Document:

Exhibit
10.1

FIRST AMENDMENT TO CREDIT
AGREEMENT

THIS FIRST AMENDMENT (this “Amendment”),
effective as of January 1, 2007, amends and modifies a certain Credit
Agreement, dated as of August 31, 2006 (the “Credit Agreement”), by and among
MARTEN TRANSPORT, LTD., a Delaware corporation (the “Borrower”), the Banks
named therein, and U.S. BANK NATIONAL ASSOCIATION, as agent for the Banks (the “Agent”).  Terms not otherwise expressly defined herein
shall have the meanings set forth in the Credit Agreement.

Preliminary Statement

The Borrower has requested
consent of the Banks and Agent to (a) organize three Subsidiaries; and (b)
transfer certain assets and businesses to such Subsidiaries.  In consideration of approving these
transactions, the Banks have required that the three new Subsidiaries guaranty
obligations of the Borrower arising under the Credit Agreement.

FOR VALUE RECEIVED, the
Borrower, the Banks and the Agent agree that the Credit Agreement is amended as
follows.

ARTICLE I - AMENDMENTS TO THE
CREDIT AGREEMENT

1.1 Definitions.  Section 1.1 is amended as follows:

(a)  By adding the following definitions:

“‘Guaranties’:  Guaranties by the Guarantor Subsidiaries in
the form provided by the Agent with the First Amendment of this Agreement, as
amended, modified or replaced from time to time.”

“‘Guarantor Subsidiaries’:  Marten Transport Services, Ltd., a Delaware
corporation, Marten Transport Logistics, LLC, a Delaware limited liability
company, Marten Transport Holdings, Ltd., a Delaware corporation and each successor
thereof.”

“‘Guarantor Transaction’:  Contribution of assets and businesses by the
Borrower to the Guarantor Subsidiaries, resulting in (a) the Borrower owning
all of the stock of Marten Transport Services, Ltd., and (b) Marten Transport
Services, Ltd. owning all of the membership or other equity interest of Marten
Transport Logistics, LLC and all of the stock of Marten Transport Holdings,
Ltd.

(b)  By amending the definition
of “Borrowing Base” to read as follows (with the added words being underlined
for convenience of reference):

“‘Borrowing Base’:
As of any date of determination shall mean 80% of the net book value
(determined in accordance with GAAP) of all revenue-generating transportation
equipment of the Borrower and the Guarantor Subsidiaries, less
the outstanding balance of all funded Indebtedness of the Borrower and the
Guarantor 

 

Subsidiaries other than the
Obligations, and less all trade accounts payable of the Borrower and
the Guarantor Subsidiaries as of the date of determination.”

(c)  By amending the definition
of “Loan Documents” to read as follows (with the added words being underlined
for convenience of reference):

“‘Loan Documents’:  This
Agreement, the Notes, each Guaranty, each Letter of Credit Agreement,
the Agent’s Fee Letter and each other instrument, document, guaranty, security
agreement, mortgage, or other agreement executed and delivered by the Borrower or
a Guarantor Subsidiary in connection with this Agreement, the Loans, the
Letters of Credit or the Letter of Credit obligations, as amended from time to
time.”

(d)  By adding the following sentence at the end
of the definition of “Subsidiary”:

“Each Guarantor
Subsidiary shall be deemed at all times to be a Subsidiary, whether or not it
shall meet or continue, at any time, to meet the foregoing requirements.”

1.2  Provisions Permitting the Guarantor
Transaction.  The following Sections
in Article 6 are amended as follows:

(a)  New Section 6.2(d) is added after Section
6.2(c), and shall read as follows:

“6.2(d)  transfer of assets and
businesses to the Guarantor Subsidiaries as part of the Guarantor Transaction.”

(b)  Section 6.4 is amended by
adding the following phrase at the end of such Section:

“except for any change in the nature of the business or entrance into
any new lines of business relating to the implementation of the Guarantor
Transaction.”

(c)  Section 6.5 is amended by adding the
following phrase at the end of such Section:

“except for formation of the Guarantor Subsidiaries as part of the
Guarantor Transaction.”

(d)  Section 6.8 is amended by adding the
following sentence at the end of such Section:

“The Guarantor Transaction shall not be deemed to be a transaction
prohibited by this Section.”

(e)  New Section 6.12(k) is added
after Section 6.12(j), and shall read as follows:

“6.12(k)  The transfer of assets
and businesses to the Guarantor Subsidiaries in exchange for the equity
interests of the Guarantor Subsidiaries (held as provided in 

 

the definition of ‘Guarantor Transaction’) as part of the Guarantor
Transaction and the subsequent holding of such equity interests.”

1.3  Investment in MW Logistics, LLC.  Section 6.12(j) is amended to read as
follows:

“6.12(j) Investments in MW Logistics, LLC, in the form of revolving
debt or equity interests, not to exceed, in the aggregate, $3,500,000.”

1.4  Guaranty of Note Purchase Agreement.  The following Sections in Article 6 are
amended as follow:

(a)  New Section 6.13(f) is added after Section
6.13(e), and shall read as follows:

“6.13(f)  Indebtedness of the
Guarantor Subsidiaries consisting of Contingent Obligations arising under the
Guaranties and under any guaranty by the Guarantor Subsidiaries of the
obligations of the Borrower under the Note Purchase Agreement.”

(b)  Section 6.15 is amended by adding the
following phrase at the end of such Section:

“and except for Contingent Obligations arising under the Guaranties and
under any guaranty by the Guarantor Subsidiaries of the obligations of the
Borrower under the Note Purchase Agreement.”

1.5  Defaults.  New Section 7.1(l) is added after Section
7.1(k), and shall read as follows:

“7.1(l) 
Any Guaranty shall not be, or shall cease to be, binding and enforceable
in accordance with its terms, or any Guarantor Subsidiary shall fail to comply
with the terms thereof or shall contest, disavow or revoke, or attempt to
disavow or revoke, its Guaranty.”

1.6  Construction.  All references in the Credit Agreement to “this
Agreement”, “herein” and similar references shall be deemed to refer to the
Credit Agreement as amended by this Amendment.

ARTICLE II - REPRESENTATIONS AND
WARRANTIES

To induce the Banks and the
Agent to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower
hereby warrants and represents to the Banks and the Agent that it is duly
authorized to execute and deliver this Amendment, and to perform its
obligations under the Credit Agreement as amended hereby, and that this
Amendment constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and subject to
equitable principles.

 

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth
above, provided, however, that the effectiveness of this Amendment is subject
to the satisfaction of each of the following conditions precedent:

3.1 Warranties.  Before and after giving effect to this
Amendment, the representations and warranties in Article 4 of the Credit
Agreement shall be true and correct as though made on the date hereof, except
for changes that are permitted by the terms of the Credit Agreement, as amended
hereby.  The execution by the Borrower of
this Amendment shall be deemed a representation that the Borrower has complied
with the foregoing condition.

3.2 Defaults.  Before and after giving effect to this
Amendment, no Default and no Event of Default shall have occurred and be
continuing under the Credit Agreement. 
The execution by the Borrower of this Amendment shall be deemed a
representation that the Borrower has complied with the foregoing condition.

