foregoing obligations of confidentiality,
however, will not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct
or indirect result of the breach of this Agreement by Consultant.

 

8.             Ventures.  If, during the term of this Agreement, Consultant
is engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in the project, program or venture will belong to the Company and will
constitute a corporate opportunity belonging exclusively to the Company.  Except as expressly approved in writing by
the Company, Consultant will not be entitled to any interest in such project,
program or venture or to any commission, finder’s fee or other compensation in
connection therewith, other than the compensation to be paid to Consultant as
provided in this Agreement.

 

9.             Protective Provisions.

 

9.1.1.     Competitive Activities.  During his service to the Company as a
consultant or employee and for one year thereafter, Consultant will not in the
continental United States of America, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business engaged in the provision of
integrated medical management services, technology-based 

 

2

 

clinical decision support or transaction
management solutions to managed care or other payers (a “Competing Business”).  Notwithstanding the foregoing, Consultant may
hold up to 2% of the outstanding securities of any class of any publicly-traded
securities of any company.

 

9.1.2.       Solicitation of Customers and
Employees.  During his engagement by
the Company and for one year thereafter, Consultant will not, either directly
or indirectly, on his own behalf or in the service or on behalf of others:

 

(a)           solicit, divert or appropriate, or attempt to solicit,
divert or appropriate, to any Competing Business any customer or client of the
Company, or any person or entity whose account has been solicited by the Company;

 

(b)           influence or attempt to influence any
person to terminate or modify any employment, consulting, agency,
distributorship or other arrangement with the Company; or

 

(c)           employ or retain any person who has resigned or been
terminated from employment or engagement as an employee, consultant, agent or
distributor of the Company within the preceding 12 months.

 

9.2.          Acknowledgements.  Consultant acknowledges that the provisions
of Section 8 (the “Restrictive Covenants”) are reasonable and
necessary to protect the legitimate interests of the Company and its
affiliates, that the duration and geographic scope of the Restrictive Covenants
are reasonable given the nature of this Agreement and his relationship with the
Company, and that the Company would not enter into this Agreement or otherwise retain
Consultant unless Consultant agrees to be bound by the Restrictive Covenants.

 

9.3.          Remedies and Enforcement Upon
Breach.

 

9.3.1.      Specific Enforcement.  Consultant acknowledges that any breach by
him, willfully or otherwise, of the Restrictive Covenants will cause continuing
and irreparable injury to the Company for which monetary damages would not be
an adequate remedy.  Consultant will
not, in any action or proceeding to enforce any of the provisions of this Agreement,
assert the claim or defense that such an adequate remedy at law exists.  In the event
of any breach by Consultant of the Restrictive Covenants, the Company will be
entitled to injunctive or other similar equitable relief in any court, without
any requirement that a bond or other security be posted, and this Agreement will
not in any way limit remedies of law or in equity otherwise available to the
Company.

 

9.3.2.      Judicial Modification.  If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, such court will have the
power to modify such provision and, in its modified form, such provision will
then be enforceable.

 

9.3.3.      Accounting.  If Consultant breaches any of the Restrictive
Covenants, the Company will have the right and remedy to require Consultant to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by Consultant as the
result of such breach.  This right and
remedy will be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.

 

9.3.4.      Enforceability.  If any court holds the Restrictive Covenants
unenforceable by reason of their breadth or scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the right of the Company to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the Restrictive
Covenants.

 

3

 

9.3.5.      Disclosure of Restrictive Covenants.  Consultant agrees to disclose the existence
and terms of the Restrictive Covenants to any person that Consultant may perform
services for during the one year period following the termination of his
engagement with the Company.

 

9.3.6.      Extension of Restricted Period.  If Consultant breaches Section 9.1,
the restrictions contained in that section will be extended for a period equal
to the period that Consultant was in breach.

 

9.3.7.      Application Following
Termination.  The
Restrictive Covenants will continue to apply following any termination of Consultant’s
engagement without regard to the reason for that termination and without regard
to whether that termination was initiated by Consultant or the Company.

 

10.           Miscellaneous.

 

10.1.        Other Agreements.  Consultant
represents and warrants to the Company that there are no restrictions,
agreements or understandings whatsoever to which he is a party that would
prevent or make unlawful his execution of this Agreement, that would be
inconsistent or in conflict with this Agreement or Consultant’s obligations
hereunder, or that would otherwise prevent, limit or impair the performance by Consultant
of services for the Company.

 

10.2.        Successors and Assigns.  The Company may assign this Agreement to any
successor to all or substantially all of its assets and business by means of
liquidation, dissolution, merger, consolidation, transfer of assets, sale of
stock or otherwise.  The duties of Consultant
hereunder are personal to Consultant and may not be assigned by him.

 

10.3.        Governing Law and Enforcement.  This Agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the principles of conflicts of laws.  Any legal proceeding arising out of or
relating to this Agreement will be instituted in a state or federal court in the
Commonwealth of Pennsylvania, and Consultant and the Company hereby consent to
the personal and exclusive jurisdiction of such court(s) and hereby waive
any objection(s) that they may have to personal jurisdiction, the laying
of venue of any such proceeding and any claim or defense of inconvenient forum.

 

10.4.        Waivers.  The waiver by either party of any right
hereunder or of any breach by the other party will not be deemed a waiver of
any other right hereunder or of any other breach by the other party.  No waiver will be deemed to have occurred
unless set forth in writing.  No waiver
will constitute a continuing waiver unless specifically stated, and any waiver
will operate only as to the specific term or condition waived.

 

10.5.        Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law.  However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect
any other provision, and this Agreement will be reformed, construed and
enforced as though the invalid, illegal or unenforceable provision had never
been herein contained.

 

10.6.        Survival.  The provisions of this Agreement will survive
the cessation of Consultant’s engagement to the extent necessary to fulfill their
purposes and intent.

 

10.7.        Notices.  Any notice or communication required or
permitted under this Agreement will be made in writing and (a) sent by
overnight courier, (b) mailed by overnight U.S. express mail, return
receipt requested or (c) sent by telecopier.  Any notice or communication to 

 

4

 

Consultant will be sent to
the address contained in his personnel file. 
Any notice or communication to the Company will be sent to the Company’s
principal Consultant officers, to the attention of its Chief Consultant Officer.  Notwithstanding the foregoing, either party
may change the address for notices or communications hereunder by providing
written notice to the other in the manner specified in this paragraph.

 

10.8.        Entire Agreement; Amendments.  This Agreement contains the entire agreement
and understanding of the parties hereto relating to the subject matter hereof,
and merges and supersedes all prior and contemporaneous discussions, agreements
and understandings of every nature relating to the subject matter.  This Agreement may not be changed or
modified, except by an agreement in writing signed by each of the parties
hereto.

 

10.9.        Section Headings.  The headings of sections and paragraphs of
this Agreement are inserted for convenience only and will not in any way affect
the meaning or construction of any provision of this Agreement.

 

10.10.      Counterparts; Facsimile.  This Agreement may be executed in multiple
counterparts (including by facsimile signature), each of which will be deemed
to be an original, but all of which together will constitute but one and the
same instrument.

 

IN WITNESS
WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and Consultant has executed this Agreement, in each case on
April 21, 2008.

 

	
   

  	
  MEDecision, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ David St.
  Clair

  
	
   

  	
  By:

  	
  David St. Clair

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Timothy W. Wallace

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Timothy W. Wallace

  

 

5

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