STOCKHOLDER RIGHTS AGREEMENT Dated as of June 1, 2009 BY AND BETWEEN NURX PHARMACEUTICALS, INC. and CONTINENTAL STOCK TRANSFER & TRUST COMPANY as RIGHTS AGENT


 
Dated as of June 1, 2009
 
BY AND BETWEEN
 
 
and
 
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as RIGHTS AGENT

 
 

TABLE OF CONTENTS
 
Section 1.  Certain Definitions
     1  
         
Section 2.  Appointment of Rights Agent
     6  
         
Section 3.  Distribution Date; Issue of Right Certificates
     6  
         
Section 4.  Form of Right Certificates
     7  
         
Section 5.  Countersignature and Registration
     8  
         
Section 6.  Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates
     9  
         
Section 7.  Exercise of Rights; Purchase Price; Expiration Date of Rights
     10  
         
Section 8.  Cancellation and Destruction of Right Certificates
     11  
         
Section 9.  Availability of Preferred Shares
     12  
         
Section 10. Preferred Shares Record Date
     13  
         
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights
     13  
         
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
     20  
         
Section 13. Consolidation, Merger, Liquidation or Sale or Transfer of Assets
     21  
         
Section 14. Fractional Rights and Fractional Shares
     24  
         
Section 15. Rights of Action
     25  
         
Section 16. Agreement of Right Holders
     25  
         
Section 17. Right Certificate Holder Not Deemed a Stockholder
     25  
         
Section 18. Concerning the Rights Agent
     26  
         
Section 19. Merger or Consolidation or Change of Name of Rights Agent
     26  
         
Section 20. Duties of Rights Agent
     27  
         
Section 21. Change of Rights Agent
     29  
         
Section 22. Issuance of New Right Certificates
     30  
         
Section 23. Redemption
     30  
 
 
 

Section 24. Exchange
     31  
         
Section 25. Notice of Certain Events
     32  
         
Section 26. Notices
     32  
         
Section 27. Supplements and Amendments
     33  
         
Section 28. Successors
     33  
         
Section 29. Determinations and Actions by the Board of Directors
     33  
         
Section 30. Benefits of this Agreement
     34  
         
Section 31. Severability
     34  
         
Section 32. Governing Law
     34  
         
Section 33. Counterparts
     34  
         
Section 34. Descriptive Headings
     34  
 
Exhibit A - Certificate of Designation of Series C Preferred Stock
 
Exhibit B - Form of Right Certificate
 
Exhibit C - Summary of Rights to Acquire Preferred Stock

 
 


STOCKHOLDER RIGHTS AGREEMENT, dated as of June 1, 2009 (this “Agreement”), by and between NURX PHARMACEUTICALS, INC., a Nevada corporation (the “Company”), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY (the “Rights Agent”).
 
WHEREAS, effective on June 1, 2009 (the “Rights Dividend Declaration Date”), the Board of Directors of the Company authorized and declared a distribution of one Right for each share of Company Common Stock outstanding at the Close of Business on June 1, 2009 (the “Record Date”), and has authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant hereto) for each share of Company Common Stock issued between the Record Date (whether originally issued or delivered from the Company’s treasury), and except as otherwise provided in Section 22, the Distribution Date, each Right initially representing the right to purchase upon the terms and subject to the conditions hereinafter set forth one one-hundredth (1/100) of a share of Company Preferred Stock (the “Rights”);
 
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
 
SECTION 1.    Certain Definitions.  For purposes of this Agreement, the following terms have the meanings indicated:
 
“Acquiring Person” means any Person (a) which is on the Rights Dividend Declaration Date or (b) upon the acquisition of additional shares of Company Common Stock after the Rights Dividend Declaration Date becomes, the Beneficial Owner of twenty percent (20%) or more of the shares of Company Common Stock from time to time outstanding; provided, however, that the term “Acquiring Person” shall not include an Exempt Person.  Notwithstanding the foregoing, if the Board of Directors of the Company determines in good faith (with the concurrence of a majority of Continuing Directors then in office prior to the time of the event causing a Person to become an Acquiring Person) that a Person who would otherwise be an “Acquiring Person” has become such a Person inadvertently, including, without limitation under the circumstances described in Subsections (i) and (ii) below, then such Person shall not be deemed to be or have become an “Acquiring Person” at any time for any purposes of this Agreement.  Such circumstances shall include the following:
 
(i)           such Person was unaware that it Beneficially Owned (as defined below in this Section 1) a percentage of the Common Stock that would otherwise cause such Person to be an “Acquiring Person”; or
 
(ii)           such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement, and no intention of changing or influencing control of the Company, and such Person divests as promptly as practicable a sufficient number of Common Stock so that such Person would no longer be an Acquiring Person (or, in the case solely of Derivative Common Stock (as defined below in this Section 1), such Person terminates the subject derivative transaction or transactions or disposes of the subject derivative security or securities, or establishes to the satisfaction of the Board of Directors (with the concurrence of a majority of Continuing Directors then in office prior to the time of the event causing a Person to become an Acquiring Person) that such Derivative Common Stock are not held with any intention of changing or influencing control of the Company).

 
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“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 (“Rule 12b-2”), as in effect on the date hereof; provided, however, that the term “Associate” shall not include any Person who would be an Associate only as a result of clause (2) of the definition of Associate contained in such Rule 12b-2.
 
“Beneficial Owner” or “Beneficial Ownership”  A Person shall be deemed the “Beneficial Owner” or possessing “Beneficial Ownership” of, and shall be deemed to “beneficially own”, any securities:
 
(i)           of which such Person or any of such Person’s Affiliates or Associates is considered to be a Beneficial Owner under Rule 13d-3 of the General Rules and Regulations under the Exchange Act (the “Exchange Act Regulations”) as in effect on the date hereof; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any securities under this Paragraph (i) as a result of an agreement, arrangement or understanding to vote such securities if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act and the Exchange Act Regulations, and (B) is not reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report);
 
(ii)           which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate of such other Person) 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 or among underwriters and selling group members with respect to a bona fide firmly committed public offering), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to the above Paragraph (i) or disposing of such securities;
 
(iii)           which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of conditions) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between or among underwriters and selling group members with respect to a bona fide firmly committed public offering), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that under this Paragraph (iii) a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made in accordance with the Exchange Act or Exchange Act Regulations by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (B) securities that may be issued upon exercise of Rights at any time prior to the occurrence of a Triggering Event, or (C) securities that may be issued upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(c) or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights; or

 
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(iv)           which are the subject of a derivative transaction entered into by such Person, or derivative security acquired by such Person, which gives such Person the economic equivalent of ownership of an amount of such securities due to the fact that the value of the derivative is explicitly determined by reference to the price or value of such securities, without regard to whether (A) such derivative conveys any voting rights in such securities to such Person, (B) the derivative is required to be, or capable of being, settled through delivery of such securities, or (C) such Person may have entered into other transactions that hedge the economic effect of such derivative. In determining the number of Common Stock deemed Beneficially Owned by virtue of the operation of this Section 1, the subject Person shall be deemed to Beneficially Own (without duplication) the number of Common Stock that are synthetically owned pursuant to such derivative transactions or such derivative securities. Common Stock deemed to be Beneficially Owned pursuant to the operation of this Section 1 is referred to herein as “Derivative Common Stock.”
 
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
 
“Close of Business” on any given date means 5:00 P.M., New York, New York time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York, New York time, on the next succeeding Business Day.
 
“Common Stock” of any Person other than the Company means the capital stock of such Person with the greatest voting power, or, if such Person shall have no capital stock, the equity securities or other equity interest having power to control or direct the management of such Person.
 
“Common Stock Equivalents” has the meaning set forth in Section 11(a)(ii).
 
“Company Common Stock” means the Common Stock, par value $0.001, of the Company.
 
“Company Preferred Stock” means the Series C Preferred Stock, par value $0.001, of the Company with the rights, preferences and privileges set forth in the Certificate of Designation attached hereto as Exhibit A.

 
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“Continuing Director” shall mean (i) any member of the Board of Directors of the Company, while a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who was a member of the Board prior to the date of this Agreement, or (ii) any Person who subsequently becomes a member of the Board, while a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors.
 
“Current Market Price” has the meaning set forth in Section 11(d).
 
“Current Value” has the meaning set forth in Section 11(a)(ii).
 
“Depositary Agent” has the meaning set forth in Section 7(c).
 
“Derivative Common Stock” has the meaning set forth in Subsection (iv) of the definition of Beneficial Ownership above.
 