3.3 Documents.  The Borrower shall have executed and
delivered this Amendment and the Guarantor Subsidiaries shall have executed and
delivered (a) the Guaranties, (b) the approval resolutions approving the
Guaranties, (c) incumbency certificates, and (d) copies of the Certificate of
Incorporation and Bylaws, or other organizational documents of each Guarantor
Subsidiary.

ARTICLE
IV - GENERAL

4.1 Expenses.  The Borrower agrees to reimburse the Agent
upon demand for all reasonable expenses (including reasonable attorneys’ fees
and legal expenses) incurred by the Agent in the preparation, negotiation and
execution of this Amendment and any other document required to be furnished
herewith, and in enforcing the obligations of the Borrower hereunder, and to
pay and save the Agent and the Banks harmless from all liability for, any stamp
or other taxes which may be payable with respect to the execution or delivery
of this Amendment, which obligations of the Borrower shall survive any
termination of the Credit Agreement.

4.2 Counterparts.  This Amendment may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and
the same instrument.

4.3 Severability.  Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

4.4 Law; Consent to
Jurisdiction; Waiver of Jury Trial. 
This Amendment shall be a contract made under the laws of the State of
Minnesota, which laws shall govern all the rights and duties hereunder.    This Amendment shall be subject to the
Consent to Jurisdiction and Waiver of Jury Trial provisions of the Credit
Agreement.

 

4.5 Successors;
Enforceability.  This Amendment shall
be binding upon the Borrower, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Borrower, the
Banks and the Agent and the successors and assigns of the Banks and the
Agent.  Except as hereby amended, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects.

(signature page follows)

 

 

IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be executed at Minneapolis, Minnesota by
their respective officers thereunto duly authorized as of the date first
written above.

 

	
  

  	
  U.S. BANK
  NATIONAL ASSOCIATION, as Agent

  
	
   

  	
  and as a Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael J.
  Reymann

  	
   

  
	
   

  	
   

  	
   Michael J. Reymann

  
	
   

  	
   

  	
   Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARTEN
  TRANSPORT, LTD., as the Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  James Hinnendael

  	
   

  
	
   

  	
   

  	
   James Hinnendael

  
	
   

  	
   

  	
   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA,
  N.A., as a Bank

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Carlos Morales

  	
   

  
	
   

  	
   

  	
  Carlos Morales

  
	
   

  	
   

  	
  Vice PresidentExhibit
4.1

QUIDEL CORPORATION

AND

AMERICAN STOCK TRANSFER &
TRUST COMPANY

AS RIGHTS AGENT

AMENDED AND RESTATED

RIGHTS AGREEMENT

DATED DECEMBER 29, 2006

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Certain Definitions.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Appointment of Rights Agent.

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Issue of Rights Certificates.

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Form of Rights Certificates.

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Countersignature and Registration.

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

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

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Exercise of Rights; Purchase Price; Expiration Date
  of Rights.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Cancellation and Destruction of Rights Certificates.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Reservation and Availability of Capital Stock.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Preferred Stock Record Date.

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

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

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Certificate of Adjusted Purchase Price or Number of
  Shares.

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

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

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Fractional Rights and Fractional Shares.

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Rights of Action.

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Agreement of Rights Holders.

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Rights Certificate Holder Not Deemed a Stockholder.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Concerning the Rights Agent.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Merger or Consolidation or Change of Name of the
  Rights Agent.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Duties of Rights Agent.

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Change of Rights Agent.

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Issuance of New Rights Certificates.

  	
   

  	
  29

  

 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Redemption and Termination.

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Exchange.

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Notice of Certain Events.

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Notices.

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Supplements and Amendments .

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Successors.

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  Determination and Actions by the Board of Directors,
  etc.

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  Benefits of this Agreement.

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  Severability.

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  Governing Law.

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
   

  	
  Counterparts.

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
   

  	
  Descriptive Headings; References.

  	
   

  	
  36

  

EXHIBIT
LIST

	
  Exhibit A

  	
  Form of Certificate of Designation of Rights,
  Preferences, Privileges and Restrictions of Series C Junior Participating
  Preferred Stock of Quidel Corporation

  
	
  Exhibit B

  	
  Form of Rights Certificate

  
	
  Exhibit C

  	
  Summary of Rights to Purchase Preferred Stock of
  Quidel Corporation

  

 

  

AMENDED AND RESTATED RIGHTS AGREEMENT

THIS AMENDED AND RESTATED RIGHTS AGREEMENT (this “Agreement”), dated December 29, 2006, is entered into by and
between Quidel Corporation, a Delaware corporation (the “Company”),
and American Stock Transfer & Trust Company, a New York corporation (the “Rights Agent”), with reference to the following facts:

WHEREAS, on December 11, 1996 (the “Rights Dividend Declaration Date”), the Board of Directors
(as defined below) authorized and declared a dividend distribution of one Right
for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on January 10, 1997 (the “Record Date”), and has authorized the issuance of one Right
(as such number may hereinafter be adjusted pursuant to the provisions of Section 11(p)) for each share of Common Stock issued
from the Record Date (whether originally issued or delivered from the Company’s
treasury) until the earliest of the Distribution Date or a Section 13
Event or the Expiration Date (each as hereinafter defined), each Right
initially representing the right to purchase one one-thousandth of a
share of Series C Junior Participating Preferred Stock of the Company
having the rights, preferences, privileges and restrictions set forth in the form
of Certificate of Designation of Rights, Preferences, Privileges and
Restrictions attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the “Rights”);

WHEREAS, as of December 31, 1996, the Company and
the Rights Agent entered into that certain Rights Agreement (the “Rights Agreement”);

WHEREAS, as of May 24, 2002, the Company amended
and restated the Rights Agreement; and

WHEREAS, the Company desires to set forth certain
further amendments to the Rights Agreement, including extending the Final
Expiration Date (as hereinafter defined) to December 31, 2011.

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

1.             Certain Definitions.

For purposes of this Agreement, the following terms
have the meanings indicated:

(a)           “Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates
of such Person, without the prior approval of the Board of Directors, shall become,
after the date hereof, the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, but shall not include (i) an Exempt Person, (ii)
a Person who or which, together with its Affiliates and Associates, shall
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares of Common
Stock outstanding due to a repurchase of Common Stock by the Company, unless
such Person shall thereafter purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock representing 1% of the shares of Common
Stock

 

then outstanding, or (iii) any Person that
would not otherwise be a 15% Stockholder but for its Beneficial Ownership
of Rights.  Notwithstanding the
foregoing, if the Board of Directors determines in good faith that a Person who
would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an “Acquiring Person” for any purposes of
this Agreement.

