Document:

Exhibit 4.1

 

FEI
COMPANY

 

and

 

MELLON
INVESTOR SERVICES LLC,

as
Rights Agent

 

 

PREFERRED
STOCK RIGHTS AGREEMENT

 

Dated
as of July 21, 2005

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issuance of Rights
  Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Rights Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and
  Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of Rights;
  Exercise Price; Expiration Date of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation and
  Destruction of Rights Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Reservation and
  Availability of Preferred Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Record Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted
  Exercise Price or Number of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional
  Rights and Fractional Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of
  Action

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement
  of Rights Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Rights
  Certificate Holder Not Deemed a Shareholder

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning
  the Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or
  Consolidation or Change of Name of Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of
  Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of
  Rights Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance of
  New Rights Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange

  	
   

  

 

i

 

	
  Section 25.

  	
  Notice of
  Certain Events

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements
  and Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Determinations
  and Actions by the Board of Directors, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Benefits of
  this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive
  Headings

  	
   

  

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
   

  	
  Form of
  Articles of Amendment

  
	
  Exhibit
  B

  	
   

  	
  Form of
  Rights Certificate

  
	
  Exhibit
  C

  	
   

  	
  Summary
  of Rights

  

 

ii

 

PREFERRED STOCK RIGHTS
AGREEMENT

 

This Preferred
Stock Rights Agreement (the “Agreement”)
is dated as of July 21, 2005, between FEI Company, an Oregon corporation, and
Mellon Investor Services LLC as Rights Agent.

 

On July 21, 2005,
(the “Rights Dividend Declaration Date”),
the Board of Directors of the Company authorized and declared a dividend of one
Preferred Share Purchase Right (a “Right”) for
each Common Share (as hereinafter defined) of the Company outstanding as of the
Close of Business (as hereinafter defined) on August 12, 2005 (the “Record Date”), each Right
representing the right to purchase one one-thousandth (0.001) of a share of
Series A Participating Preferred Stock (as such number may be adjusted
pursuant to the provisions of this Agreement), having the rights, preferences
and privileges set forth in the form of the Articles of Amendment attached
hereto as Exhibit A, upon the terms and subject to the conditions herein set
forth, and further authorized and directed the issuance of one Right (as such
number may be adjusted pursuant to the provisions of this Agreement) with
respect to each Common Share that shall become outstanding between the Record
Date and the earlier of the Distribution Date and the Expiration Date (as such
terms are hereinafter defined), and in certain circumstances after the
Distribution Date.

 

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

 

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

 

(a)  “Acquiring Person” shall mean any
Person, who or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the Common Shares then
outstanding, but shall not include the Company, any Subsidiary of the Company
or any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of
any such plan.  Notwithstanding the
foregoing, Philips Business Electronics International B.V. (“Philips”), any Person of which
Philips owns at least 90% of such Person’s voting stock or any Person that owns
at least 90% of Philips’ voting stock (each such Person, a “Philips’ Affiliate”) shall not be
deemed an “Acquiring Person” until such time as Philips, with its Philips’
Affiliates, shall be the Beneficial Owner of 30% or more of the Common Shares
then outstanding or, notwithstanding Section 1(d)(ii)(A), until such time
as Philips, with its Philips’ Affiliates, announces a tender offer to acquire
30% or more of the Company’s Common Stock (which percentage includes any shares
of the Company’s Common Stock held immediately prior to such offer, and which
collectively, is referred to herein as the “Limitations,”
and as to Phillips and any Phillips’ Affiliate, in each case in which the
number “20%” is used in this Section or elsewhere in this Agreement in
connection with any determination as to whether a Person is an “Acquiring
Person,” such number shall be read to equal the current percentage threshold
applicable to Phillips or any Phillips’ Affiliate under this
Section 1(a)), and no Person shall be deemed to be an “Acquiring Person”
as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the

 

 

proportionate number of
shares beneficially owned by such Person to 20% or more of the Common Shares of
the Company then outstanding; provided, however, that if a Person
shall become the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an “Acquiring Person” unless
upon becoming the Beneficial Owner of such additional Common Shares of the
Company such Person does not beneficially own 20% or more of the Common Shares
of the Company then outstanding. Notwithstanding the foregoing, (i) if the
Company’s Board of Directors determines in good faith that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares that would otherwise
cause such Person to be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), or (B) such Person was
aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have
become an “Acquiring Person” for any purposes of this Agreement including
without limitation Section 1(gg) hereof; and (ii) if, as of the date
hereof, any Person is the Beneficial Owner of 20% or more of the Common Shares
outstanding, such Person shall not be or become an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), unless
and until such time as such Person shall become the Beneficial Owner of
additional Common Shares (other than pursuant to a dividend or distribution
paid or made by the Company on the outstanding Common Shares in Common Shares
or pursuant to a split or subdivision of the outstanding Common Shares),
unless, upon becoming the Beneficial Owner of such additional Common Shares,
such Person is not then the Beneficial Owner of 20% or more of the Common
Shares then outstanding.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

(g)  “Common Shares” when used with
reference to the Company shall mean the shares of Common Stock of the Company,
no par value.  Common Shares when used
with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

 

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

 

(i)  “Company” shall mean FEI Company, an
Oregon corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

 

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

 

4

 

stock split, stock
dividend or similar transaction occurring after the date hereof, multiplied by
(y) 1,000.  If the Security is not
publicly held or so listed or traded, Current Per Share Market Price shall mean
the fair value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(r)  “Final Expiration Date” shall mean
August 12, 2015.