“Distribution Date” has the meaning set forth in Section 3(a).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Exempt Person” means:
 
(i)           the Company, any Subsidiary of the Company, any employee benefit plan or employee stock plan of the Company or of any Subsidiary of the Company, or any person or entity organized, appointed, established or holding Company Common Stock for or pursuant to the terms of any such plan;
 
(ii)           any Person who would otherwise become an Acquiring Person solely by virtue of a reduction in the number of outstanding shares of Company Common Stock; provided, however, that any such Person shall not be an Exempt Person if, subsequent to such reduction, such Person shall become the Beneficial Owner of any additional shares of Company Common Stock; or
 
(iii)           Xx. Xxxxxxx Xxxx and his immediate family members and their Affiliates and Associates, provided, however, that any such Person shall not be an Exempt Person if such Person shall become the Beneficial Owner of any additional shares of Company Common Stock after the effective time of this Agreement.
 
“Expiration Date” has the meaning set forth in Section 7(a).
 
“Final Expiration Date” has the meaning set forth in Section 7(a).
 
“NASDAQ” has the meaning set forth in Section 11(d).

 
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“Person” shall mean any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act.
 
“Preferred Stock Equivalents” has the meaning set forth in Section 11(b).
 
“Principal Party” has the meaning set forth in Section 13(b).
 
“Purchase Price” has the meaning set forth in Section 7(b).
 
“Record Date” has the meaning set forth in the recital hereto.
 
“Redemption Price” has the meaning set forth in Section 23.
 
“Registered Common Stock” has the meaning set forth in Section 13(b).
 
“Registration Date” has the meaning set forth in Section 9(c).
 
“Registration Statements” has the meaning set forth in Section 9(c).
 
“Right” has the meaning set forth in the recital hereto.
 
“Rights Certificate” has the meaning set forth in Section 3(a).
 
“Rights Dividend Declaration Date” has the meaning set forth in the recital hereto.
 
“Section 11(a)(ii) Event” means any event described in Section 11(a)(ii)(A), (B), (C), (D) or (E).
 
“Section 11(a)(ii) Trigger Date” has the meaning set forth in Section 11(a)(ii).
 
“Section 13 Event” means any event described in clause (x), (y) or (z) of Section 13(a).
 
“Securities Act” has the meaning set forth in Section 9(c).
 
“Spread” has the meaning set forth in Section 11(a)(ii).
 
“Stock Acquisition Date” means the earlier of (i) the date of the first public announcement (including, without limitation, the filing of any report pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such (or if a Person is obligated to make such a public announcement pursuant to Section 13(d) of the Exchange Act but has failed to do so as required by applicable law, the actual date upon which such Person is first required to make such a public announcement) or (ii) such earlier date that the Board of Directors of the Company first becomes aware of the existence of an Acquiring Person as evidenced by a resolution of the Board to such effect.
 
“Subsidiary” means, with reference to any Person, any other Person of which an amount of voting securities or equity interests sufficient to elect at least a majority of the directors or equivalent governing body of such other Person is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such first-mentioned Person.

 
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“Summary of Rights” has the meaning set forth in Section 3(b).
 
“Trading Day” has the meaning set forth in Section 11(d).
 
“Triggering Event” means any Section 11(a)(ii) Event or any Section 13 Event.
 
“Unit” has the meaning set forth in Section 7(b).
 
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.  With the consent of the Rights Agent, the Company may from time to time appoint such “co-Rights Agents” as it may deem necessary or desirable.
 
SECTION 3.   Distribution Date; Issue of Rights Certificates.
 
(a)           Until the earlier of (i) the Close of Business on the tenth (10th) Business Day after the Stock Acquisition Date (or such later date as may be determined by action of a majority of Continuing Directors then in office prior to such time and of which the Company will give the Rights Agent prompt written notice), and (ii) the Close of Business on the tenth (10th) Business Day (or such later date as may be determined by action of a majority of Continuing Directors then in office prior to such time and of which the Company will give the Rights Agent prompt written notice) after the date that a tender or exchange offer by any Person (other than by the Company, any Subsidiary of the Company, any employee benefit plan maintained by the Company or any of its Subsidiaries or any trustee or fiduciary with respect to such plan acting in such capacity) is first published or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any successor rule, if upon consummation thereof such Person would be the Beneficial Owner of twenty percent (20%) or more of the shares of Company Common Stock then outstanding (the earlier of (i) and (ii) above being the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of Subsection (b) of this Section 3) by the shares of Company Common Stock, whether represented by certificates or uncertificated, registered in the names of the holders of shares of Company Common Stock as of and subsequent to the Record Date (which shares of Company Common Stock shall be deemed also to represent the Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Company Common Stock (including a transfer to the Company) and not separately.
 
As promptly as reasonably practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of shares of Company Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit B hereto (the “Rights Certificates”), evidencing one Right for each share of Company Common Stock so held, subject to adjustment as provided herein.  In the event that an adjustment in the number of Rights per share of Company Common Stock has been made pursuant to Section 11(o) hereof, at the time of distribution of the Rights Certificates, the Company may 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.  As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.

 
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(b)           As promptly as reasonably practicable following the Record Date, the Company will send a copy of a Summary of Rights to Acquire Company Preferred Stock in a form which may be appended to certificates that represent shares of Company Common Stock which may be written statements describing shares of Company Preferred Stock, in substantially the form attached hereto as Exhibit C (the “Summary of Rights”), by first-class, postage prepaid mail, to each record holder of shares of Company Common Stock as of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company.
 
(c)           Rights shall, without any further action, be issued in respect of all shares of Company Common Stock which are issued (including any shares of Company Common Stock held in treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date.  Certificates representing such shares of Company Common Stock and written statements delivered to registered holders of the shares of Company Common Stock describing uncertificated shares of Company Common Stock registered to such holder, issued or delivered after the Record Date shall bear the following legend/notice substantially as follows:
 
“This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Stockholder Rights Agreement between NuRx Pharmaceuticals, Inc. (the “Company”) and Continental Stock Transfer & Trust Company (the “Rights Agent”) dated as of June 1, 2009 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal office of the stock transfer administration office of the Rights Agent.  Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by the shares of stock described herein.  The Company will mail to the holder of the shares of stock described herein a copy of the Rights Agreement, as in effect on the date of mailing, without charge as promptly as reasonably practicable 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.”
 
SECTION 4.   Form of Rights Certificates.
 
(a)           The Rights Certificates (and the forms of election to exercise, assignment and certificate to be printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or any rule or regulation thereunder or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed or to conform to 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 and on their face shall entitle the holders thereof to acquire such number of Units of Company Preferred Stock as shall be set forth therein at the price set forth therein, but the amount and type of securities, cash or other assets that may be acquired upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.

 
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(b)           Any Rights Certificate issued pursuant hereto that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which becomes a transferee prior to or concurrently with the Acquiring Person becoming such and which receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or such Associate or Affiliate) or to any Person with whom such Acquiring Person (or such Associate or Affiliate) has any continuing agreement, arrangement or understanding regarding either the transferred Rights, shares of Company Common Stock or the Company or (B) a transfer which the Board of Directors of the Company has determined to be part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of Section 7(e) hereof shall, upon the written direction of the Board of Directors of the Company, contain (to the extent feasible) the following legend:
 
The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement).  Accordingly, this Rights Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement.
 
SECTION 5.  Countersignature and Registration.
 
(a)           Rights Certificates shall be executed on behalf of the Company by its Chairman, its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries.  The signature of any of these officers on the Rights Certificates may be manual or facsimile.  Rights Certificates bearing the manual or facsimile signatures of the individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature of such Rights Certificates or did not hold such offices at the date of such Rights Certificates.  No Rights Certificate shall be entitled to any benefit under this Agreement or be valid for any purpose unless there appears on such Rights Certificate a countersignature duly executed by the Rights Agent by manual signature of an authorized signatory, and such countersignature upon any Rights Certificate shall be conclusive evidence, and the only evidence, that such Rights Certificate has been duly countersigned as required hereunder.

 
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(b)           Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office designated for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder.  Such books shall show the name and address of each holder of the Rights Certificates, the number of Rights evidenced on its face by each Rights Certificate and the date of each Rights Certificate.
 
    
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 4(b), 7(e) and 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates (other than Right Certificates representing Rights that have become void pursuant to Section 7(e) hereof or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to acquire a like number of Units of Company Preferred Stock (or, following a Triggering Event, other securities, cash or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled such holder to acquire.  Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and executed the certificate set forth 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) of the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the Company shall reasonably request; whereupon the Rights Agent shall, subject to the provisions of Section 4(b), Section 7(e) and Section 14 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 of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.
 