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

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

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

(i)      which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own,” (A) securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person’s Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or
(B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) 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 Section 3(a)
or Section 22 (the “Original Rights”) or pursuant to Section 11(i) in connection with an adjustment made
with respect to any Original Rights;

(ii)     which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), including 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,” any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

(iii)    which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person’s Affiliates or Associates) has any agreement, arrangement
or understanding (whether or not in writing), for

 2
 

 

the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (d) shall cause
a Person engaged in business as an underwriter of securities to be the “Beneficial
Owner” of, or to “beneficially own,” any securities acquired through such
Person’s participation in good faith in a firm commitment underwriting until
the expiration of 40 days after the date of such acquisition.

(e)           “Board of Directors
“ shall mean the Board of Directors of the Company.

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

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

(h)           “Common Stock”
shall mean the common stock, par value $.001 per share, of the Company, except
that “Common Stock” when used with reference to any Person other than the
Company shall mean the capital stock (or units of beneficial interest which
represent the right to participate in profits, losses, deductions and credits)
of such Person with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of such
Person.

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

(j)            “Current Market Price”
shall have the meaning set forth in Section 11(d)(i).

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

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

(m)          “Equivalent Preferred
Stock” shall have the meaning set forth in Section 11(b).

(n)           “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended and in effect on the
date of this Agreement.

(o)           “Exempt Person”
shall mean the Company, any Subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or any Subsidiary of the Company, or
any Person organized, appointed, or established by the Company or any
Subsidiary of the Company, for or pursuant to the terms of any such plan.

(p)           “Expiration Date”
shall mean the earliest of (i) the Final Expiration Date, (ii) the
time at which the Rights are redeemed as provided in Section 23, (iii) the time at which the Board of
Directors orders the exchange of Rights as provided in Section 24, or (iv) the
consummation of a transaction contemplated by Section 13(e).

 3
 

 

(q)           “Final Expiration Date”
shall mean the close of business on December 31, 2011.

(r)            “Permitted Offer”
shall have the meaning set forth in Section 11(a)(ii).

(s)           “Person”
shall mean any individual, firm, corporation, partnership or other entity.

(t)            “Preferred Stock”
shall mean shares of Series C Junior Participating Preferred Stock, par
value $.001 per share, of the Company and, to the extent that there is not a
sufficient number of shares of Series C Junior Participating Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, par value $.001 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of the
Series C Junior Participating Preferred Stock.

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

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

(w)          “Record Date”
shall have the meaning set forth in the WHEREAS clause at the beginning of this
Agreement.

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

(y)           “Rights”
shall have the meaning set forth in the WHEREAS clause at the beginning of this
Agreement.

(z)            “Rights Certificates”
shall have the meaning set forth in Section 3(a).

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

(bb)         “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii).

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

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

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

(ff)           “Stock Acquisition Date”
shall mean the first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such or such earlier date as a
majority of the directors shall become aware of the existence of an Acquiring
Person; provided, however, that if such Person is thereafter
determined not to have become an Acquiring Person within the meaning of Section 1(a), then no Stock Acquisition
Date shall be deemed to have occurred.

 4
 

 

(gg)         “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 to elect at least a majority of the directors of such corporation
(or other persons performing similar functions) is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.

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

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

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

Any determination required by the definitions
contained in this Section 1 shall be made by
the Board of Directors in its good faith judgment, which determination shall be
binding on the Rights Agent and the holders of the Rights.

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

3.             Issue of Rights Certificates.

(a)           Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date, or (ii) the close of business
on the tenth day after the first public announcement by any Person (other than
an Exempt Person) to commence a tender or exchange offer within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if, upon consummation thereof, such Person together with its Affiliates
and Associates, would be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding (irrespective of whether any shares are actually
purchased pursuant to any such offer) (each of the time periods in (i) and (ii)
being subject to extension as provided in Section 27
and the earliest of (i) and (ii) being herein referred to as the “Distribution Date”), (w) the Rights shall
not be exercisable, (x) the Rights will be solely evidenced (subject to
the provisions of paragraph (b) of this Section 3)
by the certificates for the Common Stock registered in the names of the holders
of the Common stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and
(y) each Right will be transferable only in connection with the transfer
of the underlying share of Common Stock (including a transfer to the
Company).  As soon as practicable after
the Distribution Date, the Rights Agent will send to each record holder of the
Common Stock 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 rights
certificates, in substantially the form of Exhibit B
hereto (the “Rights Certificates”),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein.  In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(p),
at the time of distribution of the Rights Certificates, the

 5
 

 

Company may make any necessary and
appropriate adjustments (in accordance with Section 14(a))
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

(b)           As promptly as practicable following the Record Date, the
Company has sent a copy of a Summary of Rights to purchase Preferred Stock,
containing substantially the information set forth in the form attached hereto
as Exhibit C, to each record
holder of the Common Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company.  With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights.  Until the earlier of
the Distribution Date or the Expiration Date, the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such shares of
Common Stock.

(c)           Rights shall be issued in respect of all shares of Common
Stock that are issued after the Record Date but prior to the earliest of the
Stock Acquisition Date or a Section 13 Event or the Expiration Date.  Certificates representing such shares of
Common Stock, and certificates issued upon transfer or exchange of Common
Stock, shall also be deemed to be certificates for Rights, and shall bear the
following legend:

“This certificate also
represents Rights that entitle the holder hereof to certain rights as set forth
in a Rights Agreement between the Corporation and American Stock Transfer &
Trust Company, as Rights Agent, dated as of December 31, 1996, as amended
from time to time (the “Rights Agreement”),
the terms, conditions and limitations of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the
Corporation.  Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Corporation 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 set forth in the Rights Agreement, Rights issued to, or
beneficially owned by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.”

Notwithstanding this subsection (c), the omission
of a legend shall not affect the enforceability of any part of this Agreement
or the rights of any holder of the Rights. 
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates shall,
until the Distribution Date, be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered holders of the
associated Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.

 6
 

 

4.             Form of Rights Certificates.

(a)           The Rights Certificates (and the forms of an election to
purchase and of assignment and of certificates to be printed on the reverse
thereof) when, as and if issued, shall each be substantially in the form set
forth in Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed or traded, or to conform to
usage.  Subject to the provisions of Section 11 and Section 22, the Rights Certificates,
whenever distributed, on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock
at the Purchase Price, but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

(b)           Notwithstanding any other provision of this Agreement, any
Rights Certificate issued pursuant to Section 3(a)
or Section 22 that
represents Rights beneficially owned by any Person known to be (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, 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
such Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer which
the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e), and any Rights
Certificate issued pursuant to Section 6
or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend,
modified as applicable to apply to such Person:

“The Rights represented
by this Rights Certificate are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement).  Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such
Agreement.”

5.             Countersignature and Registration.

(a)           The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any other officer of the
Company designated by the Chairman or President, either manually or by
facsimile signature, and shall have affixed thereto the Company’s seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.  The Rights Certificates

 7
 

 

shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned.  In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.

(b)           Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder.  Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the certificate number and the date of each of the Rights Certificates.  The Rights Certificates shall thereafter only
be transferable on the registry books of the Rights Agent.

6.             Transfer, Split-Up, Combination and Exchange of
Rights Certificates;

Mutilated, Destroyed, Lost or Stolen Rights Certificates.

(a)           Subject to the provisions of Section 4(b), Section 7(e)
and Section 14, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged 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 Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.  Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested.  The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificate.