 

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

 

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

 

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

 

(v)  “Preferred Shares” shall mean shares
of Series A Participating Preferred Stock, no par value, of the Company.

 

5

 

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

 

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

 

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

 

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

 

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

 

(bb)  “Rights Agent” shall mean
(i) Mellon Investor Services LLC, (ii) its successor or replacement
as provided in Sections 19 and 21 hereof or (iii) any additional
Person appointed pursuant to Section 2 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

Section 3.                                            Issuance
of Rights Certificates.

 

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

 

7

 

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

 

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

 

THIS CERTIFICATE ALSO
EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
PREFERRED STOCK RIGHTS AGREEMENT BETWEEN FEI COMPANY (THE “COMPANY”) AND MELLON
INVESTOR SERVICES LLC, AS THE RIGHTS AGENT, DATED AS OF JULY 21, 2005 (THE
“RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY.  UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE.  THE COMPANY WILL MAIL TO
THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. 
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR
ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

 

With respect to such certificates containing the
foregoing legend, until the earlier of the Distribution Date or the Expiration
Date, the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.

 

(d)         In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares

 

8

 

shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.

 

Section 4.                                            Form
of Rights Certificates.

 

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

 

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

 

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 THE RIGHTS
AGREEMENT.

 

Section 5.                                            Countersignature
and Registration.

 

(a)          The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its Chief Financial Officer, its
President or any

 

9

 

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

 

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

 

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

 

(a)                                  Subject
to the provisions of Sections 7(e), 14 and 24 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered holder shall
have properly 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 and/or the
Rights Agent shall reasonably request. 
Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and
24 hereof, countersign and deliver to the person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.  The Company may require payment from the
registered holder of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or 

 

10

 

exchange of Rights Certificates.  The Rights Agent shall have no duty or
obligation to take any action under any Section of this Agreement which
requires the payment by a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.

 

(b)         Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them, and, at the Company’s or Rights Agent’s request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the registered
holder in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.

 

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

 

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

 

(b)         The
Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable
pursuant to the exercise of a Right shall initially be $120, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)          Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Exercise
Price for the number of one-thousandths (0.001) of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as the
case may be) to be purchased and an amount equal to any applicable tax or
charge required to be paid by the holder of such Rights Certificate in
accordance with Section 9(e) hereof, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent for the Preferred Shares) a certificate or
certificates for the number of one-thousandths (0.001) of a Preferred Share
(or, following a Triggering Event, other securities, cash or other assets as
the case may be) to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests or (B) if the Company
shall have elected to deposit the total number of one-thousandths (0.001) of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) issuable upon exercise of the Rights hereunder
with a depository agent, requisition from the depository agent depository
receipts representing such number of one-thousandths (0.001) of a Preferred
Share (or, following a

 

11

 

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

 

(d)         In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Rights Certificate or to his or her duly
authorized assigns, subject to the provisions of Sections 6 and 14 hereof.

 

(e)          Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such (a “Post-Event Transferee”),
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Company’s
Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e) (a “Pre-Event Transferee”)
or (iv) any subsequent transferee receiving transferred Rights from a
Post-Event Transferee or a Pre-Event Transferee, either directly or through one
or more intermediate transferees, shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise.  The Company shall notify the
Rights Agent when this Section 7(e) applies and shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but neither the Company nor the
Rights Agent shall have any liability to any holder of Rights Certificates or
to any other Person as a

 

12

 

result of the Company’s
failure to make any determinations with respect to an Acquiring Person or any
of such Acquiring Person’s Affiliates, Associates or transferees hereunder.

 

(f)            Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in
Section 7 unless such registered holder shall, in addition to having
complied with the requirements of subsection 7(a), have (i) duly and
properly 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 or the Rights Agent shall reasonably request.

 

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

 

Section 9.                                            Reservation
and Availability of Preferred Shares.

 

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

 

(b)         If
the Company shall hereafter list any of its Preferred Shares on a national
securities exchange, then so long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be listed on such
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that the
Company’s Board of Directors determines that it is reasonably likely that the
Rights will be exercised), all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.