(b)           If a Rights Certificate shall be mutilated, lost, stolen or destroyed, upon request by the registered holder of the Rights represented thereby and upon payment to the Company and the Rights Agent of all reasonable expenses incident thereto, there shall be issued, in exchange for and upon cancellation of the mutilated Rights Certificate, or in substitution for the lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in substantially the form of the prior Rights Certificate, of like tenor and representing the equivalent number of Rights, but, in the case of loss, theft or destruction, only upon receipt of evidence satisfactory to the Company and the Rights Agent of such loss, theft or destruction of such Rights Certificate and, if requested by the Company or the Rights Agent, indemnity also satisfactory to it.

 
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SECTION 7.   Exercise of Rights; Expiration Date of Rights.
 
(a)           Prior to the earlier of (i) the Close of Business on the fifth (5th) anniversary hereof (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii) being the “Expiration Date”), or the time at which such Rights are exchanged as provided in Section 24 hereof, the registered holder of any Rights Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof, exercise the Rights evidenced thereby in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to exercise and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together (if applicable) with payment of the aggregate Purchase Price (as defined in Subsection (b) below) for the number of Units of Company Preferred Stock (or, following a Triggering Event, other securities, cash or other assets, as the case may be) for which such surrendered Rights are then exercisable.
 
(b)           The purchase price for each one one-hundredth (1/100) of a share (each such one one-hundredth (1/100) of a share being a “Unit”) of Company Preferred Stock upon exercise of Rights shall be $5.00, subject to adjustment from time to time as provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted, being the “Purchase Price”), and shall be payable in accordance with Subsection (c) below.
 
(c)           As promptly as reasonably practicable following the occurrence of the Distribution Date, the Company shall deposit with a corporation in good standing organized under the laws of the United States or any State of the United States, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority (such institution being the “Depositary Agent”), shares of Company Preferred Stock that may be acquired upon exercise of the Rights and shall cause such Depositary Agent to enter into an agreement pursuant to which the Depositary Agent shall issue receipts representing interests in the shares of Company Preferred Stock so deposited.  Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to exercise and the certificate duly executed, accompanied (if applicable) by payment, with respect to each Right so exercised, of the Purchase Price for the Units of Company Preferred Stock (or, following a Triggering Event, other securities, cash or other assets, as the case may be) to be purchased thereby as set forth below and an amount equal to any applicable transfer tax or evidence satisfactory to the Company of payment of such tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) requisition from the Depositary Agent depositary receipts representing such number of Units of Company Preferred Stock as are to be acquired and the Company will direct the Depositary Agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such depositary 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) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate.  In the event that the Company is obligated to issue Company Preferred Stock, other securities of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such Company Preferred Stock, other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate.  The payment (if applicable) of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(ii) hereof) may be made by certified or bank check or money order payable to the order of the Rights Agent (i.e., Continental Stock Transfer & Trust Company).  The Rights Agent shall promptly transfer the amount of such payments received by it pursuant to this paragraph to the Company.
 
 
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(d)           In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Section 14 hereof.
 
(e)           Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of any Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of a Acquiring Person (or of any such Associate or Affiliate) which becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which becomes a transferee prior to or concurrently with the Acquiring Person becoming such and which receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or such Associate or Affiliate) has any continuing agreement, arrangement or understanding regarding the transferred Rights, shares of Company Common Stock or the Company or (B) a transfer which the Board of Directors of the Company has determined to be part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall be null and void without any further action, and no holder of such Rights shall have any rights whatsoever with respect to such Rights, nor shall any such Person be entitled to receive any property or securities in an exchange pursuant to Section 24 hereof, whether under any provision of this Agreement or otherwise.  The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights or any other Person as a result of its failure to make any determination under this Section 7(e) or such Section 4(b) with respect to an Acquiring Person or its Affiliates, Associates or transferees.
 
(f)           Notwithstanding anything in this Agreement or any Rights Certificate 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 by such registered holder unless such registered holder shall have (i) completed and executed the certificate following the form of election to exercise 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) of the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the Company shall reasonably request.
 
SECTION 8.   Cancellation and Destruction of Rights Certificates.  All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by 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 Certificates acquired by the Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy the cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

 
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SECTION 9.    Reservation and Availability of Capital Stock.
 
(a)           The Company shall at all times prior to the Expiration Date cause to be reserved and kept available, out of its authorized and unissued shares of Company Preferred Stock, the number of shares of Company Preferred Stock that, as provided in this Agreement, will be sufficient to permit the exercise in full of all outstanding Rights or the number of shares of Company Common Stock that, as provided in this Agreement, will be sufficient to permit any exchange pursuant to Section 24 hereof.  Upon the occurrence of any events resulting in an increase in the aggregate number of shares of Company Preferred Stock (or Company Common Stock or other equity securities of the Company, as the case may be) issuable upon exercise of all outstanding Rights above the number then reserved, the Company shall make appropriate increases in the number of shares so reserved.
 
(b)           If the shares of Company Preferred Stock (or Company Common Stock or other equity securities of the Company, as the case may be) to be issued and delivered upon the exercise of the Rights may be listed on any national securities exchange, the Company shall during the period from the Distribution Date through the Expiration Date use its best efforts to cause all securities reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise.
 
(c)           To the extent necessary to permit the Rights to be exercised in accordance with the terms of this Agreement without conflict with applicable law, the Company shall use its best efforts (i) as soon as practicable following a Distribution Date (the date on which such registration statement is filed being the “Registration Date”), to file a registration statement on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the securities that may be acquired upon exercise of the Rights (the “Registration Statement”), (ii) to cause the Registration Statement to become effective as soon as practicable after such filing, (iii) to cause the Registration Statement to continue to be effective (and to include a prospectus complying with the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for the securities covered by the Registration Statement, and (B) the Expiration Date and (iv) to take as soon as practicable following the Registration Date such action as may be required to ensure that any acquisition of securities upon exercise of the Rights complies with any applicable state securities or “blue sky” laws.
 
(d)           The Company shall take such action as may be necessary to ensure that all shares of Company Preferred Stock (or Company Common Stock or other equity securities of the Company, as the case may be, that may be delivered upon exercise of Rights) issued upon exercise of the Rights shall be, at the time of delivery of the certificates representing such securities, written statements describing such securities or depositary receipts for such securities, duly and validly authorized and issued and fully paid and non-assessable.

 
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 (e)          The Company shall pay any documentary, stamp or transfer tax imposed in connection with the issuance or delivery of the Rights Certificates or upon the exercise of Rights; provided, however, the Company shall not be required to pay any such tax imposed in connection with the issuance or delivery of Units of Company Preferred Stock, or any certificates representing, written statements describing or depositary receipts for such Units of Company Preferred Stock (or, following the occurrence of a Triggering Event, any other securities, cash or assets, as the case may be) to any person other than the registered holder of the Rights Certificates evidencing the Rights surrendered for exercise.  The Company shall not be required to issue or deliver any certificates, written statements or depository receipts for Units of Company Preferred Stock (or, following the occurrence of a Triggering Event, any other securities, cash or assets, as the case may be) to, or in a name other than that of, the registered holder upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due.
 
SECTION 10.        Company Preferred Stock Record Date.  Each Person in whose name any Units of Company Preferred Stock (or, following the occurrence of a Triggering Event, other securities) are issued and registered upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Units of Company Preferred Stock (or, following the occurrence of a Triggering Event, other securities) on, and the date of such issuance and registration shall be, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (if applicable) and any applicable transfer taxes was made; provided, however, that if the date of such surrender and payment is a date upon which the Company Preferred Stock (or, following the occurrence of a Triggering Event, other securities) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such securities on, and the date of such issuance and registration shall be, the next succeeding Business Day on which the Company Preferred Stock (or, following the occurrence of a Triggering Event, other securities) transfer books of the Company are open and, further provided, however, that if delivery of Units of Company Preferred Stock is delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have become the record holders of such Units of Company Preferred Stock only when such Units first become deliverable.  Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a shareholder of the Company with respect to securities 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 Purchase Price, Number and Kind of Shares or Number of Rights.  The Purchase Price, the number and kind of securities covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

 
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 (a)          (i)            In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Company Preferred Stock payable in shares of Company Preferred Stock, (B) subdivide the outstanding Company Preferred Stock, (C) combine the outstanding Company Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the Company Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Company Preferred Stock or capital stock, as the case may be, issuable on such date upon exercise of the Rights, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment (if applicable) of the Purchase Price then in effect, the aggregate number and kind of shares of Company Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification.  If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
 
(ii)           Subject to Section 24 of this Agreement, in the event that:
 