(b)           Subject to the provisions of Section 4(b) and Section 7(e),
at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the

 8
 

 

Expiration Date, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably 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 Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

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

(a)           Subject to Section 7(e),
Section 23(b) and Section 24(b), the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 23(a)), in whole or in part
at any time after the Distribution Date upon surrender of the Rights
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 Purchase Price with respect to the total number of one one-thousandths
of a share of Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable, and
any taxes or other charges relating thereto pursuant to Section 9(e), at or prior to the
Expiration Date.

(b)           The purchase price for each one one-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
$24.00 (such exercise price per one one-thousandth of a share, the “Purchase Price”), and shall be subject to
adjustment from time to time as provided in Section 11
and Section 13(a) and shall
be payable in accordance with paragraph (c) below.

(c)           Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one one-thousandth of a share of Preferred
Stock (or other shares, securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k),
thereupon promptly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of one one-thousandths
of a share of Preferred Stock to be purchased and the Company hereby authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depository agent) and the Company will direct the depository agent to comply
with such request, (ii) requisition from the Company an amount of cash, if
any, to be paid in lieu of fractional shares in accordance with Section 14, (iii) after receipt
of such certificates or depository receipts, cause the same to be delivered to
or upon the order of the registered holder

 9
 

 

of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. 
The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii))
shall be made by bank draft, certified bank check or money order payable to the
order of the Company or other form of payment acceptable to the Company.  In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a),
the Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate.

(d)           In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14.

(e)           Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate of 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) by or for the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined is
part of a plan, arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise.  The Company shall use all reasonable efforts
to insure that the provisions of this Section 7(e)
and Section 4(b) are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any of their respective Affiliates,
Associates or transferees hereunder.

(f)            Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in 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 Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.

 10

 

8.             Cancellation and Destruction of
Rights Certificates.

All Rights Certificates surrendered for the purpose of
exercises, 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 Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.  The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. 
The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

9.             Reservation and Availability of Capital
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 (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement including Section 11(a)(iii), will be
sufficient to permit the exercise in full of all outstanding Rights; provided, however,
that the Company shall not be required to reserve and keep available shares of
Preferred Stock, Common Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13 unless, and only to the
extent that, the Rights become exercisable pursuant to such adjustments.

(b)           So
long as the shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

(c)           If
necessary to permit the offer and issuance of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of Rights, 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),
or as soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Final Expiration Date.  The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or “blue 

 11
 

 

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 pursuant to clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective.  Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.  Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement (if required) has been
declared effective.

(d)           The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all one one-thousandths of a share of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase 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 Rights Certificates and of any
certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights.  The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one one-thousandths of a share
of Preferred Stock (or Common Stock and/or other securities, as the case may
be) 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 Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.

10.          Preferred Stock Record Date.

Each Person in whose name any certificate for a number
of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such fractional shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby and such certificate shall
be dated as of the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Stock (or Common Stock and/or other securities,
as the case may be) transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or 

 12
 

 

Common Stock and/or other securities, as the case may
be) transfer books of the Company are open. 
Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate, as such, shall not be entitled to any rights of a
stockholder 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 or subscription
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.

11.          Adjustment of Purchase Price,

Number and Kind of Shares or Number of Rights.

The Purchase 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 any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a)
and Section 7(e), the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Preferred Stock or capital stock, as the case may be, 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, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.  If an event occurs which would require an
adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), 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).

(ii)           In
the event that a Stock Acquisition Date shall occur at any time after the
Rights Dividend Declaration Date, and the Rights shall not have been redeemed
pursuant to Section 23(a) or exchanged pursuant
to Section 24, and the Expiration Date
shall not have occurred, in each case prior to the tenth day following such
Stock Acquisition Date (as such ten days may be extended pursuant to Section 27), unless the event causing the 15% threshold to
be crossed is a transaction set forth in Section 13(a),
or is an acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for any and all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the members of the Board of
Directors after receiving advice from one or more investment banking firms, to
be (a) at a price which is fair to stockholders of the Company (taking
into account all factors which such members of the Board of Directors deem
relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the
Company and its 

 13
 

 

stockholders (a “Permitted Offer”),
then, proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e))
shall thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-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 Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the occurrence of the
Section 11(a)(ii) Event, and (y) dividing that product (which,
following such occurrence, shall thereafter be referred to as the “Purchase Price” for each Right and for all purposes of this
Agreement by 50% of the Current Market Price (determined pursuant to Section 11(d)) per share of Common Stock on the date of
such occurrence (such number of shares is herein called the “Adjustment Shares”); provided that
the Purchase Price and the number of Adjustment Shares shall be further
adjusted as provided in this Agreement to reflect any events occurring after
the date of such occurrence; and provided  further, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section 13, then only the provisions of Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).

(iii)          In
the event that the number of shares of Common Stock which are authorized by the
Company’s Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a)
and the Rights shall become so exercisable, to the extent permitted by
applicable law and any agreements in effect on the date hereof to which the
Company is a party, the Company shall (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”) over (2) the
Purchase Price (such excess, the “Spread”), and
(B) with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which the Board of Directors has
deemed to have the same value as shares of Common Stock (such shares of
preferred stock, “Common Stock Equivalents”)),
(4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors; provided, however, 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 occurrence of the 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
Purchase Price, shares of Common Stock (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 shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares 

 14
 

 

(such period, as it may
be extended, the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e),
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, as well as a public announcement at
such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the Current Market Price (as determined
pursuant to Section 11(d)) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value of any “Common Stock Equivalent” shall be deemed to have the same
value as the Common Stock on such date. 
The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
Rights pursuant to this Section 11(a)(iii).

(b)           In
case the Company shall fix a record date for the issuance of rights (other than
the Rights), options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the shares of Preferred Stock (“Equivalent Preferred Stock”)) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or per share of Equivalent Preferred Stock (or having
a conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price (as determined
pursuant to Section 11(d))
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock 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 Equivalent Preferred Stock so to be offered and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date, plus
the number of additional shares of Preferred Stock and/or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).  In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights.  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 adjustment 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 Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

(c)           In
case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or 

 15
 

 

merger in which the Company is the continuing corporation) of evidences
of indebtedness, cash (other than a regular quarterly 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 subscription rights or warrants (excluding those
referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the Current Market Price
(as determined pursuant to Section 11(d))
per share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such Current Market Price (as determined
pursuant to Section 11(d))
per share of Preferred Stock.  Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.

(d)           (i)            “Current
Market Price” per share of Common Stock on any date shall be deemed
to be, for the purpose of any computation hereunder, the average of the daily
closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days (as hereinafter defined) immediately prior to such date; provided, however,
that in the event that the Current Market Price per share of the Common Stock
is determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Day period, as set forth above,
after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Market Price 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 National Market System of NASDAQ Stock
Market (“NASDAQ”) or, if the
shares of Common Stock are not listed or admitted to trading on the National
Market System of NASDAQ, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected by
the Board of Directors.  If on any such
date no market maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board of Directors
shall be used.  The term “Trading Day” shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of

 16
 

 

business or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day.  If the Common Stock is not publicly held or
not so listed or traded, Current Market Price per share shall mean the fair
value per share as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.