 

(c)          The
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Triggering Event in
which the consideration to be delivered by the Company upon exercise of the
Rights is described in Section 11(a)(ii) or Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as
the case

 

13

 

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

 

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

 

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

 

Section 10.                                      Record
Date.  Each Person in whose name any certificate for a number of
one-thousandths (0.001) of a Preferred Share (or other securities of the
Company) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of Preferred Shares (or other securities of
the Company) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Total Exercise Price with respect to which the
Rights have been exercised (and any applicable taxes and charges) was made; provided, however,
that if the date of such surrender and

 

14

 

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

 

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

 

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

 

15

 

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

 

(iii)       In lieu of issuing
Common Shares in accordance with Section 11(a)(ii) hereof, the Company
may, if the Company’s Board of Directors determines that such action is
necessary or appropriate and not contrary to the interest of holders of Rights
and, in the event that the number of Common Shares which are authorized by the
Company’s Articles of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights, or if any necessary regulatory
approval for such issuance has not been obtained by the Company, the Company
shall: (A) determine the excess of (1) the value of the Common Shares
issuable upon the exercise of a Right (the “Current
Value”) over (2) the Exercise Price (such excess, the “Spread”) and (B) with respect
to each Right, make adequate provision to substitute for such Common Shares,
upon exercise of the Rights, (1) cash, (2) a reduction in the
Exercise Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of preferred stock
which the Company’s Board of Directors has deemed to have the same value as
Common Shares (such shares or units of shares of preferred stock are herein
called “Common Stock Equivalents”)),
except to the extent that the Company has not obtained any necessary
shareholder or regulatory approval for such issuance, (4) debt securities
of the Company, except to the extent that the Company has not obtained any
necessary shareholder or regulatory approval for such issuance, (5) other
assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Company’s Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Company’s Board of
Directors; provided, however, that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Triggering Event and
(y) the date on which the Company’s right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein
as the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Exercise Price, Common Shares
(to the extent available), except to the extent that the Company has not
obtained any necessary shareholder or regulatory approval for such issuance,
and then, if necessary,

 

16

 

cash,
which shares and/or cash have an aggregate value equal to the Spread.  If the Company’s Board of Directors shall
determine in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the Rights or
that any necessary regulatory approval for such issuance will be obtained, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares or take action to obtain such
regulatory approval (such period, as it may be extended, the “Substitution Period”).  To the extent that the Company determines
that some action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as issue a public announcement
at such time as the suspension is no longer in effect (with prompt written
notice of each such announcement to the Rights Agent).  For purposes of this Section 11(a)(iii),
the value of the Common Shares shall be the Current Per Share Market Price of
the Common Shares on the Section 11(a)(ii) Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same value as the
Common Shares on such date.

 

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

 

17

 

be as determined in good faith by the Company’s Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights.  Preferred Shares and Equivalent
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Exercise Price shall be adjusted to
be the Exercise Price which would then be in effect if such record date had not
been fixed.

 

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

 

(d)         Anything
herein to the contrary notwithstanding, no adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) of the Exercise Price; provided, however, that any
adjustments which by reason of this Section 11(d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth (0.0001) of a Common Share or other share or one
hundred-thousandth (0.00001) of a Preferred Share, as the case may be.  Notwithstanding the first sentence of this
Section 11(d), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.

 

(e)          If
as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right and, if required, the Exercise Price thereof, shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with

 

18

 

respect to the Preferred
Shares contained in Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h),
11(i), 11(j), 11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13
and 14 with respect to the Preferred Shares shall apply on like terms to any
such other shares.

 

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

 

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

 

(h)         The
Company may elect on or after the date of any adjustment of the Exercise Price
as a result of the calculations made in Section 11(b) or (c) to adjust the
number of Rights, in substitution for any adjustment in the number of Preferred
Shares purchasable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
one-thousandths (0.001) of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. 
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
hundred-thousandth (0.00001)) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the Exercise Price in
effect immediately after adjustment of the Exercise Price.  The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made, and shall promptly give the Rights Agent a copy of such announcement.  This record date may be the date on which the
Exercise Price is adjusted or any day thereafter, but, if any Rights
Certificates have been issued, shall be at least ten days later than the date
of the public announcement.  If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment.  Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the

 

19

 

adjusted Exercise Price)
and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

Section 12.                                      Certificate of Adjusted Exercise Price or
Number of Shares.  Whenever an adjustment is made as provided in
Sections 11 and/or 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment and a brief statement of the facts
and computations accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 26 hereof.  Notwithstanding the foregoing sentence, the
failure of the Company to make such certification or give such notice shall not
affect the validity of such adjustment or the force or effect of the
requirement for such adjustment.  The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall have no duty with respect to and
shall not be deemed to have knowledge of such adjustment unless and until it
shall have received such certificate.

 

21

 

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

 

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

 

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

 

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

 

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

 

then, concurrent
with and in each such case,

 

(A)                              each
holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at a price
equal to the Total Exercise Price applicable immediately prior to the
occurrence of the Section 13 Event in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradable Common Shares of the Principal Party (as
hereinafter defined), free of any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by dividing
such Total Exercise Price by an amount equal to fifty percent (50%) of the
Current Per Share Market Price of the Common Shares of such Principal Party on
the date of consummation of such Section 13 Event, provided, however,
that the Exercise Price and the number of Common Shares of such Principal Party
so receivable upon exercise of a Right shall be subject to further adjustment
as appropriate in accordance with Section 11(e) hereof;

 

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

 

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

 

(D)                               such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with the

 

22

 

consummation of any such transaction as may be
necessary to ensure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; and

 

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

 

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

 

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

 

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

 

(ii)                                  in
the case of any transaction described in clause (iii) of
Section 13(a) hereof, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if more than one Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred and each such portion would, were it not for the other
equal portions, constitute the greatest portion of the assets or earning power
so transferred, or if the Person receiving the greatest portion of the assets
or earning power cannot be determined, whichever of such Persons is the issuer
of Common Shares having the greatest aggregate market value of shares
outstanding; provided that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Shares of such Person are not at
such time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect

 

23

 

Subsidiary of another Person the Common Shares of
which are and have been so registered, the term “Principal
Party” shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of which are and have been so registered, the term “Principal
Party” shall refer to whichever of such Persons is the issuer of Common Shares
having the greatest aggregate market value of shares outstanding, or
(3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly by the
same Person, the rules set forth in clauses (1) and (2) above shall apply
to each of the owners having an interest in the venture as if the Person owned
by the joint venture was a Subsidiary of both or all of such joint ventures,
and the Principal Party in each such case shall bear the obligations set forth
in this Section 13 in the same ratio as its interest in such Person bears
to the total of such interests.

 

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

 

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

 

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

 

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

 

In the event that at any time after the occurrence of a Triggering
Event some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not
theretofore been exercised shall thereafter be exercisable in the manner

 

24

 

described in Section 13(a) (without taking into
account any prior adjustment required by Section 11(a)(ii)).

 

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

 

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

 

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

 

Section 14.             Fractional
Rights and Fractional Shares.

 

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

 

25

 

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

 

(c)   The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares upon the
exercise or exchange of Rights.  In lieu
of such fractional Common Shares, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a Common Share.  For purposes of
this Section 14(c), the current market value of a Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 1(j) hereof) for the Trading Day immediately prior to
the date of such exercise.

 

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

 

(e)           Whenever
a payment for fractional Rights or fractional shares is to be made by the
Rights Agent, the Company shall (i) promptly prepare and deliver to the
Rights Agent a certificate setting forth in reasonable detail the facts related
to such payments and the prices and/or formulas utilized in calculating such
payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in
relying upon such a certificate and shall have no duty with respect to, and
shall not be deemed to have knowledge of any payment for fractional Rights or
fractional shares under any Section of this Agreement relating to the payment
of fractional Rights or fractional shares unless and until the Rights Agent
shall have received such a certificate and sufficient monies.

 

Section 15.             Rights
of Action.  All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent hereunder, are vested
in the respective registered holders of the Rights Certificates (and, prior to
the Distribution Date, the registered holders of the

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

Section 18.             Concerning
the Rights Agent.

 

(a)           The
Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in
the preparation, administration, delivery, execution and amendment of this
Agreement and the exercise and performance of its duties and its rights,
including, but not limited to, its right to indemnification, hereunder. 
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense, incurred in connection with its
performance under the Agreement, unless caused by the Rights Agent’s gross
negligence, bad faith or willful misconduct (each as determined by a final
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including,
without limitation, the costs and expenses of defending against any claim of
liability hereunder.  The costs and
expenses incurred by the Rights Agent in enforcing its right of indemnification
hereunder shall be paid by the Company. 
The provisions of this Section 18 and Section 20 below shall
survive the termination of this Agreement, the exercise or expiration of the
Rights and the resignation, replacement or removal of the Rights Agent.

 

(b)           The
Rights Agent shall be authorized and protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its acceptance and administration of this Agreement in reliance upon any
Rights Certificate or certificate for the Preferred Shares or Common Shares or
for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.  The Rights Agent shall not be deemed to have
knowledge of any event of which it was supposed to receive notice thereof hereunder,
and the Rights Agent shall be fully protected and shall incur no liability for
failing to take any action in connection therewith unless and until it has
received such notice in writing.

 

Section 19.             Merger
or Consolidation or Change of Name of 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 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 hereof.  In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such

 

28

 

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

 

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

 

Section 20.             Duties of Rights Agent.  The Rights Agent undertakes the duties and
obligations expressly imposed by this Agreement (and no implied duties
and obligations) 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 advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent, and the Rights Agent shall
incur no liability for , or in respect of, any action taken, suffered or
omitted to be taken by it and in accordance with such advice or opinion.

 

(b)   Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Per Share Market Price) be proved or established by the Company prior
to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization and protection to the
Rights Agent, and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted to be taken by it under the provisions
of this Agreement in reliance upon such certificate.

 

(c)           The
Rights Agent shall be liable hereunder to the Company only for its own gross
negligence, bad faith or willful misconduct (each as determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).  Any liability of the
Rights Agent under this Agreement will be limited to the amount of annual fees
paid by the Company to the Rights Agent.  In no event will the Rights Agent be liable
for special, indirect, incidental, punitive or consequential loss or damage of
any kind whatsoever, even if the Rights Agent has been advised of the
possibility of such loss or damage.

 

29

 

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

 

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

 

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

 

(g)   The Rights Agent is
hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Secretary or any Assistant Secretary of the Company, and
to apply to such officers for advice or instructions in connection with its
duties, and such instructions shall be full authorization and protection to the
Rights Agent, and the Rights Agent shall not be liable for any action taken,
suffered, or omitted by it in accordance with such advice or instructions of any
such officer or for any delay in acting while waiting for those
instructions.  Any application by the
Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date on which any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken, suffered or
omitted.