(A)           any Person shall become an Acquiring Person, other than pursuant to any transaction set forth in Section 13(a) hereof;
 
(B)           any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time after the date of this Agreement, directly or indirectly, (1) shall merge into the Company or otherwise combine with the Company and the Company shall be the continuing or surviving corporation of such merger or combination and Company Common Stock shall remain outstanding and unchanged, (2) shall, in one transaction or a series of transactions, transfer any assets to the Company or to any of its Subsidiaries in exchange (in whole or in part) for shares of Company Common Stock, for other equity securities of the Company or any such Subsidiary, or for securities exercisable for or convertible into shares of equity securities of the Company or any of its Subsidiaries (whether Company Common Stock or otherwise) or otherwise obtain from the Company or any of its Subsidiaries, with or without consideration, any additional shares of such equity securities or securities exercisable for or convertible into such equity securities (other than pursuant to a pro rata distribution to all holders of Company Common Stock);
 
(C)           during such time as there is an Acquiring Person, there shall be any reclassification of securities (including any reverse stock split), or recapitalization of the Company, or any merger or consolidation of the Company with any of its Subsidiaries or any other transaction or series of transactions involving the Company or any of its Subsidiaries, other than a transaction or transactions to which the provisions of Section 13(a) apply (whether or not with or into or otherwise involving an Acquiring Person), which has the effect, directly or indirectly, of increasing by more than one percent (1%) the proportionate share of the outstanding shares of any class of equity securities of the Company or any of its Subsidiaries that is directly or indirectly beneficially owned by any Acquiring Person or any Associate or Affiliate of any Acquiring Person;

 
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(D)           during such time as there is an Acquiring Person, the Company shall issue new shares of capital stock to an Acquiring Person having voting power in the election of directors of the Company (other than Company Preferred Stock); or
 
(E)           during such time as there is an Acquiring Person, the Company shall take material steps to liquidate or dissolve;
 
then, immediately upon the date of the occurrence of an event described in Section 11(a)(ii)(A)-(E) hereof (a “Section 11(a)(ii) Event”), each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon full or partial exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredth (1/100) of a share of Preferred Stock, up to such number of shares of Company Common Stock as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of Units for which a Right is then exercisable and dividing that product by (y) fifty percent (50%) of the Current Market Price per share of Company Common Stock (determined pursuant to Section 11(d) hereof) on the earlier of (a) the date on which any Person becomes an Acquiring Person and (b) the date on which a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan maintained by the Company or any of its Subsidiaries or any trustee or fiduciary with respect to such plan acting in such capacity) is first published or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any successor rule, if upon consummation thereof such Person would be the Beneficial Owner of twenty percent (20%) or more of the shares of Company Common Stock then outstanding.
 
(iii)           In the event that the number of shares of Company Common Stock which are authorized by the Company’s Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing Paragraph (ii) of this Section 11(a), or in any exchange of the Rights pursuant to Section 24 hereof, the Company, by the vote of the Board of Directors shall: (A) determine the excess of (1) the value of the shares issuable upon the exercise of a Right (the “Current Value”) over (2) the Purchase Price (such excess being the “Spread”), and (B) with respect to each Right, make adequate provision to substitute for the shares of Company Common Stock so issuable, upon payment of the Purchase Price, (1) cash, (2) other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock (such other shares being “Common Stock Equivalents”)), (3) debt securities of the Company, (4) other assets, or (5) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company, after receiving advice from an investment banking firm; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right, shares of Company Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash shall have an aggregate value equal to the Spread.  Any substitution pursuant to Subsection (ii) of this Section 11(a) or pursuant to Section 24(c) shall be effected by the Company, by the vote of the Board of Directors, subject to Section 11(e) hereof, in its sole and absolute discretion.  For purposes of this Section 11(a)(ii), the value of a share of Company Common Stock shall be the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Company Common Stock on the Section 11(a)(ii) Trigger Date and the value of any common stock equivalent shall be deemed to have the same value as the Company Common Stock on such date.

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

 
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(c)           In case the Company shall fix a record date for a distribution to all holders of shares of Company Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in shares of Company Preferred Stock, but including any dividend payable in stock other than Company Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Company Preferred Stock on such record date less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holder of the Rights) of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants distributable in respect of a share of Company Preferred Stock, and the denominator of which shall be such Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Company Preferred Stock.  Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed.
 
(d)           For the purpose of any computation hereunder, the “Current Market Price” per share of Company Common Stock or Company Preferred Stock on any date shall be deemed to be the average of the daily closing prices per share of such shares for the ten (10) consecutive Trading Days (as defined in this Section 11(d) below) immediately prior to such date; provided, however, if prior to the expiration of such requisite ten Trading Day period the issuer announces either (A) a dividend or distribution on such shares payable in such shares or securities convertible into such shares (other than the Rights), or (B) any subdivision, combination or reclassification of such shares, then, following the ex-dividend date for such dividend or the record date for such subdivision, as the case may be, the Current Market Price shall be properly adjusted to take into account such event.  The closing price for each day shall be, if the shares are listed and admitted to trading on a national securities exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such shares are listed or admitted to trading or, if such shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (“NASDAQ”) or such other system then in use, or, if on any such date such shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such shares selected by the Board of Directors of the Company.  If on any such date no market maker is making a market in such shares, 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 such shares are not publicly held or not so listed or traded, Current Market Price per share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.  The term “Trading Day” shall mean, if such shares are listed or admitted to trading on any national securities exchange, a day on which the principal national securities exchange on which such shares are listed or admitted to trading is open for the transaction of business or, if such shares are not so listed or admitted, a Business Day.

 
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(e)           Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten thousandth of a Unit of Company Common Stock or Company Preferred Stock or other share.  Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment and (ii) the Expiration Date.
 
(f)           If as a result of an adjustment made pursuant to Section 11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Company Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Company Preferred Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Company Preferred Stock shall apply on like terms to any such other shares.
 
(g)           All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Units of Company Preferred Stock (or other securities or amount of cash or combination thereof) that may be acquired from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
 
(h)           Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Units of Company Preferred Stock (calculated to the nearest ten-thousandth of a Unit) obtained by (i) multiplying (x) the number of Units of Company Preferred Stock covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 
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(i)           The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of Units of Company Preferred Stock that may be acquired upon the exercise of a Right.  Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of Units of Company Preferred Stock for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price.  The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which the Purchase Price is adjusted or any day thereafter, provided, however, that if the Rights Certificates have been issued, the record date shall be at least ten days later than the date of such public announcement.  If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 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 to be so distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement.
 
(j)           Irrespective of any adjustment or change in the Purchase Price or the number of Units of Company Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per Unit and the number of Units of Company Preferred Stock which were expressed in the Initial Rights Certificates issued hereunder.
 
(k)           Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value of the number of Units of Company Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue such fully paid and non-assessable number of Units of Company Preferred Stock at such adjusted Purchase Price.
 
(l)           In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of that number of Units of Company Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of Units of Company Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such  holder a due xxxx or other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.

 
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(m)           Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions to the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in their good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of the Company Preferred Stock, (ii) issuance wholly for cash of any shares of Company Preferred Stock at less than the Current Market Price, (iii) issuance wholly for cash of shares of Company Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Company Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Company Preferred Stock, shall not be taxable to such holders or shall reduce the taxes payable by such holders.
 
(n)           After the Distribution Date, the Company shall not, except as permitted by Section 23 or Section 25 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
 
(o)           Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare a dividend on the outstanding shares of Company Common Stock payable in shares of Company Common Stock, (ii) subdivide the outstanding shares of Company Common Stock, (iii) combine the outstanding shares of Company Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Company Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the number of Rights associated with each share of Company Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Company Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Company Common Stock immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Company Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Company Common Stock outstanding immediately following the occurrence of such event.
 
SECTION 12.         Certificate of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Company Common Stock or Company Preferred Stock, a copy of such certificate, and (c) if Rights Certificates have been issued, mail a brief summary thereof to each holder of a Rights Certificate in accordance with Section 25 hereof.  The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate.

 
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SECTION 13.       Consolidation, Merger, Liquidation or Sale or Transfer of Assets.
 