(ii)           For
the purpose of any computation hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). 
If the Current Market Price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Current Market
Price per share of the Common Stock.  If
neither the Common Stock nor the Preferred Stock is publicly held or so listed
or traded, Current Market Price per share of the Preferred Stock shall mean the
fair value per share as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. 
For all purposes of this Agreement, the Current Market Price of one one-thousandth
of a share of Preferred Stock shall be equal to the Current Market Price of one
share of Preferred Stock divided by 1,000.

(e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.  All
calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. 
Notwithstanding the first sentence of this Section 11(e), an adjustment required by this Section 11 shall be made no later
than three (3) years from the date of the transaction that mandates such
adjustments, unless the Expiration Date occurs prior to such date.

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

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

 17
 

 

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

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

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

(k)           Before
taking any action that would cause adjustment reducing the Purchase Price below
the then stated value, if any, of the number of one one-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 

 18
 

 

legally issue fully paid and nonassessable such number of one one-thousandths
of a share of Preferred Stock at such adjusted Purchase Price.

(l)            In
any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-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 Purchase Price
in effect prior to such adjustment; provided,
however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares (fractional or otherwise)
or securities 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 Purchase Price, in addition to those adjustments expressly
required by this Section 11,
as and to the extent that in their good faith judgment the Board of Directors
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the Current Market Price,
(iii) 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, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.

(n)           The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)), (ii) merge with
or into any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)),
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 more than 50% 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 transactions
each of which complies with Section 11(o)),
if (x) at the time of or immediately after such consolidation, merger,
sale or transfer there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale or transfer, the stockholders of the Person who
constitutes, or would constitute, the Principal Party (as hereinafter defined)
for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.

(o)           The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23,
Section 24 or Section 27, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action 

 19
 

 

will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.

(p)           Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior
to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.

12.          Certificate of Adjusted Purchase Price
or Number of Shares.

Whenever an adjustment is made as provided in Section 11 and Section 13,
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, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 25
or make a public announcement thereof. 
Notwithstanding the foregoing sentence, the failure of the Company to
give such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.  Any
adjustment to be made pursuant to Section 11
and Section 13 shall be effective as of
the date of the event giving rise to such adjustment.

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 complies
with Section 11(o)), 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 complies with Section 11(o))
shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or
merger, and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock 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 or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the

 20
 

 

Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o)),
then, and in each such case, proper provisions shall be made so that
(i) each holder of a Right, except as provided in Section 7(e), shall thereafter have
the right to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to the occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such Section 11(a)(ii) Event, and
(2) dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the “Purchase Price” for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d)(i)) per share of the
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event (or the fair market value on such date of other
securities or property of the Principal Party, as provided for herein); provided, however,
that the Purchase Price and the number of shares of Common Stock of such
Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of
the first occurrence of a Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term “Company”
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (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) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights; provided, however,
that upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such
Principal Party, each holder of a Right shall thereupon be entitled to receive,
upon exercise of a Right and payment of the Purchase Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section 11(a)(ii) shall be of no
effect following the first occurrence of any Section 13 Event.

(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), (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 whose issued and outstanding Common Stock has
the greatest aggregate market value or (B) if no securities are so issued,
(x) the Person that is the 

 21
 

 

other party to such merger or consolidation and survives said merger or
consolidation, or, if there is more than one such Person, the Person whose
issued and outstanding Common Stock has the greatest aggregate market value or
(y) if the Person that is the other party to the merger or consolidation
does not survive the merger or consolidation, the Person that does survive the
merger or consolidation (including the Company if it survives); and 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 so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided however, in any such
case, (1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
so registered, “Principal Party” shall refer to such other Person; (2) if
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the
issued and outstanding Common Stock having the greatest aggregate market value,
and (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and
(2) of this provision shall apply to each of the owners having an interest
in the venture as if the Person owned by the joint venture was a Subsidiary of
both or all of such joint venturers.

(c)           The
Company shall not consummate any such consolidation, merger, sale or transfer
unless 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 unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal
Party will:

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

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

(iii)  use
its best efforts, if the Common Stock of the Principal Party shall become
listed on a national securities exchange, to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on such
securities exchange and, if the 

 22
 

 

Common Stock of the Principal Party shall not be listed on a national
securities exchange, to cause the Rights and the securities purchasable upon
exercise of the Rights to be reported by NASDAQ or such other system then in
use; and

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

The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or
transfers.  In the event that a
Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section 13(a).

(d)           In case the Principal Party that 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 charter or bylaws or other instrument governing its
corporate affairs that would have the effect of (i) causing such Principal
Party to issue, in connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13,
Common Shares of such Principal Party at less than the then Current Market
Price or securities exercisable for, or convertible into, Common Shares of such
Principal Party at less than such then Current Market Price (other than to
holders of Rights pursuant to this Section
13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Shares 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 has been cancelled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.

(e)           Notwithstanding
anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if
(i) such transaction is consummated with a Person or Persons who acquired
shares of Common Stock pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such Permitted Offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to the Permitted Offer.  Upon
consummation of any such transaction contemplated by this Section 13(e), all Rights hereunder
shall expire.

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(p),
or to distribute Rights Certificates which evidence fractional Rights.  If the Company so elects, in lieu of such
fractional Rights, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of 

 23
 

 

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

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

(c)           Following
the occurrence of a Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock.  If the Company so elects, in lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the Current Market
Value of one share of Common Stock.  For
purposes of this Section 14(c),
the Current Market Value of one share of Common Stock shall be the closing price
of one share of Common Stock (as determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise.

(d)           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.

 24

 

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 Section 18, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his 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 Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and 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.

16.          Agreement of Rights Holders.

Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with every other holder of
a Right that:

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

(b)           subject
to Section 6(a), after the
Distribution Date, the Rights 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 purposes, duly endorsed or accompanied by
a proper instrument of transfer and with the appropriate forms and certificates
fully executed;

(c)           subject
to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agents) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e), shall be required to 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 a
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, judgment 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 obligation;

 25
 

 

 

provided, however, the Company shall use its best
efforts to have any such order, decree, judgment or ruling lifted or otherwise
overturned as soon as possible.

17.          Rights Certificate Holder Not Deemed a
Stockholder.

No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purposes the holder of
the number of one one-thousandths of a share 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 Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25),
or to receive dividends or distributions or exercise any subscription or
preemptive rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.

18.          Concerning the Rights Agent.

(a)           The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder as set forth in a separately executed written
fee agreement.  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 or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises.

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

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

(a)           Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger
or consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any Person succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of Section 21.  In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the

 26
 

 

 

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

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

20.          Duties of Rights Agent.

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

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

(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Market Price) be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

(c)           The
Rights Agent shall be liable hereunder only for its own gross negligence or
willful misconduct.