 

30

 

(h)   The
Rights Agent and any shareholder, Affiliate, 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 of any such attorneys
or agents or for any loss to the Company or any other reason resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction) in the
selection and continued employment thereof.

 

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

 

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

 

Section 21.             Change
of Rights Agent.  The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon thirty (30)
days’ notice in writing mailed to the Company and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail and to
the holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his or her Rights Certificate for inspection by the
Company), then the registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver

 

31

 

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

 

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

 

Section 23.             Redemption.

 

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

 

32

 

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

 

Section 24.             Exchange.

 

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

 

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

 

33

 

holder receives the
notice.  Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged.  Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.

 

(c)   In
the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with Section 24(a), the Company shall either
take such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights or alternatively, at the option of a
majority of the Board of Directors of the Company, with respect to each Right
(i) pay cash in an amount equal to the Current Value (as hereinafter
defined), in lieu of issuing Common Shares in exchange therefor, or
(ii) issue debt or equity securities or a combination thereof, having a
value equal to the Current Value, in lieu of issuing Common Shares in exchange
for each such Right, where the value of such securities shall be determined by
a nationally recognized investment banking firm selected by majority vote of
the Board of Directors of the Company, or (iii) deliver any combination of
cash, property, Common Shares and/or other securities having a value equal to
the Current Value in exchange for each Right. 
For purposes of this Section 24(c) only, the Current Value shall
mean the product of the Current Per Share Market Price of Common Shares on the
date of the occurrence of the event described above in subsection 2 (a),
multiplied by the number of Common Shares for which the Right otherwise would
be exchangeable if there were sufficient shares available.  To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii) or (iii) of
this Section 24(c), the Board of Directors of the Company may temporarily
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the event described in Section 24(a) shall
have occurred, in order to seek any authorization of additional Common Shares
and/or to decide the appropriate form of distribution to be made pursuant to
the above provision and to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement (with prompt written notice thereof
to the Rights Agent) stating that the exercisability of the Rights has been
temporarily suspended.

 

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

 

(e)   The
Company may, at its option, by majority vote of its 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 Company’s Board of Directors
based upon the advice of one or more nationally recognized investment banking
firms.

 

34

 

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

 

Section 25.             Notice
of Certain Events.

 

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

 

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

 

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

 

FEI Company

5350 NE Dawson Creek Drive

Hillsboro, Oregon 97124

Attention: General Counsel

 

with a copy to:

 

Wilson Sonsini Goodrich
& Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304-1050

Attention: Larry W. Sonsini and Tony Jeffries

 

35

 

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

 

Mellon Investor Services
LLC

520 Pike Street

Seattle, Washington  98101

Attention: Dennis
Treibel, Relationship Manager

 

with a copy to:

 

Mellon Investor Services
LLC

85 Challenger Road

Ridgefield Park, New Jersey  07660

Attention: General
Counsel

 

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

 

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

 

36

 

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

 

Section 29.             Determinations
and Actions by the Board of Directors, etc.  For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act.  The Board of Directors of
the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement and (ii) to
make all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the Rights or
to amend the Agreement).  All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors of the Company in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights Certificates and all other Persons and
(y) with respect to claims specifically arising from this Agreement, not
subject the Board of Directors of the Company to any liability to the holders
of the Rights.  The Rights Agent shall
always be entitled to assume the Company’s Board of Directors acted in good
faith and shall be fully protected and incur no liability in reliance thereon.

 

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

 

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

 

Section 32.             Governing
Law.  This Agreement and each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Oregon and

 

37

 

for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to by performed entirely within such
State.

 

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

 

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

 

[Remainder of page intentionally left blank]

 

38

 

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

 

	
  “COMPANY”

  	
   

  	
   

  	
  FEI COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Vahé A.
  Sarkissian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Vahé A.
  Sarkissian

  
	
   

  	
   

  	
   

  	
   

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “RIGHTS AGENT”

  	
   

  	
   

  	
  MELLON INVESTOR
  SERVICES LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Dennis Treibel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Dennis Treibel

  
	
   

  	
   

  	
   

  	
   

  	
  Vice President
  & Client Relationship

  Executive

  
							

 

 

EXHIBIT A

 

ARTICLES OF AMENDMENT

TO THE

THIRD AMENDED AND RESTATED ARTICLES OF
INCORPORATION

OF

FEI COMPANY

 

Pursuant to the
provisions ORS 60.134, FEI Company, an Oregon corporation (the “Corporation”), adopts the following
Articles of Amendment to its Third Amended and Restated Articles of
Incorporation and all amendments thereto, for the purpose of determining the
terms of a series of shares of its Preferred Stock:

 

 

1.             The
name of the Corporation is FEI Company.

 

 

2.             The
text of the amendment determining the terms of the series of shares of
Preferred Stock of the Corporation is attached hereto as Appendix I.

 

 

3.             The
amendment was duly adopted by the Board of Directors of the Corporation on July
21, 2005 without shareholder approval. 
No shareholder action was required.