(a)           In the event that, following the Stock Acquisition Date, directly or indirectly,
 
(i)           the Company shall consolidate with, or merge with and into, any other Person, and the Company shall not be the continuing or surviving corporation of such consolidation or merger,
 
(ii)          any Person shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Company Common Stock shall be converted into or exchanged for stock or other securities of any other Person or cash or any other property,
 
(iii)         the Company shall sell, dividend, distribute or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer) to any Person or Persons, in one or more transactions, cash, other assets or earning power aggregating more than fifty percent (50%) of the cash, other assets or earning power of the Company and its Subsidiaries taken as a whole (any such event described in paragraphs (i)-(v) above being a “Section 13 Event”),
 
then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the full or partial exercise thereof at the then current Purchase Price in accordance with this Agreement, up to such number of validly authorized and issued, fully paid and nonassessable shares of Common Stock of the Principal Party (as such term is hereinafter defined), which shares shall not be subject to any liens, encumbrances, rights of first refusal, transfer restrictions or other adverse claims, as shall be equal to the result obtained by (x) multiplying the then current Purchase Price by the number of Units of Company Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event and (y) dividing that product by fifty percent (50%) of the Current Market Price per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to ensure that the provisions of this Agreement shall thereafter be applicable to its shares of Common Stock thereafter deliverable upon the exchange of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no further effect following the first occurrence of any Section 13 Event.

 
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(b)          “Principal Party” shall mean:
 
(i)           in the case of any transaction described in clause (a)(i) or (a)(ii) of Section 13(a) hereof, (A) the Person that is the issuer of any securities into which shares of Company Common Stock are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer of Common Stock that has the highest aggregate Current Market Price and (B) if no securities are so issued, the Person that is the other party to such merger or consolidation, or, if there is more than one such Person, the Person the Common Stock of which has the highest aggregate Current Market Price; and
 
(ii)          in the case of any transaction described in clause (a)(iii) of Section 13(a) hereof, the Person that is the party receiving the largest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of the assets or earning power transferred pursuant to such transaction or transactions or if the Person receiving the largest portion of the assets or earning power cannot be determined, whichever Person the Common Stock of which has the highest aggregate Current Market Price;
 
provided, however, that in any such case, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve-month period registered under Section 12 of the Exchange Act (“Registered Common Stock”), or such Person is not a corporation, and such Person is a direct or indirect Subsidiary of another Person that has Registered Common Stock outstanding, “Principal Party” shall refer to such other Person; (2) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is a direct or indirect Subsidiary of another Person but is not a direct or indirect Subsidiary of another Person which has Registered Common Stock outstanding, “Principal Party” shall refer to the ultimate parent entity of such first-mentioned Person; (3) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is directly or indirectly controlled by more than one Person, and one or more of such other Persons has Registered Common Stock outstanding, “Principal Party” shall refer to whichever of such other Persons is the issuer of the Registered Common Stock having the highest aggregate Current Market Price; and (4) if the Common Stock of such Person is not Registered Common Stock or such Person is not a corporation, and such Person is directly or indirectly controlled by more than one Person, and none of such other Persons have Registered Common Stock outstanding, “Principal Party” shall refer to whichever ultimate parent entity is the corporation having the greatest shareholders equity or, if no such ultimate parent entity is a corporation, shall refer to whichever ultimate parent entity is the entity having the greatest net assets.
 
(c)           The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13, and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Paragraphs (a) and (b) of this Section 13 and further providing that the Principal Party will:

 
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(i)           (A) file on an appropriate form, as soon as practicable following the execution of such agreement, a registration statement under the Securities Act with respect to the Common Stock that may be acquired upon exercise of the Rights, (B) cause such registration statement to remain effective (and to include a prospectus complying with the requirements of the Securities Act) until the Expiration Date, and (C) as soon as practicable following the execution of such agreement, take such action as may be required to ensure that any acquisition of such Common Stock upon the exercise of the Rights complies with any applicable state security or “blue sky” laws; and
 
(ii)          deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act.
 
(d)          In case the Principal Party which is to be a party to a transaction referred to in this Section 13 has a provision in any of its authorized securities or in its Certificate of Incorporation or Bylaws or other instrument governing its corporate affairs, which provision would have the effect of (i) causing such Principal Party to issue, in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, shares of Common Stock of such Principal Party at less than the then Current Market Price per share or securities exercisable for, or convertible into, Common Stock of such Principal Party at less than such then Current Market Price (other than to holders of Rights pursuant to this Section 13) or (ii) providing for any special payment, tax or similar provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to the provisions of this Section 13; then, in such event, the Company shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction.
 
(e)           The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.  In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a).
 
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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 Persons to which such fractional Rights would otherwise be issuable, an amount in cash equal to such fraction of the market value of a whole Right.  For purposes of this Section 14(a), the market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable.  The closing price of the Rights for any day shall be, if the Rights are listed or admitted to trading on a national securities exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company.  If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used and such determination shall be described in a statement filed with the Rights Agent.
 
(b)           In connection with any exercise of Rights, or any exchange of Rights pursuant to Section 24 hereof, the Company shall not be required to issue fractions of Company Common Stock or to distribute certificates which evidence fractional Company Common Stock, nor shall the Company be required to issue fractions of Company Preferred Stock (other than fractions which are integral multiples of one one-hundredth (1/100) of a share of Company Preferred Stock) or to distribute certificates which evidence Company Preferred Stock in any such odd fraction.  Fractions of Company Preferred Stock in integral multiples of one one-hundredth (1/100) of a share of Company Preferred Stock may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided, that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Company Preferred Stock represented by such depositary receipts.  If the Company elects not to issue fractional Company Common Stock or odd fractional Company Preferred Stock, then, in lieu of such fractional shares, the Company shall pay to the registered holder of each Right otherwise entitled to receive the same at the time such Right is exercised or exchanged as herein provided an amount in cash equal to the same fraction of the current market value of a whole share.  For the purposes of this Subsection (b), the current market value of a whole share of Company Common Stock or share of Company Preferred Stock shall be the closing price of a share of Company Common Stock or Company Preferred Stock, as the case may be (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise or exchange.
 
(c)           The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

 
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SECTION 15.       Rights of Action.  All rights of action in respect of this Agreement, other than rights of action vested in the Rights Agent pursuant to Section 18 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of shares of Company Common Stock); and any registered holder of a Rights Certificate (or, prior to the Distribution Date, of shares of Company Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of shares of Company Common Stock), may, on its own behalf and for its own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.
 
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 Company Common Stock;
 
(b)          after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office 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 duly executed;
 
(c)           subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated shares of Company Common Stock) 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 applicable to the associated shares of Company Common Stock made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be affected by any notice to the contrary; and
 
(d)           notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or any other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation.
 
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 the holder of the number of shares of Company Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a 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, except as provided in Section 24 hereof, to receive notice of meetings or other actions affecting shareholders, 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.
 
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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, including reasonable fees and disbursements of its counsel, incurred in connection with the execution and administration of this Agreement and the exercise and performance of its duties hereunder.  The Company shall indemnify the Rights Agent for, and hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability hereunder.
 
(b)           The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate, certificate for Company Common Stock, or written statement describing shares of Company Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to have been signed, executed and, where necessary, verified or acknowledged by the proper Person or Persons.
 
SECTION 19.       Merger or Consolidation or Change of Name of Rights Agent.
 
(a)           Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust or shareholder services businesses 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 document or any further act on the part of any of the parties hereto; provided, however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.  In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

 
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(b)           In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.
 
SECTION 20.       Duties of Rights Agent.  The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:
 
(a)           The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the written opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.
 
(b)           Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be specified herein) may be deemed to be conclusively proved and established by a certificate signed by the Chief Executive Officer, President, Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
 
(c)           The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct.  Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage.
 
(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 or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only.
 
(e)           The Rights Agent shall not have any responsibility for the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or for the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or failure by the Company to satisfy conditions contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11, Section 13 or Section 24 hereof or for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt by the Rights Agent of the certificate describing any such adjustment contemplated by Section 12 hereof); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Company Common Stock or Company Preferred Stock or any other securities to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Company Common Stock or Company Preferred Stock or any other securities will, when so issued, be validly authorized and issued, fully paid and nonassessable.
 
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(f)           The Company shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Rights Agent for the performance by the Rights Agent of its duties under this Agreement and shall provide free upon request of any holder of a Right a copy of this Agreement.
 
(g)          The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer.  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 Business Days after the date any such officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.
 
(h)          The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement.  Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.
 
(i)           The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents.
 
(j)           No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of its rights hereunder if the Rights Agent shall have reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 
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(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 exercise, as the case may be, has either not been completed, not signed 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.  If such certificate has been completed and signed and shows a negative response to clauses 1 and 2 of such certificate, unless previously instructed otherwise in writing by the Company (which instructions may impose on the Rights Agent additional ministerial responsibilities, but no discretionary responsibilities), the Rights Agent may assume without further inquiry that the Rights Certificate is not owned by a person described in Section 4(b) or Section 7(e) hereof and shall not be charged with any knowledge to the contrary.
 