(d)           The
Rights Agent shall not be liable for or by reason of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), 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
Rights Certificate (except its

 27
 

 

 

countersignature thereof); nor
shall it be responsible for any adjustment required under the provisions of Section 11 or Section 13 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 Rights Certificates after receipt of the
certificate described in Section 12
setting forth any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares of Common
Stock or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.

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

(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board or the President of the Company or any other officer of the Company
designated to the Rights Agent in writing by the Chairman of the Board or
President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.

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

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

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

(k)           If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase as the case may be, has either not been completed
or indicates an affirmative response

 28
 

 

 

to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without
first consulting with the Company.

21.          Change of Rights Agent.

The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon thirty (30)
days’ notice in writing mailed to the Company, and to each transfer agent of
the Common Stock and Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause) upon thirty (30) days’
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail or by the issuance of a public announcement providing
such information.  If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation or other entity
organized and doing business under the laws of the United States or of any
other state of the United States in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject
to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
deemed by the Company’s Board of Directors to be reasonable under the
circumstances.  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 the 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 that 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 and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates or issue a public
announcement providing such information. 
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 Agents as the case may be.

22.          Issuance of New Rights Certificates.

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

 29
 

 

 

connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the Expiration Date,
the Company (a) shall, with respect to shares of Common Stock 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 issued
by the Company prior to the Distribution Date, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be
issued 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 Rights Certificate would
be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.

23.          Redemption and Termination.

(a)           The
Board of Directors may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth (10th) day following the Stock
Acquisition Date, subject to extension as provided in Section 27 or (ii) the close of
business on the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $0.005 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the “Redemption
Price”).  Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the occurrence of an event described in Section 11(a)(ii) until such time as
the Company’s right of redemption hereunder has expired.  The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market
Price, as defined in Section 11(d)(i),
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.  Such redemption of the Rights by the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.

(b)           Immediately
upon the action of the Board of Directors ordering the redemption of the
Rights, 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,
without any interest thereon.  Promptly
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice to all
such holders at each holder’s last address as it appears 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 or by the issuance of a public
announcement providing such information. 
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.  The failure to give notice required by this Section 23(b) or any defect therein
shall not affect the legality or validity of the action taken by the Company.

(c)           The
Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement and
(ii) mailing payment of the Redemption Price to the

 30
 

 

 

registered holders of the Rights at their last addresses as they appear
on the registry books of the Rights Agent or, prior the Distribution Date, on the
registry books of the transfer agent of Common Stock, and upon such action, all
outstanding Rights and Rights Certificates shall be null and void without any
further action by the Company.

24.          Exchange.

(a)           Subject
to applicable laws, rules and regulations, and subject to subsection (c)
below, at any time after the occurrence of a Triggering Event, the Board of
Directors may cause the Company to 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))
for Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Ratio of
Exchange”).

(b)           Immediately
upon the action of the Board of Directors 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 shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Ratio of
Exchange.  The Company shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent or issue a
public notice of any such exchange; provided,
however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights that will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e))
held by each holder of Rights.

(c)           In
the event that there shall not be sufficient Common Stock authorized but
unissued to permit any exchange of Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights or alternatively, at the
option of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Stock in exchange therefor, or (ii) issue debt or equity
securities (including Preferred Stock) or a combination thereof, having a value
equal to the Current Value, in lieu of issuing Common Stock in exchange for
each such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors, or (iii) deliver any combination of cash, property, Common
Stock and/or other securities having a value equal to the Current Value in exchange
for each Right.  For purposes of this Section 24(c) only, the “Current Value” shall mean the product of
the current per share market price of Common Stock (determined pursuant to Section 11(d) on the date of the
occurrence of the event described above in subparagraph (a)) multiplied by
the number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available.  To the extent that the Company determines that
some action need be taken pursuant to clauses (i), (ii), or (iii) of this Section 24(c), the Board of Directors
may temporarily suspend the exercisability of the Rights

 31
 

 

 

for a period of up to sixty (60) days following the date on which the
event described in Section 24(a)
shall have occurred, in order to seek any authorization of additional Common
Stock and/or to determine the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended.

(d)           The
Company shall not be required to issue fractions of Common Stock or to
distribute certificates that evidence fractional Common Stock.  If elected by the Company, in lieu of such
fractional Common Stock, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Common Stock would
otherwise be issuable, an amount in cash equal to the same fraction of the
current per share market value of a whole Common Stock (as determined pursuant
to Section 14).

(e)           Without
limiting any of the other rights of the Board of Directors hereunder, the
Company may, at the option of the Board of Directors, at any time before any
Person has become an Acquiring Person, exchange all or part of the then
outstanding Rights for rights of substantially equivalent value, as determined
reasonably and with good faith by the Board of Directors, based upon the advice
of one or more nationally recognized investment banking firms.

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

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 quarterly cash 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 any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)),
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its

 32
 

 

 

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 transactions
each of which complies with Section 11(o)),
or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26, 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 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 ten (10) 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 ten (10) 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 Preferred Stock whichever shall be the
earlier.  The failure to give notice
required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.

(b)           In
case any of the events set forth in Section 11(a)(ii)
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26,
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), and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.

26.          Notices.

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

Quidel Corporation

10165 McKellar Court

San Diego, California 92121

Attention:      President

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 Rights Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:

American Stock &
Transfer Trust Company 

59 Maiden Lane

New York, NY 10038

Attention:     Corporate Trust Department

 33
 

 

 

Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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 Rights Agent (or, if prior to
the Distribution Date, to the holder of certificates representing shares of
Common Stock as shown on the registry books of the Transfer Agent).

27.          Supplements and Amendments .

Prior to (i) the close of business on the tenth
day after the Stock Acquisition Date, or (ii) the close of business on the
tenth day after the first public announcement by any Person (other than an
Exempt Person) to commence a tender or exchange offer within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if, upon consummation thereof, such Person together with its Affiliates
and Associates, would be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, and subject in each case to extension by the
Board of Directors by amendment hereby and the penultimate sentence of this Section 27, the Company may, in its sole and absolute
discretion and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock, whether or not such
supplement or amendment is adverse to any holders of Rights.  From and after the Distribution Date, and
subject to the penultimate sentence of this Section 27,
the Board of Directors may, and the Rights Agent shall, if the Board of
Directors so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order to (i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions hereunder,
(iii) shorten or lengthen any time period hereunder, or
(iv) otherwise change or supplement the provisions hereunder in any manner
which the Board of Directors may deem necessary or desirable and which shall
not materially and adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of
any such Person); provided, however,
this Agreement may not be supplemented or amended after the Distribution Date
to (A) make the Rights again redeemable after the Rights have ceased to be
redeemable other than pursuant to Section 31, or
(B) change any other time period unless such change is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to the
holders of Rights (other than any Acquiring Person and its Associates or
Affiliates).  Upon the delivery of a certificate
from 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.  No supplement
or amendment shall be made that changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of shares of Preferred Stock
or Common Stock for which a Right is exercisable without the approval of the
Board of Directors of the Company.  Prior
to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.

 34
 

 

 

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.