 

 

	
  Dated:                   ,
  2005

  	
   

  	
   

  	
  FEI Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Vahé A.
  Sarkissian

  
	
   

  	
   

  	
   

  	
  Title: President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Person to
  contact about this filing:

  	
   

  	
   

  	
  Jason Altieri

  
	
  (Telephone
  Number):

  	
   

  	
   

  	
  (650) 565-3931

  

 

 

APPENDIX I

 

DESIGNATION OF TERMS

OF

SERIES A PARTICIPATING
PREFERRED STOCK

OF

FEI COMPANY

 

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

 

Section 1.               Designation
and Amount.  The shares of such
series shall be designated as “Series A
Participating Preferred Stock.” 
The number of shares constituting Series A Participating Preferred
Stock shall be 75,000.

 

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

 

Section 3.               Dividends
and Distributions.

 

(a)           Subject
to the prior and superior right of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Participating Preferred Stock.

 

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.               Certain
Restrictions.

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

EXHIBIT B

 

FORM OF RIGHTS
CERTIFICATE

 

	
  Certificate No.
  R-

  	
   

  	
             
  Rights

  

 

NOT EXERCISABLE AFTER THE
EARLIER OF (i) AUGUST 12, 2015 (ii) THE DATE TERMINATED BY THE
COMPANY OR (iii) THE DATE THE COMPANY
EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). 
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF
SUCH RIGHTS AGREEMENT.] *

 

RIGHTS CERTIFICATE

 

FEI COMPANY

 

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 Preferred Stock Rights Agreement dated as of
July 21, 2005, (the “Rights Agreement”),
between FEI Company, an Oregon corporation (the “Company”),
and Mellon Investor Services LLC (the “Rights Agent”),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M., Pacific
Standard time, on August 12, 2015 at the office of the Rights Agent designated
for such purpose, or at the office of its successor as Rights Agent, one
one-thousandth (0.001) of a fully paid and non-assessable share of
Series A Participating Preferred Stock, no par value (the “Preferred Shares”), of the Company,
at an Exercise Price of $120 per one-thousandth (0.001) of a Preferred Share
(the “Exercise Price”), upon
presentation and surrender of this Rights Certificate with the Form of

 

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

 

 

Election to Purchase and related Certificate duly
executed.  The number of Rights evidenced
by this Rights Certificate (and the number of one-thousandths (0.001) of a
Preferred Share which may be purchased upon exercise hereof) set forth above
are the number and Exercise Price as of August 12, 2005 based on the Preferred
Shares as constituted at such date.  As
provided in the Rights Agreement, the Exercise Price and the number and kind of
Preferred Shares or other securities which may be purchased upon the exercise
of the Rights evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

	
  ATTEST:

  	
   

  	
   

  	
  FEI COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
							

 

 

Countersigned:

 

	
  MELLON INVESTOR
  SERVICES LLC,

  
	
  as Rights Agent

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Its:

  	
   

  	
   

  
					

 

3

 

Form of Reverse Side of
Rights Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate)

 

FOR VALUE RECEIVED                                   
hereby sells, assigns and transfers unto

 

(Please print name and
address of transferee)

 

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

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature
Guaranteed:

 

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

 

 

CERTIFICATE

 

The undersigned
hereby certifies by checking the appropriate boxes that:

 

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

 

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

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

 

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

 

 

Form of Reverse Side of
Rights Certificate — continued

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to

exercise the Rights Certificate)

 

To:

 

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

 

Please insert
social security

or other
identifying number

 

 

(Please print name and
address)

 

 

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

 

Please insert
social security

or other
identifying number

 

 

(Please print name and
address)

 

	
  Dated:

  	
   

  	
  ,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature
Guaranteed:

 

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

 

 

CERTIFICATE

 

The undersigned hereby
certifies by checking the appropriate boxes that:

 

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

 

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

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

 

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

 

 

Form of Reverse Side of
Rights Certificate — continued

 

NOTICE

 

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

 

 

EXHIBIT C

 

SHAREHOLDER RIGHTS PLAN

FEI Company

 

Summary of Rights

 

	
  Distribution and Transfer of
  Rights; Rights Certificate:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Distribution Date:

  	
   

  	
  Rights will separate
  from the Common Stock and become exercisable following (a) the tenth day
  (or such later date as may be determined by the Company’s Board of Directors)
  after a person or group acquires beneficial ownership of 20% or more (or, in
  the case of Philips and certain other persons affiliated with Phillips, 30%
  or more) of the Company’s Common Stock or (b) the tenth business day (or
  such later date as may be determined by the Company’s Board of Directors)
  after a person or group announces a tender or exchange offer, the
  consummation of which would result in ownership by a person or group of 20%
  or more (or, in the case of Philips and certain other person affiliated with
  Phillips, 30% or more) of the Company’s Common Stock.

  
	
   

  	
   

  	
   

  
	
  Preferred Stock Purchasable
  Upon Exercise of Rights:

  	
   

  	
  After the Distribution
  Date, each Right will entitle the holder to purchase for $120 (the “Exercise Price”), a fraction of a
  share of the Company’s Preferred Stock with economic terms similar to that of
  one share of the Company’s Common Stock.

