the Common Stock then outstanding, such Person shall be deemed to be an Acquiring Personunless upon becoming the Beneficial Owner of such additional shares of Common Stock of the Companysuch Person does not beneficially own 15% or more of the shares of Common Stock of the Company thenoutstanding. Notwithstanding the foregoing, (x) if the Company’s Board of Directors determines ingood faith that a Person who would otherwise be an “Acquiring Person,” as defined herein, hasbecome such inadvertently (including, without limitation, because (1) such Person was unaware thatit beneficially owned a percentage of the shares of Common Stock that would otherwise cause suchPerson to be an “Acquiring Person,” as defined herein, or (2) such Person was aware of the extentof the shares of Common Stock it beneficially owned but had no actual knowledge of the consequencesof such beneficial ownership under this Agreement) and without any intention of changing orinfluencing control of the Company, and if such Person divested or divests as promptly aspracticable a sufficient number of shares of Common Stock so that such Person would no longer be an“Acquiring Person,” as defined herein, then such Person shall not be deemed to be or to have becomean “Acquiring Person” for any purposes of this Agreement; and (y) if, as of the date hereof, anyPerson is the Beneficial Owner of 15% or more of the shares of Common Stock outstanding, suchPerson shall not be or become an “Acquiring Person,” as defined herein, unless and until such timeas such Person shall become the Beneficial Owner of additional shares of Common Stock (other thanpursuant to a dividend or distribution paid or made by the Company on the outstanding shares ofCommon Stock in shares of Common Stock or pursuant to a split or subdivision of the outstandingshares of Common Stock), unless, upon becoming the Beneficial Owner of such additional shares ofCommon Stock, such Person is not then the Beneficial Owner of 15% or more of the shares of CommonStock then outstanding.          “Adjustment Fraction” shall have the meaning set forth in Section 11(a)(i) hereof.          “Affiliate” and “Associate” shall have the respective meanings ascribed tosuch terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effecton the date of this Agreement.          A Person shall be deemed the “Beneficial Owner” of and shall be deemed to“Beneficially Own” any securities:               (i) which such Person or any of such Person’s Affiliates or Associates beneficially owns,directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder(or any comparable or successor law or regulation);               (ii) which such Person or any of such Person’s Affiliates or Associates has (A) the right toacquire (whether such right is exercisable immediately or only after the passage of time) pursuantto any agreement, arrangement or understanding (other than customary agreements with and betweenunderwriters and selling group members with respect to a bona fide public offering of securities),or upon the exercise of conversion rights, exchange rights, rights (other than the Rights),warrants or options, or otherwise; provided, however, that a Person shall not be deemed pursuant tothis subsection (ii)(A) to be the Beneficial Owner of, or to beneficially own, (1) securitiestendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of suchPerson’s Affiliates or Associates until such tendered securities are accepted for purchase orexchange, or (2) securities which a Person or any of such
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Person’s Affiliates or Associates may be deemed to have the right to acquire pursuant to anymerger or other acquisition agreement between the Company and such Person (or one or more of itsAffiliates or Associates) if such agreement has been approved by the Board of Directors of theCompany prior to such Person becoming an Acquiring Person; or (B) the right to vote pursuant to anyagreement, arrangement or understanding; provided, however, that a Person shall notbe deemed the Beneficial Owner of, or to beneficially own, any security under this subsection(ii)(B) if the agreement, arrangement or understanding to vote such security (1) arises solely froma revocable proxy or consent given to such Person in response to a public proxy or consentsolicitation made pursuant to, and in accordance with, the applicable rules and regulations of theExchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or anycomparable or successor report); or               (iii) which are beneficially owned, directly or indirectly, by any other Person (or anyAffiliate or Associate thereof) with which such Person or any of such Person’s Affiliates orAssociates has any agreement, arrangement or understanding, whether or not in writing (other thancustomary agreements with and between underwriters and selling group members with respect to a bonafide public offering of securities) for the purpose of acquiring, holding, voting (except to theextent contemplated by the proviso to subsection (ii)(B) above) or disposing of any securities ofthe Company; provided, however, that in no case shall an officer or director of the Company bedeemed (x) the Beneficial Owner of any securities beneficially owned by another officer or directorof the Company solely by reason of actions undertaken by such persons in their capacity as officersor directors of the Company or (y) the Beneficial Owner of securities held of record by the trusteeof any employee benefit plan of the Company or any Subsidiary of the Company for the benefit of anyemployee of the Company or any Subsidiary of the Company, other than the officer or director, byreason of any influence that such officer or director may have over the voting of the securitiesheld in the plan.          “Business Day” shall mean any day other than a Saturday, Sunday or a day on whichbanking institutions in New York are authorized or obligated by law or executive order to close.          “Close of Business” on any given date shall mean 5:00 P.M., New York time, on suchdate; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New Yorktime, on the next succeeding Business Day.          “Common Stock” shall have the meaning set forth in the preamble. Common Stock whenused with reference to any Person other than the Company shall mean the capital stock (or equityinterest) with the greatest voting power of such other Person or, if such other Person is aSubsidiary of another Person, the Person or Persons which ultimately control such first-mentionedPerson.          “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)hereof.          “Company” shall have the meaning set forth in the preamble, subject to the terms ofSection 13(a)(iii)(c) hereof.