29.          Determination and Actions by the Board
of Directors, etc.

For all purposes
of this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d 3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act.  The Board of Directors
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 it may determine to be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights, or to amend this Agreement,
whether or not such supplement or amendment is adverse to any holders of
Rights).  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.

30.          Benefits of this Agreement.

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

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 determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23,
if lapsed, shall be reinstated and shall not expire until the

 35
 

 

 

close of business on the tenth Business Day following
the date of such determination by the Board of Directors.

32.          Governing Law.

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

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.

34.          Descriptive Headings; References.

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.  References herein to
Sections and Exhibits shall, unless otherwise specified, be to the referenced
section or exhibit hereof or hereto.

 

[Signature page follows]

 

 36

 

 

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

 

 

	
  

  	
  The “Company”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  QUIDEL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Caren L. Mason

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Caren L. Mason

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  The “Rights Agent”:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herbert J. Lemmer

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Herbert J. Lemmer

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 37

 

EXHIBIT
A

FORM
OF CERTIFICATE OF DESIGNATION OF RIGHTS,

PREFERENCES, PRIVILEGES AND RESTRICTIONS OF SERIES C

JUNIOR PARTICIPATING PREFERRED STOCK OF QUIDEL CORPORATION

The undersigned, Steven T. Frankel, the President of
Quidel Corporation, a Delaware corporation (the “Corporation”),
does hereby certify that pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, on
December 11, 1996, the Board of Directors adopted the following
resolutions creating a series of 50,000 shares of Preferred Stock designated as
Series C Participating Preferred Stock:

‘RESOLVED, that pursuant to Section 151(g) of the
Delaware General Corporation Law, the Board of Directors hereby acknowledges
that none of the shares of Series B Preferred Stock authorized pursuant to that
certain Certificate of Designations of the Series B Preferred Stock of Quidel
Corporation filed on January 4, 1995 with the Delaware Secretary of
State are outstanding.

‘RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by the Certificate of Incorporation,
the Board of Directors does hereby provide for the issue of a series of
Preferred Stock, par value $.001 per share, of the Corporation, to be
designated “Series C Junior Participating Preferred Stock” (the “Series C Preferred Stock”), initially consisting of
50,000 shares, and to the extent that the rights, preferences, privileges and
restrictions of the Series C Preferred Stock are not stated and expressed
in the Certificate of Incorporation, does hereby fix and herein state and
express such rights, preferences, privileges and restrictions thereof as
follows (all terms used herein that are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein):

1.                                      Designation
and Amount.

The shares of such series shall be designated as
“Series C Junior Participating Preferred Stock” and the number of shares
constituting such series shall be 50,000. 
Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, that
no decrease shall reduce the number of shares of Series C Junior
Participating Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series C
Junior Participating Preferred Stock.

2.                                      Dividends
and Distributions.

(a)           Subject
to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series C
Preferred Stock with respect to dividends, the holders of shares of
Series C Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 15th day of January, April,
July and October and in each year (each 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 C 

 A-1
 

 

Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to, subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the common stock, par value $.001 per share, of the
Corporation (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 C Preferred Stock.  In the event the Corporation shall at any
time after December 11, 1996 (the “Right
Declaration Date”) (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

(b)           The
Corporation shall declare a dividend or distribution on the Series C
Preferred Stock as provided in paragraph (a) above concurrently with any
declaration of a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).

(c)           Dividends
shall begin to accrue and be cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series C 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 C 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 C Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.

3.                                      Voting
Rights.

The holders of shares of Series C Preferred Stock
shall have the following voting rights:

(a)           Subject
to the provision for adjustment hereinafter set forth, each share of Series C
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation.  In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of 

 A-2
 

 

Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each case the number of votes per share to which holders of
shares of Series C Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

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

(c)           Except
as set forth herein, holders of Series C 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.

4.                                      Certain
Restrictions.

(a)           The
Corporation shall not declare any dividend on, make any distribution on, or
redeem or purchase or otherwise acquire for consideration any shares of Common
Stock after the first issuance of a share or fraction of a share of
Series C Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series C Participating Preferred Stock as
required by Section 2 hereof.

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

(i)    declare
or pay dividends on, make any other distribution 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 C 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 C Preferred Stock, except dividends paid
ratably on the Series C Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;

(iii)  redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series C 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 C Preferred Stock;

(iv)  purchase
or otherwise acquire for consideration any shares of Series C Preferred
Stock, or any shares of stock ranking on a parity with the Series C
Preferred Stock, 

 A-3
 

 

except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

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

5.                                      Reacquired
Shares.

Any shares of Series C 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.

6.                                      Liquidation,
Dissolution or Winding Up.

(a)           Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock unless, prior thereto, the
holders of shares of Series C Preferred Stock shall have received $1,000
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the “Series C Liquidation Preference”).  Following the payment of the full amount of
the Series C Liquidation Preference, no additional distributions shall be
made to the holders of shares of Series C Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount
per share (the “Common Adjustment”)
equal to the quotient obtained by dividing (i) the Series C
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth
in subparagraph (c) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the “Adjustment Number”).  Following the payment of the full amount of
the Series C Liquidation Preference and the Common Adjustment in respect
of all outstanding shares of Series C Preferred Stock and Common Stock,
respectively, holders of Series C Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of remaining
assets to be distributed in the ratio of the Adjustment Number to one (1) with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

(b)           In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series C Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series C Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. 
In the event, however, that there are not 

 A-4
 

 

sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.

(c)           In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

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 C
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 1,000 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged.  In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series C
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.

8.                                      No
Redemption.

The shares of Series C Preferred Stock shall not
be redeemable.

9.                                      Ranking.

The Series C Preferred Stock shall rank junior to
all other series of the Corporation’s preferred stock, if any, as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

10.                               Amendment.

The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series C Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of Series C
Preferred Stock, voting separately as a class.

 A-5
 

 

11.                               Fractional
Shares.

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

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

IN WITNESS
WHEREOF, this Certificate of Designations is executed on January     ,
1997.

	
  

  	
  QUIDEL CORPORATION

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   

  
	
   

  	
   

  	
  Steven T. Frankel, President

  

 

 A-6

 

EXHIBIT
B

FORM
OF RIGHTS CERTIFICATE

	
  CERTIFICATE NO. R                       

  	
   

  	
                                             RIGHTS

  

NOT EXERCISABLE AFTER DECEMBER 31, 2011 OR EARLIER IF
REDEEMED BY THE COMPANY.  THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.  [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.*]

RIGHTS CERTIFICATE

QUIDEL CORPORATION

This certifies that                              ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of December 31,
1996, as amended (the “Rights Agreement”),
between Quidel Corporation, a Delaware corporation (the “Company”),
and American Stock Transfer & Trust Company, a New York corporation (the “Rights Agent”), to purchase from the Company at any time
prior to 5:00 P.M. (California time) on December 31, 2011 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, non-assessable
share of Series C Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of
$24.00 per one one-thousandth of a share (the “Purchase
Price”), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly
executed.  The payment of the Purchase
Price shall be made by bank draft, certified bank check or money order payable
to the order of the Company or other form of payment acceptable to the Company.