  
	
   

  	
   

  	
   

  
	
  Flip-In:

  	
   

  	
  If an acquiror (an “Acquiring Person”) obtains 20% or
  more (or, in the case of Philips and certain other persons affiliated with
  Phillips, 30% or more) of the Company’s Common Stock, then each Right (other
  than Rights owned by an Acquiring Person or its affiliates) will entitle the
  holder thereof to purchase, for the Exercise Price, a number of shares of the
  Company’s Common Stock having a then-current market value of twice the Exercise
  Price.

  
	
   

  	
   

  	
   

  
	
  Flip-Over:

  	
   

  	
  If, after an Acquiring
  Person obtains 20% or more (or, in the case of Philips and certain other
  persons affiliated with Phillips, 30% or more) of the Company’s Common Stock,
  (a) the Company merges into another entity, (b) an acquiring entity
  merges into the Company or (c) the Company sells more than 50% of the
  Company’s assets or earning power, then each Right (other than Rights owned
  by an Acquiring Person or its affiliates) will entitle the holder thereof to
  purchase, for the Exercise Price, a number of shares of Common Stock of the
  person engaging in the transaction having a then current market value of
  twice the Exercise Price.

  

 

 

	
  Exchange Provision:

  	
   

  	
  At any time after the
  date on which an Acquiring Person obtains 20% or more (or, in the case of
  Philips and certain other persons affiliated with Phillips, 30% or more) of
  the Company’s Common Stock and prior to the acquisition by the Acquiring
  Person of 50% of the outstanding Common Stock, the Board of Directors of the
  Company may exchange the Rights (other than Rights owned by the Acquiring
  Person or its affiliates), in whole or in part, for shares of Common Stock of
  the Company at an exchange ratio of one share of Common Stock per Right
  (subject to adjustment).

  
	
   

  	
   

  	
   

  
	
  Redemption of the Rights:

  	
   

  	
  Rights will be
  redeemable at the Company’s option for $0.001 per Right at any time on or
  prior to the fifth day (or such later date as may be determined by the
  Company’s Board of Directors) after public announcement that a Person has acquired
  beneficial ownership of 20% or more (or, in the case of Philips and certain
  other persons affiliated with Phillips, 30% or more) of the Company’s Common
  Stock (the “Shares Acquisition Date”).

  
	
   

  	
   

  	
   

  
	
  Expiration of the Rights:

  	
   

  	
  The Rights expire on the
  earliest of (a) August 12, 2015 or (b) exchange or redemption of
  the Rights as described above.

  
	
   

  	
   

  	
   

  
	
  Amendment of Terms of Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Voting Rights:

  	
   

  	
  Rights will not have
  any voting rights.

  
	
   

  	
   

  	
   

  
	
  Anti-Dilution Provisions:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Taxes:

  	
   

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

  

 

The foregoing is a
summary of certain principal terms of the Shareholder Rights Plan only and is
qualified in its entirety by reference to the Preferred Stock Rights Agreement
dated as of July 21, 2005 between the Company and Mellon Investor Services LLC
as Rights Agent (the “Rights Agreement”).  The Rights Agreement may be amended from time
to time.  A copy of the Rights Agreement
was filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated July 27, 2005.  A copy of the Rights Agreement is available
free of charge from the Company.

 

2Exhibit 10.1

 

DIRECTOR:

DATE OF GRANT: April 29, 2005

NUMBER OF SHARES: 555

 

BANK OF
HAWAII CORPORATION

AMENDED
AND RESTATED DIRECTOR STOCK COMPENSATION PLAN

 

*                    *                    *

 

RESTRICTED
STOCK AGREEMENT

 

1.     Definitions.

 

1.1           “Agreement” means this
Restricted Stock Agreement.

 

1.2           “Board” means the Board
of Directors of the Company.

 

1.3           “Change in Control”
means, and shall be deemed to have occurred, if:

 

(a)  any Person,
excluding employee benefit plans of the Company or any of its affiliates,
is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of Company securities
representing 25 percent or more of the combined voting power of the Company’s
then outstanding securities (“Voting Power”);

 

(b)  the Company
consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of the Company (a “Fundamental Transaction”) with
any other corporation, other than a Fundamental Transaction that results in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least sixty percent (60%) of
the combined Voting Power immediately after such Fundamental Transaction of (i) the
Company’s outstanding securities, (ii) the surviving entity’s outstanding
securities, or (iii) in the case of a division, the outstanding securities
of each entity resulting from the division;

 

(c)   the shareholders
of the Company approve a plan of complete liquidation or winding-up of the
Company or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of the Company’s assets; or

 

(d)   during any period of
twenty-four (24) consecutive months, individuals who at the beginning of such
period constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company’s shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still 

 

 

in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied).

 

1.4       “Common Stock: means the
common stock par value $0.01 per share, of the Company.

 

1.5       “Company” means Bank of
Hawaii Corporation, and any successor thereto.

 

1.6       “Date of Grant” means the
date set forth as the “Date of Grant” on page 1 of this Agreement.

 

1.7       “Disability” means the
Director’s permanent and total disability within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended.

 

1.8       “Director” means the person
identified as the “Director” on page 1 of this Agreement.

 

1.9       “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

1.10     “Person” means the term “person”
within the meaning of Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d)(3) and 14(d) thereof.