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 days’ prior notice in writing mailed to the Company, and to each transfer agent of the Company Common Stock and Company Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or any successor Rights Agent upon thirty days’ prior notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Company Common Stock and Company Preferred Stock, 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 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or any state of the United States in good standing, shall be authorized under such laws to exercise corporate trust or stock transfer powers, shall be subject to supervision or examination by federal or state authorities and shall have at the time of its appointment as Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a corporation described in clause (a).  After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Company Common Stock and Company Preferred Stock, 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.

 
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SECTION 22.  Issuance of New Rights Certificates.  Notwithstanding any of the provisions of this Agreement or the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change made in accordance with the provisions of this Agreement in the Purchase Price or the number or kind or class of shares or other securities or property that may be acquired under the Rights Certificates.  In addition, in connection with the issuance or sale of shares of Company Common Stock following the Distribution Date and prior to the Expiration Date, the Company (a) shall, with respect to shares of Company Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities 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 if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.
 
SECTION 23.  Redemption and Termination.
 
(a)           Subject to Section 30 hereof, the Company may, at its option, by action of the Board of Directors of the Company, at any time prior to the earlier of (i) the Close of Business on the tenth (10th) Business Day following the Stock Acquisition Date (or such later date as may be determined by action of a majority of Continuing Directors then in office prior to such time) or (ii) the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being the “Redemption Price”), and the Company may, at its option, by action of the Board of Directors of the Company, pay the Redemption Price either in shares of Company Common Stock (based on the Current Market Price of the shares of Company Common Stock at the time of redemption) or cash.  Such redemption of the Rights by the Company may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish; provided, however, if the Board of Directors of the Company authorizes redemption of the Rights on or after the time a Person becomes an Acquiring Person, then there must be Continuing Directors then in office and such authorization shall require the concurrence of a majority of such Continuing Directors.
 
(b)          Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall be 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 for each Right so held.  Promptly after the action of the Board of Directors of the Company ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder’s last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for Company Common Stock.  Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.

 
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SECTION 24.  Exchange.
 
(a)           The Board of Directors of the Company may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for Company Common Stock at an exchange ratio of one share of Company Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the effective date of this Agreement (such exchange ratio being the “Exchange Ratio”).
 
(b)          Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to Subsection (a) of this Section 24 (or at such later time as may be specified by the Board in taking such action) 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 Company Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio.  The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange.  The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights in accordance with Section 25 hereof.  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 Company Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.
 
(c)          In any exchange pursuant to this Section 24, the Company, (i) at its option may, and (ii) in the event there are not sufficient Common Stock available (that is, shares constituting treasury shares or authorized but unissued shares, after excluding any Company Common Stock previously reserved for other purposes) to permit the full exchange of the Rights ordered by the Board of Directors of the Company shall, substitute (in whole or in part) Company Preferred Stock (or Preferred Stock Equivalent, as such term is defined in Section 11(b) hereof) for Company Common Stock exchangeable for Rights, at the initial rate of one one-hundredth (1/100) of a share of Company Preferred Stock (or Preferred Stock Equivalent) for each Common Share, as appropriately adjusted to reflect adjustments in the voting rights of the Company Preferred Stock pursuant to the terms thereof, so that the fraction of a share of Company Preferred Stock delivered in lieu of each share of Company Common Stock shall have the same voting rights as one share of Company Common Stock.  Exchange pursuant to this Section 24 is also subject to the provisions of Section 11(a)(ii) hereof.

 
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SECTION 25.  Notice of Certain Events.
 
(a)           In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Company Preferred Stock or to make any other distribution to the holders of Company Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of Company Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Company Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Company Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Company Preferred Stock), (iv) to effect any consolidation or merger into or with any other Person, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than fifty percent (50%) of the assets or of the Company and its Subsidiaries (taken as a whole) to any other Person or earning power Persons, or (v) to effect the liquidation, dissolution or winding up of the Company, (vi) to declare or pay any dividend on the Company Common Stock payable in Company Common Stock or to effect a subdivision, combination or consolidation of the Company Common Stock (by reclassification or otherwise than by payment of dividends in Company Common Stock), then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Company Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Company Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Company Preferred Stock whichever shall be the earlier.
 
(b)          In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the Company shall as soon as reasonably practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(iii) hereof.
 
SECTION 26.  Notices.  All notices and other communications provided for hereunder shall, unless stated herein, be in writing and mailed or sent or delivered, if to the Company, at its address at:
 
00 Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
 
and if to the Rights Agent, at its address at:
 
Continental Stock Transfer & Trust Company
00 Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX  00000
 
 
- 32 -
 

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder of shares of Company Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
 
SECTION 27.  Supplements and Amendments.  Prior to the Distribution Date and subject to this Section 27, the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any holders of shares of Company Common Stock.  From and after the Distribution Date and subject to the penultimate sentence of this Section 27 as described below, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder (which lengthening or shortening, following the first time a Person becomes an Acquiring Person, shall be effective only if there are Continuing Directors and shall require the concurrence of a majority of such Continuing Directors), or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided, however, that  this Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) subject to Section 30 hereof, 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.  Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment.  Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made which changes the Redemption Price, the Purchase Price, the Expiration Date or the number of Units of Company Preferred Stock for which a Right is exercisable without the approval of the Board of Directors of the Company (and with the concurrence of a majority of the Continuing Directors, where specifically provided for herein).  Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Company Common Stock.

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.  For all purposes of this Agreement, any calculation of the number of shares of Company Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Company Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as in effect on the date hereof.  Except as otherwise specifically provided herein, the Board of Directors of the Company (and, where specifically provided for herein, the Continuing Directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company (or, where specifically provided for herein, the Continuing Directors), 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.  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 and all other parties, and (y) not subject the Board, any member thereof or the Continuing Directors to any liability to the holders of the Rights.

 
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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, registered holders of shares of Company Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of shares of Company Common Stock).
 
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 and the Rights shall not then be redeemable, the right of redemption set forth in  Section 23 hereof shall be reinstated and shall not expire until the Close of Business on the tenth (10th) Business Day following the date of such determination by the Board of Directors of the Company.
 
SECTION 32.  Governing Law.  This Agreement, each Right and each Rights Certificate issued hereunder shall be governed by, and construed in accordance with, the laws of the State of Nevada applicable to contracts executed in and to be performed entirely in such State.
 
SECTION 33.  Counterparts.  This Agreement may be executed (including by facsimile) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.
 
SECTION 34.  Descriptive Headings.  The headings contained in this Agreement are for descriptive purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 
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[Signature Page Follows]

 
- 35 -
 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
 
 
By  
/s/ Xxxxx Xxxxx-Xxxxxx 
 
Name: Xxxxx Xxxxx-Xxxxxx 
 
Title: President and CEO
 
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, as Rights Agent
 
By
/s/ Xxxx X. Xxxxx, Xx.
 
Name: Xxxx X. Xxxxx, Xx.
 
Title: Vice President
 
 
- 36 -
 

EXHIBIT A
 
CERTIFICATE OF DESIGNATION
OF
SERIES C PREFERRED STOCK

The undersigned, Xxxxx Xxxxx-Xxxxxx, does hereby certify:
 
1.      That he is the duly elected and acting President of NuRx Pharmaceuticals, Inc., a Nevada corporation (the “Corporation”).
 
2.      That the authorized number of shares of Preferred Stock of the Corporation is 5,000,000 and that no shares of Preferred Stock are currently issued or outstanding.
 
3.      That pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Articles of Incorporation of the said Corporation, the said Board of Directors adopted the following resolution creating a series of 300,000 shares of Preferred Stock designated as Series C Preferred Stock:
 
“RESOLVED, that pursuant to the authority vested in the Board of Directors of the corporation by the Amended and Restated Articles of Incorporation, the Board of Directors does hereby provide for the issue of a series of Preferred Stock, par value $0.001 per share, of the Corporation, to be designated “Series C Preferred Stock,” initially consisting of 300,000 shares and to the extent that the designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions of the Series C Preferred Stock are not stated and expressed in the Amended and Restated Articles of Incorporation, does hereby fix and herein state and express such designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions thereof, as follows (all terms used herein which are defined in the Amended and Restated Articles of Incorporation shall be deemed to have the meanings provided therein):
 
SECTION 1.       DESIGNATION AND AMOUNT.  The shares of such series shall be designated as “Series C Preferred Stock,” par value $.001 per share, and the number of shares constituting such series shall be 300,000.
 
SECTION 2.       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 C Preferred Stock with respect to dividends, the holders of shares of Series C Preferred Stock shall be entitled to receive when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of September, December, March and June 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 C Preferred Stock, in an amount per share (rounded to the nearest cent) equal to, subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 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 of the Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series C Preferred Stock.  In the event the Corporation shall at any time after June 1, 2009 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 
A-1
 

(B)      The Corporation shall declare a dividend or distribution on the Series C 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 and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series C Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.
 