The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share 

*              The portion of the
legend in brackets shall be inserted only if applicable, shall be modified to
apply to an Acquiring Person, and shall replace the preceding sentence

 

 B-1
 

 

set forth above, are the number and Purchase Price as
of December 31, 1996, 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 Rights Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate an Acquiring of Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate), or (iii) under certain circumstances
specified in the Rights Agreement, 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, 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 Purchase
Price and the number and kind of shares of Preferred Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is defined in the
Rights Agreement).

The Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the Rights, limitations of Rights, and obligations, duties and immunities of
the Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of Rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement.  Copies of the Rights
Agreement are on file at the office of the Rights Agent and are also available
upon written request to the Company.

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

Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be (i) redeemed by the Company at
its option at a redemption price of $0.005 per Right or (ii) exchanged by
the Company in whole or part for Common Shares, substantially equivalent
rights, or other consideration as determined by the Company.

The Company shall not be required to issue fractional
shares of Preferred Stock upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depository receipts), but if the Company so elects, in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.

 B-2
 

 

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

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

 B-3
 

 

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

	
  Dated as of
                                ,
  20      

  	
   

  	
   

  
	
   

  	
   

  	
  The “Company”:

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
  QUIDEL CORPORATION,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The “Rights Agent”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AMERICAN STOCK TRANSFER & TRUST 

  
	
   

  	
   

  	
  COMPANY,

  
	
   

  	
   

  	
  a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
						

 

 B-4
 

 

[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)

	
  FOR VALUE RECEIVED 

  	
   

  	
   

  	
   

  	
  hereby

  
	
  sells, assigns and transfers unto

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print
  name and address of transferee)

  	
   

  	
   

  

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

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  SIGNATURE GUARANTEED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  

 

 B-5
 

 

CERTIFICATE

The undersigned hereby certifies by checking the
appropriate boxes that:

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

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

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  SIGNATURE GUARANTEED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  

 

 B-6
 

 

NOTICE

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

 B-7
 

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder
desires to exercise Rights represented by the Rights Certificate)

 

TO:         QUIDEL
CORPORATION

The undersigned hereby irrevocably elects to exercise                                
Rights represented by this Rights Certificate to purchase the number of one one-thousandths
of a share 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 and delivered to:

	
  Name and Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Social Security or Other Identifying Number:

  	
   

  

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

	
  Name and Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Social Security or Other Identifying Number:

  	
   

  

 

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  SIGNATURE GUARANTEED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  

 B-8
 

 

CERTIFICATE

The undersigned hereby certifies by checking the
appropriate boxes that:

(1)                                  This
Rights Certificate [   ] is [   ] is 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 pursuant to the
Rights Agreement);

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

	
  DATED:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  SIGNATURE GUARANTEED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  

 

 B-9
 

 

NOTICE

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

 B-10

 

EXHIBIT
C

SUMMARY
OF RIGHTS TO PURCHASE

PREFERRED STOCK OF

QUIDEL CORPORATION

On December 11, 1996 (the “Rights
Dividend Declaration Date”) the Board of Directors of Quidel
Corporation (the “Company”)
declared a dividend of one Right (a “Right”) for
each outstanding share of common stock of the Company, par value $.001 per
share (“Common Stock”) distributed to
stockholders of record at the close of business on January 10, 1997.  Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share (a “Unit”) of Series C Junior Participating Preferred
Stock, par value $.001 per share (the “Preferred Stock”)
at a purchase price of $24.00 (the “Purchase Price”),
subject to adjustment.  The description
and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”), between the Company and American Stock
Transfer & Trust Company, as Rights Agent.

Initially, the Rights will be attached to all
certificates representing shares of Common Stock then outstanding, and no
separate Rights Certificates will be distributed.

Until the Distribution Date (as defined below),
(i) the Rights will be evidenced by the certificates for Common Stock and
will be transferred with and only with such certificates for Common Stock,
(ii) new Common Stock certificates issued after January 10, 1997 will
contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.

The Rights are not exercisable until the Distribution
Date and will expire at the close of business on December 31, 2011, unless
earlier redeemed or exchanged by the Company as described below or otherwise
terminated.

The Rights will separate from the Common Stock and be
distributed to the holders of Common Stock (such date, the “Distribution Date”) upon the earlier of 10 days (or such
longer time as may be determined by the Company’s Board of Directors) following
(i) a public announcement (or determination by the Company’s Board of
Directors) that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the “Stock Acquisition Date”),
or (ii) the public announcement of any person to commence a tender offer
or exchange offer that would result in a person or group beneficially owning
15% or more of such outstanding shares of Common Stock.

As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.

In the event that on or at any time following the
Rights Dividend Declaration Date, a Person becomes the beneficial owner of more
than 15% of the then outstanding shares of Common Stock (except pursuant to an
offer for any and all outstanding shares of Common Stock

 C-1
 

 

which the Board of Directors of the Company determines
to be fair to and otherwise in the best interests of the Company and its
stockholders), then each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the Purchase Price of the Right, as adjusted. 
Rights are exercisable following the occurrence of the foregoing only
after such time as the Rights are no longer redeemable by the Company, as set
forth below.  Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (including its
associates and affiliates and certain others acting in conjunction with the
Acquiring Person) will be null and void.

In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
corporation or in which the Company’s outstanding Common Stock is exchanged for
cash, stock or other property (other than a merger which follows an offer
described in the second preceding paragraph), or (ii) 50% or more of the
assets or earning power of the Company and its subsidiaries, taken as a whole,
is sold or transferred, each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company (or in certain
cases, its affiliates) having a value equal to two times the Purchase Price of
the Right, as adjusted.

The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution, as set
forth in the Rights Agreement.  With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price.  No fractional Rights, fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth
of a share), or fractional shares of Common Stock will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Rights, Preferred Stock, or Common Stock, respectively, on the last trading
date prior to the date of exercise.

In general, the Company may redeem the Rights in
whole, but not in part, at a price of $0.005 per Right, at any time until ten
days following the Stock Acquisition Date (or such later date as may be
determined by the Company’s Board of Directors).  Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the $0.005 redemption
price per Right.

The Company may exchange Common Stock or other
substantially equivalent rights or consideration for the Rights, in whole or
part, from time to time as determined by the Company’s Board of Directors.

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

Any of the provisions of the Rights Agreement may be
supplemented or amended by the Company’s Board of Directors prior to the
Distribution Date, without approval of the Rights holders, whether or not a
supplement or amendment is adverse to the Rights holders.  After the

 C-2
 

 

Distribution Date, the
provisions of the Rights Agreement (other than the provisions relating to the
Purchase Price, redemption price, number of shares of Common Stock for which a
Right is exercisable or the final expiration date of the Rights) may be amended
by the Board of Directors in order to make changes which do not materially and
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), provided, however, that the Rights Agreement may not be amended to
(i) make the Rights again redeemable after the Rights have ceased to be
redeemable, or (ii) change any other time period unless such change is for
the benefit of the holders (excluding any Acquiring Person).

A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Form 8-K of the Company filed
on January     , 2007. 
A copy of the Rights Agreement is available free of charge from the
Company.  This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.

 C-3

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