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          “Current Per Share Market Price” of any security (a “Security” for purposes ofthis definition), for all computations other than those made pursuant to Section 11(a)(iii) hereof,shall mean the average of the daily closing prices per share of such Security for the thirty (30)consecutive Trading Days immediately prior to such date, and for purposes of computations madepursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any Security on anydate shall be deemed to be the average of the daily closing prices per share of such Security forthe ten (10) consecutive Trading Days immediately prior to such date; provided,however, that in the event that the Current Per Share Market Price of the Security isdetermined during a period following the announcement by the issuer of such Security of (i) adividend or distribution on such Security payable in shares of such Security or securitiesconvertible into such shares or (ii) any subdivision, combination or reclassification of suchSecurity, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) TradingDay period, after the ex-dividend date for such dividend or distribution, or the record date forsuch subdivision, combination or reclassification, then, and in each such case, the Current PerShare Market Price shall be appropriately adjusted to reflect the current market price per shareequivalent of such Security. The closing price for each day shall be the last sale price, regularway, or, in case no such sale takes place on such day, the average of the closing bid and askedprices, regular way, in either case as reported in the principal consolidated transaction reportingsystem with respect to securities listed or admitted to trading on the New York Stock Exchange or,if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported inthe principal consolidated transaction reporting system with respect to securities listed on theprincipal national securities exchange on which the Security is listed or admitted to trading or,if the Security is not listed or admitted to trading on any national securities exchange, the lastsale price or, if such last sale price is not reported, the average of the high bid and low askedprices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or,if on any such date the Security is not quoted by any such organization, the average of the closingbid and asked prices as furnished by a professional market maker making a market in the Securityselected by the Board of Directors of the Company. If on any such date no market maker is making amarket in the Security, the fair value of such shares on such date as determined in good faith bythe Board of Directors of the Company shall be used. If the Preferred Shares are not publiclytraded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed tobe the Current Per Share Market Price of the shares of Common Stock as determined pursuant to thisdefinition, as appropriately adjusted to reflect any stock split, stock dividend or similartransaction occurring after the date hereof, multiplied by 1000. If the Security is not publiclyheld or so listed or traded, Current Per Share Market Price shall mean the fair value per share asdetermined in good faith by the Board of Directors of the Company, whose determination shall bedescribed in a statement filed with the Rights Agent and shall be conclusive for all purposes.          “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.          “Distribution Date” shall mean the earlier of (i) the Close of Business on the tenthday after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Dateoccurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close ofBusiness on the tenth Business Day (or such later date as may be determined by action of the
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Company’s Board of Directors) after the date that a tender or exchange offer by any Person(other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company orof any Subsidiary of the Company, or any Person or entity organized, appointed or established bythe Company for or pursuant to the terms of any such plan or an Exempted Person) is first publishedor sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under theExchange Act, if, assuming the successful consummation thereof, such Person would be an AcquiringPerson.          “Equivalent Shares” shall mean Preferred Shares and any other class or series ofcapital stock of the Company which is entitled to the same rights, privileges and preferences asthe Preferred Shares.          “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.          “Exempted Person” shall mean FS Holdings and each member of the Midas Group.          “Exercise Price” shall have the meaning set forth in Section 4(a) hereof.          “Expiration Date” shall mean the earliest to occur of: (i) the Close of Business onthe Final Expiration Date, (ii) the Redemption Date, or (iii) the time at which the Board ofDirectors orders the exchange of the Rights as provided in Section 24 hereof.          “Final Expiration Date” shall mean January 23, 2019.          “FS Holdings “ shall mean FS Holdings Limited.          “Midas Group” shall mean The Midas Touch, S.A., Ion G. Varouxakis, V Estates, S.A.,Alexis Varouxakis, and Evmorfia Varouxakis or entities established for the benefit of Ion G.Varouxakis or members of his family, any other entities wholly owned by Ion G. Varouxakis andmembers of this family, and each of their respective Affiliates and Associates.          “Nasdaq” shall mean the NASDAQ OMX Group, Inc.          “Person” shall mean any individual, firm, corporation or other entity, and shallinclude any successor (by merger or otherwise) of such entity.          “Post-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.          “Preferred Shares” shall mean shares of Series A Participating Preferred Stock,U.S.$0.001 par value, of the Company.          “Pre-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.          “Principal Party” shall have the meaning set forth in Section 13(b) hereof.
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          “Record Date” shall have the meaning set forth in the recitals at the beginning ofthis Rights Agreement.          “Redemption Date” shall have the meaning set forth in Section 23(a) hereof.          “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.          “Rights Agent” shall mean American Stock Transfer &Trust Company, LLC, or itssuccessor or replacement as provided in Sections 19 and 21 hereof.          “Rights Certificate” shall mean a certificate substantially in the form attachedhereto as Exhibit B.          “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section11(a)(iii) hereof.          “Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) ofSection 13(a) hereof.          “Section 24(a)(i) Exchange Ratio” shall have the meaning set forth in Section 24(a)(i)hereof.          “Section 24(a)(ii) Exchange Ratio” shall have the meaning set forth in Section24(a)(ii) hereof.          “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.          “Shares Acquisition Date” shall mean the first date of public announcement (which, forpurposes of this definition, shall include, without limitation, a report filed pursuant to Section13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person hasbecome such; provided that, if such Person is determined not to have become an Acquiring Person asdefined herein, then no Shares Acquisition Date shall be deemed to have occurred.          “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.          “Subsidiary” of any Person shall mean any corporation or other entity of which anamount of voting securities sufficient to elect a majority of the directors or Persons havingsimilar authority of such corporation or other entity is beneficially owned, directly orindirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.          “Substitution Period” shall have the meaning set forth in Section 11(a)(iii) hereof.          “Summary of Rights” shall mean a summary of this Agreement substantially in the formattached hereto as Exhibit C.
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          “Total Exercise Price” shall have the meaning set forth in Section 4(a) hereof.          “Trading Day” shall mean a day on which the principal national securities exchange onwhich a referenced security is listed or admitted to trading is open for the transaction ofbusiness or, if a referenced security is not listed or admitted to trading on any nationalsecurities exchange, a Business Day.          A “Triggering Event” shall be deemed to have occurred upon any Person becoming anAcquiring Person.     2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act asagent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof,shall prior to the Distribution Date also be the holders of the shares of Common Stock) inaccordance with the terms and conditions hereof, and the Rights Agent hereby accepts suchappointment. The Company may from time to time appoint such co-Rights Agents as it may deemnecessary or desirable.     3. Issuance of Rights Certificates.          (a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisionsof Sections 3(b) and 3(c) hereof) by the certificates for shares of Common Stock registered in thenames of the holders thereof (which certificates shall also be deemed to be Rights Certificates)and not by separate Rights Certificates and (ii) the right to receive Rights Certificates will betransferable only in connection with the transfer of shares of Common Stock. Until the earlier ofthe Distribution Date or the Expiration Date, the surrender for transfer of certificates for sharesof Common Stock shall also constitute the surrender for transfer of the Rights associated with theshares of Common Stock represented thereby. As soon as practicable after the Distribution Date, theCompany will prepare and execute, the Rights Agent will countersign, and the Company will send orcause to be sent (and the Rights Agent will, if requested, send) by first-class, postage-prepaidmail, to each record holder of shares of Common Stock as of the Close of Business on theDistribution Date, at the address of such holder shown on the records of the Company, a RightsCertificate evidencing one Right for each share of Common Stock so held, subject to adjustment asprovided herein. In the event that an adjustment in the number of Rights per share of Common Stockhas been made pursuant to Section 11 hereof, then at the time of distribution of the RightsCertificates, the Company shall make the necessary and appropriate rounding adjustments (inaccordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbersof Rights are distributed and cash is paid in lieu of any fractional Rights. As of the DistributionDate, the Rights will be evidenced solely by such Rights Certificates and may be transferred by thetransfer of the Rights Certificates as permitted hereby, separately and apart from any transfer ofshares of Common Stock, and the holders of such Rights Certificates as listed in the records of theCompany or any transfer agent or registrar for the Rights shall be the record holders thereof.          (b) On the Record Date or as soon as practicable thereafter, the Company will send a copy ofthe Summary of Rights by first-class, postage-prepaid mail, to each record holder of shares ofCommon Stock as of the Close of Business on the Record Date that requests a Summary of the Rights,at the address of such holder shown on the records of the Company’s
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transfer agent and registrar. With respect to certificates for shares of Common Stockoutstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced bysuch certificates registered in the names of the holders thereof together with the Summary ofRights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender fortransfer of any certificate for shares of Common Stock outstanding on the Record Date, with orwithout a copy of the Summary of Rights, shall also constitute the transfer of the Rightsassociated with the shares of Common Stock represented thereby.          (c) Unless the Board of Directors by resolution adopted at or before the time of the issuanceof any shares of Common Stock specifies to the contrary, Rights shall be issued in respect of allshares of Common Stock that are issued after the Record Date but prior to the earlier of theDistribution Date or the Expiration Date or, in certain circumstances provided in Section 22hereof, after the Distribution Date. Certificates representing such shares of Common Stock shallalso be deemed to be certificates for Rights, and shall bear the following legend:**THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAINRIGHTS AS SET FORTH IN A SHAREHOLDERS RIGHTS AGREEMENT BETWEEN FREESEAS INC.AND AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, AS THE RIGHTS AGENT, DATEDAS OF JANUARY 14, 2009, (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH AREHEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE ATTHE PRINCIPAL EXECUTIVE OFFICES OF FREESEAS INC. UNDER CERTAINCIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BEEVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THISCERTIFICATE. FREESEAS INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE ACOPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTENREQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTSAGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMESAN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS AREDEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OFSUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.**With respect to such certificates containing the foregoing legend, until the earlier of (i) theDistribution Date or (ii) the Expiration Date, the Rights associated with the shares of CommonStock represented by such certificates shall be evidenced by such certificates alone, and thesurrender for transfer of any such certificate shall also constitute the transfer of the Rightsassociated with the shares of Common Stock represented thereby.