 

1.11     “Plan” means the Bank of
Hawaii Corporation Amended and Restated Director Compensation Plan, as amended
from time to time.

 

1.12     “Restricted Shares” means the
shares of Common Stock granted to the Director pursuant to Section 2
hereof

 

1.13     “Restriction Period” means
the period beginning on the Date of Grant and ending on the third anniversary
of the Date of Grant.  Notwithstanding
the foregoing, the Restriction Period shall end immediately upon the occurrence
of a Change in Control.

 

2.     Award
of Restricted Shares.  Pursuant to
the Plan and subject to the terms of this Agreement, the Company hereby grants
to the Director  that number of shares of
Common Stock (“Restricted Shares”) identified as the “Number of Shares” on page 1
of this Agreement.  During the
Restriction Period, each certificate representing Restricted Shares shall be
held by the Company or its designee and shall contain the following legend:

 

“This
certificate and the shares of stock represented hereby are subject to the terms
and conditions (including the risks of forfeiture and restrictions against
transfer) contained in the Bank of Hawaii Corporation Amended and Restated
Director Stock Compensation Plan and an Agreement entered into between the
registered owner and Bank of Hawaii Corporation.  Release from such terms and 

 

 

conditions
shall be made only in accordance with the provisions of the Plan and the
Agreement, a copy of each of which is on file in the office of the Secretary of
Bank of Hawaii Corporation.”

 

2.     Terms,
Conditions and Restrictions. 
Restricted Shares shall be subject to the following terms, conditions
and restrictions in addition to those contained in the Plan:

 

3.1       Prohibitions Against
Sale, Assignment, etc.  Restricted
Shares, the right to vote Restricted Shares and the right to receive dividends
thereon may not be sold, assigned, transferred, exchanged, pledged,
hypothecated or otherwise encumbered during the Restriction Period with respect
to such Restricted Shares.

 

3.2       Forfeiture.  In the event of the Director’s termination of
membership on the Board prior to the lapse of the Restriction Period, the
Restricted Shares shall be forfeited by the Director to the Company and neither
the Director nor any successors, heirs, assigns or personal representatives of
the Director shall thereafter have any further rights or interest in such
Restricted Shares or the certificates representing such Restricted Shares.

 

3.3       Termination of
Restrictions.  In the event the
Restriction Period shall terminate with respect to particular Restricted Shares
and such Restricted Shares shall not theretofore have been forfeited to the
Company, then the Company shall reissue the certificate representing such
Restricted Shares without the legend referred to in Section 2 of this
Agreement and shall deliver such certificate to the Director or his legal
representative.

 

3.4       Effect of Death or
Disability.  If the Director’s
membership on the Board terminates during the Restriction Period due to death
or Disability, the Restriction Period shall be treated as having expired
immediately prior to such death or disability.

 

3.5       Withholding.  The Company’s obligation to deliver shares of
Common Stock upon the termination of the Restriction Period with respect to any
Restricted Shares shall be subject to the satisfaction of applicable federal,
state and local tax withholding requirements.

 

4.     Legends.  The Director agrees that the certificates
evidencing the shares of Common Stock may include any legend which the Board
deems appropriate to reflect the transfer and other restrictions contained in
the Plan, this Agreement, or to comply with applicable laws.

 

5.     Rights
as Stockholder.  Except as provided
in Section 3 hereof, the Director shall have all the rights and privileges
of a stockholder with respect to the Restricted Shares, including (but not
limited to) the right to vote the Restricted Shares and the right to receive
dividends.   All such rights and
privileges shall cease upon forfeiture of the Restricted Shares.

 

 

6.     Board
Membership.  Neither the grant or
issuance of Restricted Shares pursuant to this Agreement nor any term or
provision of this Agreement shall constitute or be evidence of any
understanding, express or implied, on the part of the Company to retain the
Director as a member of the Board for any period.

 

7.     Subject
to the Plan.  The Restricted Shares
and this Agreement are subject to the terms and conditions of the Plan, which
are incorporated herein by reference and made a part hereof, but the terms of
the Plan shall not be considered an enlargement of any benefits under this
Agreement.  In addition, the Restricted
Shares and this Agreement are subject to any rules and regulations
promulgated by the Board in accordance with its authority under the Plan.

 

8.     Governing
Law.  The validity, construction,
interpretation and enforceability of this Agreement shall be determined and
governed by the laws of the State of Hawaii without giving effect to the
principles of conflicts of laws.

 

9.     Severability.  If any provision of this Agreement shall be
held to be invalid, illegal or unenforceable in any material respect, such
provision shall be replaced with a provision that is as close as possible in
effect to such invalid, illegal or unenforceable provision, and still be valid,
legal and enforceable, and the validity, legality and enforceability of the
remainder of this Agreement shall not in any way be affected or impaired
thereby.

 

IN WITNESS
WHEREOF, the Company has caused this Agreement to be signed on its behalf by
the undersigned, thereunto duly authorized, effective as of the Date of Grant.

 

	
  ATTEST:

  	
  BANK OF
  HAWAII CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND
  AGREED TO

  	
   

  	
   

  
	
  AS OF THE
  DATE OF GRANT:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTOR

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