SECTION 3.       VOTING RIGHTS.   The holders of shares of Series C Preferred Stock shall have the following voting rights:
 
(A)      Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation.  In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of 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 number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
 
A-2
 
(B)      Except as otherwise provided herein or by law, the holders of shares of Series C Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
 
(C)      Except as required by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
 
SECTION 4.       CERTAIN RESTRICTIONS.
 
(A)      The Corporation shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire for consideration any shares of Common Stock after the first issuance of a share or fraction of a share of Series C Preferred Stock unless concurrently therewith it shall declare a dividend on the Series C Preferred Stock as required by Section 2 hereof.
 
(B)      Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
 
(i)     declare or pay dividends on, make any other 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 C Preferred Stock;
 
(ii)    declare or pay dividends on, 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 Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
 
(iii)   redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series C Preferred Stock; or
 
(iv)    purchase or otherwise acquire for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred Stock, 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.
 
A-3
 
(C)      The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
 
SECTION 5.       REACQUIRED SHARES.  Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
 
SECTION 6.       LIQUIDATION, DISSOLUTION OR WINDING UP.
 
(A)      Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received $500.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series C Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series C Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series C Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and recapitalization with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”).  Following the payment of the full amount of the Series C Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series C Preferred Stock and Common Stock, respectively, holders of Series C Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.
 
(B)      In the event, however, that there are not sufficient assets available to permit payment in full to the Series C Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series C Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences.  In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.
 
A-4
 
(C)      In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
 
SECTION 7.       CONSOLIDATION, MERGER, ETC.  In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series C Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.  In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
 
SECTION 8.       NO REDEMPTION.  The shares of Series C Preferred Stock shall not be redeemable.
 
SECTION 9.       RANKING.  The Series C 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 10.      AMENDMENT.  The Amended and Restated Articles of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preference or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series C Preferred Stock, voting separately as a class.
 
SECTION 11.      FRACTIONAL SHARES.  Series C Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series C Preferred Stock.
 
RESOLVED FURTHER, that the President or any Vice President and the Secretary or any Assistant Secretary of this corporation be, and they hereby are, authorized and directed to prepare and file a Certificate of Designation of Rights, Preferences and Privileges in accordance with the foregoing resolution and the provisions of Nevada law and to take such actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolution.”
 
[The remainder of this page is intentionally left blank.]
 
A-5
 
I further declare under penalty of perjury that the matters set forth in the foregoing Certificate of Designation are true and correct of my own knowledge.
 
Executed at Los Angeles, California as of ________, 2009.
 
______________________________________________
Xxxxx Xxxxx-Xxxxxx, President
 
 
A-6
 

EXHIBIT B
 
[Form of Rights Certificate]
 
Certificate No. __________
 
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW).  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  [UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR 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 REFERRED TO BELOW).  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.]*
 
Rights Certificate
 
 
This certifies that ______________ or its registered assigns is the registered holder of the number of Rights set forth above, each of which entitles the registered holder thereof, subject to the terms and conditions of the Stockholder Rights Agreement dated as of June 1, 2009 (the “Rights Agreement”) between NuRx Pharmaceuticals, Inc., a Nevada corporation (the “Company”), and Continental Stock Transfer & Trust Company, as Rights Agent (which term shall include any successor Rights Agent under the Rights Agreement), to purchase from the Company at any time after the Distribution Date and prior to the Expiration Date at the office of the Rights Agent, one one-hundredth (1/100) of a fully paid and non-assessable share of Series C Preferred Stock, par value $0.001 per share (the “Company Preferred Stock”), of the Company at the Purchase Price initially of $5.00 per one one-hundredth (1/100) share (each such one one-hundredth of a share being a “Unit”) of Company Preferred Stock, upon presentation and surrender of this Rights Certificate with the Election to Exercise and related certificate duly executed.  The number of Rights evidenced by this Rights Certificate (and the number of Units which may be purchased upon exercise thereof) set forth above, and the Purchase Price per Unit set forth above shall be subject to adjustment in certain events as provided in the Rights Agreement.  Terms defined in the Rights Agreement shall have the same meaning in this Rights Certificate unless otherwise defined differently herein.
*
The portion of the legend in brackets shall be inserted where applicable and shall replace the preceding sentence.
 
B-1
 
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights Certificate are beneficially owned by an Acquiring Person or an Affiliate or Associate of any such Acquiring Person or, under certain circumstances described in the Rights Agreement, a transferee of any such Acquiring Person, Associate or Affiliate, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.
 
In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may entitle the registered holder thereof to receive, upon exercise of such Rights, Common Stock of the Company or cash or other assets, all as provided in the Rights Agreement.
 
In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may entitle the registered holder thereof to receive, upon exercise of such Rights, capital stock of an entity other than the Company or cash or other assets, all as provided in the Rights Agreement.
 
This Rights Certificate is subject to all of the terms and conditions of the Rights Agreement, which terms 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.  Copies of the Rights Agreement are on file at the principal office of the Company and are available from the Company upon written request.
 
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 an aggregate number of Rights equal to the aggregate number of Rights evidenced by the Rights Certificate or Rights Certificates surrendered.  If this Rights Certificate shall be exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.
 
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company under certain circumstances at its option at a redemption price of $0.001 per Right, payable at the Company’s option in cash or in common stock of the Company, subject to adjustment in certain events as provided in the Rights Agreement.  No fractional shares of Company Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth (1/100) of a share of Company Preferred Stock), 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 Company Preferred Stock or of any other securities 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 Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

 
B-2
 
 
This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.
 
B-3

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.  Dated as of ____________, ____.
 
ATTEST:
     
 
By
_____________________
   
Name:
   
Title:
 
Countersigned:
 
Continental Stock Transfer & Trust Company, as Rights Agent
 
By
 _____________________ 
 
Name:
 
Title:
 
 
B-4
 

[Form of Reverse Side of Rights Certificate]
 
FORM OF ASSIGNMENT
 
(To be executed by the registered holder if
such holder desires to transfer the  Rights Certificate.)
 
FOR VALUE RECEIVED __________________________________________ hereby sells, assigns and transfers unto
_____________________________________________________________________________________________
(Please print name and address of transferee)
 
_____________________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________ Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.
 
Dated: ____________, ____
 
_____________________
Signature

Signature Guaranteed:

 
B-5
 

Certificate
 
The undersigned hereby certifies by checking the appropriate boxes that:
 
(1)           this Rights Certificate ¨ is ¨ is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and
 
(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 an Acquiring Person.
 
Dated: ____________, ____
 
_____________________
Signature

Signature Guaranteed:

 
B-6
 

NOTICE
 
The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.
 
Signatures must be guaranteed by an approved eligible financial institution acceptable to the Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.
 
In the event the certification set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the case of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate.

 
B-7
 

FORM OF ELECTION TO EXERCISE
 
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
 
 
The undersigned hereby irrevocably elects to exercise _________ Rights represented by this Rights Certificate to acquire in exchange for the surrender of such Rights the Units of Company Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person or other property which may be issuable upon the exercise of the Rights) and requests that such Units be issued in the name of and delivered to:
_________________________________
(Please print name and address)
 
_________________________________
Please insert social security
or other identifying numbers:__________
 
If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to:
 
_________________________________
(Please print name and address)
 
_________________________________
Please insert social security
or other identifying numbers:__________
 
Dated: ____________, ____
 
_____________________
Signature
 
Signature Guaranteed:

 
B-8
 

Certificate
 
The undersigned hereby certifies by checking the appropriate boxes that:
 
(1)           the Rights evidenced by this Rights Certificate ¨ are ¨ are not beneficially owned by an Acquiring Person or an Affiliate or an Associate thereof (as defined in the Rights Agreement); and
 
(2)           after due inquiry and to the best knowledge of the undersigned, the undersigned ¨ did ¨ did not acquire the Rights evidenced by this Rights Certificate from any person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate thereof.
 
Dated: ____________, ____
 
_____________________
Signature
 
Signature Guaranteed:

 
B-9
 

NOTICE
 
The signature in the foregoing Election to Purchase and Certificate 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.
 
Signatures must be guaranteed by an approved eligible financial institution acceptable to the Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.
 
In the event the certification set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the case of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate.