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          (d) In the event that the Company purchases or acquires any shares of Common Stock after theRecord Date but prior to the Distribution Date, any Rights associated with such shares of CommonStock shall be deemed canceled and retired so that the Company shall not be entitled to exerciseany Rights associated with the shares of Common Stock which are no longer outstanding.     4. Form of Rights Certificates.          (a) The Rights Certificates (and the forms of election to purchase shares of Common Stock andof assignment to be printed on the reverse thereof) shall be substantially in the form ofExhibit 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 notinconsistent with the provisions of this Agreement, or as may be required to comply with anyapplicable law or with any rule or regulation made pursuant thereto or with any rule or regulationof any stock exchange or a national market system, on which the Rights may from time to time belisted or included, or to conform to usage. Subject to the provisions of Section 11 and Section 22hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date (or inthe case of Rights issued with respect to shares of Common Stock issued by the Company after theRecord Date, as of the date of issuance of such shares of Common Stock) and on their face shallentitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share asshall be set forth therein at the price set forth therein (such exercise price per oneone-thousandths of a Preferred Share being hereinafter referred to as the “Exercise Price”and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right beinghereinafter referred to as the “Total Exercise Price”), but the number and type ofsecurities purchasable upon the exercise of each Right and the Exercise Price shall be subject toadjustment as provided herein.          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof thatrepresents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate ofan Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate orAffiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transfereeof an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to orconcurrently with the Acquiring Person becoming such and receives such Rights pursuant to either(A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equityinterests in such Acquiring Person or to any Person with whom such Acquiring Person has anycontinuing agreement, arrangement or understanding regarding the transferred Rights or (B) atransfer which the Company’s Board of Directors has determined is part of a plan, arrangement orunderstanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and anyRights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,replacement or adjustment of any other Rights Certificate referred to in this sentence, shallcontain (to the extent feasible) the following legend:**THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLYOWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE ORASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTSAGREEMENT).**
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**ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAYBECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION****7(e)****OF THERIGHTS AGREEMENT.**     5. Countersignature and Registration.          (a) The Rights Certificates shall be executed on behalf of the Company by its Chief ExecutiveOfficer, its Chief Operating Officer, its Chief Financial Officer, its President or any VicePresident, either manually or by facsimile signature, and by the Secretary or an AssistantSecretary of the Company, either manually or by facsimile signature, and shall have affixed theretothe Company’s seal (if any) or a facsimile thereof. The Rights Certificates shall be manuallycountersigned by the Rights Agent and shall not be valid for any purpose unless countersigned. Incase any officer of the Company who shall have signed any of the Rights Certificates shall cease tobe such officer of the Company before countersignature by the Rights Agent and issuance anddelivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the RightsAgent and issued and delivered by the Company with the same force and effect as though the personwho signed such Rights Certificates on behalf of the Company had not ceased to be such officer ofthe Company; and any Rights Certificate may be signed on behalf of the Company by any person who,at the actual date of the execution of such Rights Certificate, shall be a proper officer of theCompany to sign such Rights Certificate, although at the date of the execution of this RightsAgreement any such person was not such an officer.          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at itsoffice designated for such purposes, books for registration and transfer of the Rights Certificatesissued hereunder. Such books shall show the names and addresses of the respective holders of theRights Certificates, the number of Rights evidenced on its face by each of the Rights Certificatesand the date of each of the Rights Certificates.     6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,Destroyed, Lost or Stolen Rights Certificates.          (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Closeof Business on the Distribution Date, and at or prior to the Close of Business on the ExpirationDate, any Rights Certificate or Rights Certificates may be transferred, split up, combined orexchanged for another Rights Certificate or Rights Certificates, entitling the registered holder topurchase a like number of one one-thousandths of a Preferred Share (or, following a TriggeringEvent, other securities, cash or other assets, as the case may be) as the Rights Certificate orRights Certificates surrendered then entitled such holder to purchase. Any registered holderdesiring to transfer, split up, combine or exchange any Rights Certificate or Rights Certificatesshall make such request in writing delivered to the Rights Agent, and shall surrender the RightsCertificate or Rights Certificates to be transferred, split up, combined or exchanged at the officeof the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall beobligated to take any action whatsoever with respect to the transfer of any such surrendered RightsCertificate until the registered holder shall have completed and signed the certificate containedin the form of assignment on the reverse side of such Rights Certificate and shall have providedsuch additional evidence of the identity of the