 
B-10
 

EXHIBIT C
 
SUMMARY OF RIGHTS TO ACQUIRE PREFERRED STOCK
 
Effective as of June 1, 2009, the Board of Directors of NURX PHARMACEUTICALS, INC., a Nevada corporation (the “Company”), declared a distribution of one Right for each outstanding share of Common Stock, par value $0.001 per share (the “Company Common Stock”), to stockholders of record at the close of business on June 1, 2009 (the “Record Date”) and for each share of Company Common Stock issued (including shares distributed from treasury) by the Company thereafter and prior to the Distribution Date.  Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one one-hundredth (1/100) of a share (a “Unit”) of Series C Preferred Stock, par value $0.001 per share (the “Company Preferred Stock”), at a Purchase Price of $5.00 per Unit, subject to adjustment.  The Purchase Price is payable in cash or by certified or bank check or money order payable to the order of the Company.  The description and terms of the Rights are set forth in a Stockholder Rights Agreement between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the “Rights Agreement”).
 
Copies of the Rights Agreement have been filed with the Securities and Exchange Commission as exhibits to a Registration Statement on Form 8-A dated June 5, 2009 (the “Form 8-A”).  Copies of the Rights Agreement are available free of charge from the Company.  This summary description of the rights does not purport to be complete and is qualified in its entirety by reference to all the provisions of the Rights Agreement, including the definitions therein of certain terms, which Rights Agreement is incorporated herein by reference.
 
 
Initially, the Rights will be attached to the certificates representing outstanding shares of Common Stock, and no separate Rights certificates will be distributed.  The Rights are not exercisable until the Distribution Date (as defined below) and will expire at the close of business on June 5, 2014 (the “Expiration Date”), unless earlier redeemed by the Company as described below.  Until the Distribution Date, (i) the Rights will be evidenced by and will be transferred with and only with such Common Stock certificates, (ii) new Common Stock certificates issued after June 1, 2009, will contain a legend incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificate for Common Stock will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.
 
As promptly as reasonably practicable after the Distribution Date, Rights certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and thereafter, the separate Rights certificates alone will represent the Rights.  Except as otherwise determined by the Board of Directors, the only Common Stock that will be issued with Rights is Common Stock issued prior to the earliest of (i) the Distribution Date, and (ii) the Expiration Date.

 
C-1
 

Initially, the Rights will attach to all shares of outstanding Company Common Stock, and no separate Rights Certificates will be distributed.  The Rights will separate from the Company Common Stock and the “Distribution Date” will occur upon the earlier of (i) ten (10) business days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, obtained the right to acquire, or otherwise obtained beneficial ownership of twenty percent (20%) or more of the outstanding shares of Company Common Stock (or an earlier date under certain circumstances specified in the Rights Agreement) (the “Stock Acquisition Date”), and (ii) ten (10) business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning twenty percent (20%) or more of the outstanding Company Common Stock.  The Continuing Directors (defined as the directors who are not affiliated or associated with an Acquiring Person) may vote to extend these timeframes in their discretion.
 
In the event that (i) an Acquiring Person becomes the beneficial owner of twenty percent (20%) or more of the then outstanding shares of Company Common Stock, (ii) the Company is the surviving corporation in a merger with an Acquiring Person and shares of Company Common Stock shall remain outstanding, (iii) an Acquiring Person engages in one or more “self-dealing” transactions as set forth in the Rights Agreement, (iv) the Company takes steps to liquidate or dissolve, or (v) during such time as there is an Acquiring Person, an event occurs which results in such Acquiring Person’s ownership interest being increased by more than one percent (1%) (e.g., by means of a reverse stock split or recapitalization), then, in each such case, each holder of a Right will thereafter have the right to acquire, upon exercise of such Right, up to that number of shares of Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times (2x) the exercise price of the Right.  The exercise price is the Purchase Price multiplied by the number of Units of Company Preferred Stock issuable upon exercise of a Right prior to the events described in this paragraph.  Notwithstanding any of the foregoing, following the occurrence of any of the events set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.
 
For example, at an exercise price of $10 per Right, each Right not owned by the Acquiring Person (or by certain related parties or transferees) following the event set forth in the preceding paragraphs would entitle its holder to purchase $20 worth of Common Stock (or other consideration, as noted above) for $10. Assuming that the Common Stock had a per share value of $2.50 at such time, the holder of each valid Right would be entitled to purchase eight (8) shares of Common Stock for $10.
 
In the event that, at any time following the Stock Acquisition Date, (i) the Company is acquired in a merger or other business combination transaction and the Company is not the surviving corporation (other than a merger described above), (ii) any Person consolidates or merges with the Company and all or part of the Company Common Stock is converted or exchanged for securities, cash or property of any other Person, or (iii) the Company sells, dividends, distributes or otherwise transfers assets or earning power aggregating more than fifty percent (50%) of the assets or earning power of the Company, then each holder of a Right (except Rights which previously have been voided as described above) shall thereafter have the right to acquire, upon exercise of such Right, up to that number of shares of common stock of the Principal Party having a value equal to two times (2x) the exercise price of the Right.

 
C-2
 

The Purchase Price and the number of Units of the Company Preferred Stock issuable upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or subdivision, combination or reclassification of, the Company Preferred Stock, (ii) if holders of the Company Preferred Stock are granted certain rights or warrants to subscribe for Company Preferred Stock or convertible securities at less than the Current Market Price of the Company Preferred Stock, or (iii) upon the distribution to the holders of the Company Preferred Stock of evidences of indebtedness, cash or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).
 
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least one percent (1%) of the Purchase Price.  The Company is not required to issue fractional Units or shares of the Company Preferred Stock.  In lieu thereof, an adjustment in cash may be made based on the market price of the Company Preferred Stock prior to the date of exercise or exchange.
 
At any time until ten (10) business days following the Stock Acquisition Date, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to adjustment in certain events) (the “Redemption Price”), payable, at the election of the Board of Directors of the Company, in cash or shares of Company Common Stock.  Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
 
Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote o to receive dividends.  While the distribution of the Rights will not be taxable to stockholder or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable or exchangeable for Units or shares of Company Preferred Stock (or other consideration).
 
At any time after a person becomes an Acquiring Person, but before any person becomes the beneficial owner of fifty percent or more of the Company’s Common Stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such Acquiring Person or group which become void), in whole or in part, at an exchange ratio of one share of Common Stock, or one one-hundredth of a share of Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment).
 
 The Preferred Stock will be non-redeemable. The Preferred Stock may rank on a lower priority in respect of the preference as to dividends and the distribution of assets with other classes or series of the Company’s preferred stock. Each share of Preferred Stock will be entitled to an aggregate of 100 times the cash and non-cash (payable in kind) dividends and distributions (other than dividends and distributions payable in Common Stock) declared on the Company’s Common Stock. In the event of liquidation, the holders of Preferred Stock will be entitled to receive a liquidation payment in an amount equal to 100 times the payment made per share of Common Stock, plus an amount equal to declared and unpaid dividends and distributions thereon. In the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 100 times the amount received per share of Common Stock. The dividend and liquidation rights of the Preferred Stock are protected by antidilution provisions. Each share of Preferred Stock will be entitled to 100 votes (subject to certain adjustments) on all matters submitted to the shareholders.

 
C-3
 
 
Any provision in the Rights Agreement may be amended by the Board of Directors prior to the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be amended by the Board of Directors in order to cure any ambiguity, make corrections, lengthen or shorten time periods (which lengthening or shortening, following the first time a person becomes an Acquiring Person, shall be effective only if there are Continuing Directors (as defined below) and shall require the concurrence of a majority of such Continuing Directors) and to otherwise make changes which do not adversely affect the interests of holders of Rights (excluding the interests of any Acquiring Person); provided, however, that no amendment to adjust the time period governing redemption may be made at such time as the Rights are not redeemable or to lengthen any time period unless for the purpose of protecting or enhancing the rights or benefits of the holders of the Rights.  “Continuing Directors” are defined as directors who are not affiliated with a hostile shareholder and who were seated as directors prior to the time the Rights Agreement was adopted, or directors who are subsequently elected or appointed by the nomination or approval of the Continuing Directors.
 
The Rights Agreement excludes from the definition of Acquiring Person certain defined Exempt Person(s) and any Person the Board of Directors determines in good faith (with the concurrence of a majority of Continuing Directors then in office prior to the time of the event causing a Person to become an Acquiring Person) that a Person who would otherwise be an “Acquiring Person” has become such a Person inadvertently.  Xx. Xxxxxxx Xxxx and his immediate family members and their affiliates and associates are defined as an Exempt Person, provided, however, that they will not be an Exempt Person if they become the Beneficial Owner of any additional shares of Company Common Stock after the effective time of the Rights Agreement.
 
This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement and the Certificate of Designation of Series C Preferred Stock, each of which is available from the Company upon request.

 
C-4
 
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Filed: June 5th, 2009
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