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Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as theCompany shall reasonably request. Thereupon the Rights Agent shall, subject to Sections 7(e), 14and 24 hereof, countersign and deliver to the person entitled thereto a Rights Certificate orRights Certificates, as the case may be, as so requested. The Company may require payment of a sumsufficient to cover any tax or governmental charge that may be imposed in connection with anytransfer, split up, combination or exchange of Rights Certificates.          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory tothem of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,theft or destruction, of indemnity or security reasonably satisfactory to them, and, at theCompany’s request, reimbursement to the Company and the Rights Agent of all reasonable expensesincidental thereto, and upon surrender to the Rights Agent and cancellation of the RightsCertificate if mutilated, the Company will make and deliver a new Rights Certificate of like tenorto the Rights Agent for delivery to the registered holder in lieu of the Rights Certificate solost, stolen, destroyed or mutilated.     7. Exercise of Rights; Exercise Price; Expiration Date of Rights.          (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any RightsCertificate may exercise the Rights evidenced thereby (except as otherwise provided herein) inwhole or in part at any time after the Distribution Date and prior to the Close of Business on theExpiration Date by surrender of the Rights Certificate, with the form of election to purchase onthe reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agentdesignated for such purpose, together with payment of the Exercise Price for each one-thousandth ofa Preferred Share (or, following a Triggering Event, other securities, cash or other assets as thecase may be) as to which the Rights are exercised.          (b) The Exercise Price for each one one-thousandths of a Preferred Share issuable pursuant tothe exercise of a Right shall initially be Eighteen U.S. Dollars (U.S.$18.00), shall be subject toadjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable inlawful money of the United States of America in accordance with paragraph (c) below.          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form ofelection to purchase duly executed, accompanied by payment of the Exercise Price for the number ofone one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cashor other assets as the case may be) to be purchased and an amount equal to any applicable transfertax required to be paid by the holder of such Rights Certificate in accordance with Section 9(e)hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agentis the transfer agent for the Preferred Shares) a certificate or certificates for the number of oneone-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash orother assets as the case may be) to be purchased and the Company hereby irrevocably authorizes itstransfer agent to comply with all such requests or (B) if the Company shall have elected to depositthe total number of one one-thousandths of a Preferred Share (or, following a Triggering Event,other securities, cash or other assets as the case may be) issuable upon exercise of the Rightshereunder with a depositary agent, requisition
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from the depositary agent depositary receipts representing such number of one one-thousandthsof a Preferred Share (or, following a Triggering Event, other securities, cash or other assets asthe case may be) as are to be purchased (in which case certificates for the Preferred Shares (or,following a Triggering Event, other securities, cash or other assets as the case may be)represented by such receipts shall be deposited by the transfer agent with the depositary agent)and the Company hereby directs the depositary agent to comply with such request, (ii) whenappropriate, requisition from the Company the amount of cash to be paid in lieu of issuance offractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates ordepositary receipts, cause the same to be delivered to or upon the order of the registered holderof such Rights Certificate, registered in such name or names as may be designated by such holderand (iv) when appropriate, after receipt thereof, deliver such cash to or upon the order of theregistered holder of such Rights Certificate. Subject to Section 24, the payment of the ExercisePrice (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) andan amount equal to any applicable transfer tax required to be paid by the holder of such RightsCertificate in accordance with Section 9(e) hereof, may be made in cash or by certified bank check,cashier’s check or bank draft payable to the order of the Company. In the event that the Company isobligated to issue securities of the Company other than Preferred Shares, pay cash and/ordistribute other property pursuant to Section 11(a) hereof, the Company will make all arrangementsnecessary so that such other securities, cash and/or other property are available for distributionby the Rights Agent, if and when appropriate.          (d) In case the registered holder of any Rights Certificate shall exercise less than all theRights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rightsremaining unexercised shall be issued by the Rights Agent to the registered holder of such RightsCertificate or to his or her duly authorized assigns, subject to the provisions of Section 14hereof.          (e) Notwithstanding anything in this Agreement to the contrary, from and after the firstoccurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or anAssociate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of anysuch Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such (a“Post-Event Transferee”), (iii) a transferee of an Acquiring Person (or of any suchAssociate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Personbecoming such and receives such Rights pursuant to either (A) a transfer (whether or not forconsideration) from the Acquiring Person to holders of equity interests in such Acquiring Person orto any Person with whom the Acquiring Person has any continuing agreement, arrangement orunderstanding regarding the transferred Rights or (B) a transfer which the Company’s Board ofDirectors has determined is part of a plan, arrangement or understanding which has as a primarypurpose or effect the avoidance of this Section 7(e) (a “Pre-Event Transferee”) or (iv) anysubsequent transferee receiving transferred Rights from a Post-Event Transferee or a Pre-EventTransferee, either directly or through one or more intermediate transferees, shall become null andvoid without any further action and no holder of such Rights shall have any rights whatsoever withrespect to such Rights, whether under any provision of this Agreement or otherwise. The Companyshall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates orto any other Person as a result of its failure to
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make any determinations with respect to an Acquiring Person or any of such Acquiring Person’sAffiliates, Associates or transferees hereunder.          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent northe Company shall be obligated to undertake any action with respect to a registered holder upon theoccurrence of any purported exercise as set forth in this Section 7 unless such registered holdershall, in addition to having complied with the requirements of Section 7(a), have (i) completed andsigned the certificate contained in the form of election to purchase set forth on the reverse sideof the Rights Certificate surrendered for such exercise and (ii) provided such additional evidenceof the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associatesthereof as the Company shall reasonably request.     8. Cancellation and Destruction of Rights Certificates. All Rights Certificatessurrendered for the purpose of exercise, transfer, split up, combination or exchange shall, ifsurrendered to the Company or to any of its agents, be delivered to the Rights Agent forcancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any ofthe provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellationand retirement, and the Rights Agent shall so cancel and retire, any Rights Certificate purchasedor acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliverall canceled Rights Certificates to the Company, or shall, at the written request of the Company,destroy such canceled Rights Certificates, and in such case shall deliver a certificate ofdestruction thereof to the Company.     9. Reservation and Availability of Preferred Shares.          (a) The Company covenants and agrees that it will use its best efforts to cause to be reservedand kept available out of its authorized and unissued Preferred Shares not reserved for anotherpurpose (and, following the occurrence of a Triggering Event, out of its authorized and unissuedshares of Common Stock and/or other securities), the number of Preferred Shares (and, following theoccurrence of the Triggering Event, Common Stock and/or other securities) that will be sufficientto permit the exercise in full of all outstanding Rights.          (b) If the Company shall hereafter list any of its Preferred Shares on a national securitiesexchange, then so long as the Preferred Shares (and, following the occurrence of a TriggeringEvent, shares of Common Stock and/or other securities) issuable and deliverable upon exercise ofthe Rights may be listed on such exchange, the Company shall use its best efforts to cause, fromand after such time as the Rights become exercisable (but only to the extent that it is reasonablylikely that the Rights will be exercised), all shares reserved for such issuance to be listed onsuch exchange upon official notice of issuance upon such exercise.          (c) The Company shall use its best efforts to (i) file, as soon as practicable following theearliest date after the first occurrence of a Triggering Event in which the consideration to bedelivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or Section11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the casemay be, a registration statement under the Securities Act with respect to the securitiespurchasable upon exercise of the Rights on an appropriate form, (ii) cause such
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registration statement to become effective as soon as practicable after such filing and (iii)cause such registration statement to remain effective (with a prospectus at all times meeting therequirements of the Securities Act) until the earlier of (A) the date as of which the Rights are nolonger exercisable for such securities and (B) the date of expiration of the Rights. The Companymay temporarily suspend, for a period not to exceed ninety (90) days after the date set forth inclause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order toprepare and file such registration statement and permit it to become effective. Upon any suchsuspension, the Company shall issue a public announcement and notify the Rights Agent that theexercisability of the Rights has been temporarily suspended, as well as a public announcement andnotification to the Rights Agent at such time as the suspension is no longer in effect. The Companywill also take such action as may be appropriate under, or to ensure compliance with, thesecurities or “blue sky” laws of the various states in connection with the exercisability of theRights. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not beexercisable in any jurisdiction, unless the requisite qualification in such jurisdiction shall havebeen obtained, or an exemption therefrom shall be available, and until a registration statement hasbeen declared effective.          (d) The Company covenants and agrees that it will take all such action as may be necessary toensure that all Preferred Shares (or other securities of the Company) delivered upon exercise ofRights shall, at the time of delivery of the certificates for such securities (subject to paymentof the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessableshares.          (e) The Company further covenants and agrees that it will pay when due and payable any and allfederal and state transfer taxes and charges which may be payable in respect of the originalissuance or delivery of the Rights Certificates or of any Preferred Shares (or other securities ofthe Company) upon the exercise of Rights. The Company shall not, however, be required to pay anytransfer tax which may be payable in respect of any transfer or delivery of Rights Certificates toa person other than, or the issuance or delivery of certificates or depositary receipts for thePreferred Shares (or other securities of the Company) in a name other than that of, the registeredholder of the Rights Certificate evidencing Rights surrendered for exercise or to issue or todeliver any certificates or depositary receipts for Preferred Shares (or other securities of theCompany) upon the exercise of any Rights until any such tax shall have been paid (any such taxbeing payable by the holder of such Rights Certificate at the time of surrender) or until it hasbeen established to the Company’s satisfaction that no such tax is due.     10. Record Date. Each Person in whose name any certificate for a number of oneone-thousandths of a Preferred Share (or other securities of the Company) is issued upon theexercise of Rights shall for all purposes be deemed to have become the holder of record ofPreferred Shares (or other securities of the Company) represented thereon, and such certificateshall be dated, the date upon which the Rights Certificate evidencing such Rights was dulysurrendered and payment of the Total Exercise Price with respect to which the Rights have beenexercised (and any applicable transfer taxes) was made; provided, however, that if the date of suchsurrender and payment is a date upon which the transfer books of the Company are closed, suchPerson shall be deemed to have become the record holder of such shares on, and such certificateshall be dated, the next succeeding Business Day on which the transfer books of the Company areopen. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
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Certificate shall not be entitled to any rights of a holder of Preferred Shares (or othersecurities of the Company) for which the Rights shall be exercisable, including, withoutlimitation, the right to vote, to receive dividends or other distributions or to exercise anypreemptive rights, and shall not be entitled to receive any notice of any proceedings of theCompany, except as provided herein.     11. Adjustment of Exercise Price, Number of Shares or Number of Rights. The ExercisePrice, the number and kind of shares or other property covered by each Right and the number ofRights outstanding are subject to adjustment from time to time as provided in this Section 11.          (a) (i) Notwithstanding anything in this Agreement to the contrary, in the event the Companyshall at any time after the date of this Agreement (A) declare a dividend on the Preferred Sharespayable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine theoutstanding Preferred Shares (by reverse stock split or otherwise) into a smaller number ofPreferred Shares, or (D) issue any shares of its capital stock in a reclassification of thePreferred Shares (including any such reclassification in connection with a consolidation or mergerin which the Company is the continuing or surviving corporation), then, in each such event, exceptas otherwise provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in effectat the time of the record date for such dividend or of the effective date of such subdivision,combination or reclassification shall be adjusted so that the Exercise Price thereafter shall equalthe result obtained by dividing the Exercise Price in effect immediately prior to such time by afraction (the “Adjustment Fraction”), the numerator of which shall be the total number ofPreferred Shares (or shares of capital stock issued in such reclassification of the PreferredShares) outstanding immediately following such time and the denominator of which shall be the totalnumber of Preferred Shares outstanding immediately prior to such time; provided, however, that inno event shall the consideration to be paid upon the exercise of one Right be less than theaggregate par value of the shares of capital stock of the Company issuable upon exercise of suchRight; and (2) the number of one one-thousandths of a Preferred Share (or share of such othercapital stock) issuable upon the exercise of each Right shall equal the number of oneone-thousandths of a Preferred Share (or share of such other capital stock) as was issuable uponexercise of a Right immediately prior to the occurrence of the event described in clauses (A)-(D)of this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however,that, no such adjustment shall be made pursuant to this Section 11(a)(i) to the extent that thereshall have simultaneously occurred an event described in clause (A), (B), (C) or (D) of Section11(n) with a proportionate adjustment being made thereunder. Each share of Common Stock that shallbecome outstanding after an adjustment has been made pursuant to this Section 11(a)(i) shall haveassociated with it the number of Rights, exercisable at the Exercise Price and for the number ofone one-thousandths of a Preferred Share (or shares of such other capital stock) as one share ofCommon Stock has associated with it immediately following the adjustment made pursuant to thisSection 11(a)(i).               (ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall haveoccurred, then promptly following such Triggering Event each holder of a Right, except as providedin Section 7(e) hereof, shall thereafter have the right to receive for each Right, upon exercisethereof in accordance with the terms of this Agreement and payment of the Exercise Price in effectimmediately prior to the occurrence of the Triggering Event, in
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lieu of a number of one one-thousandths of a Preferred Share, such number of shares of CommonStock of the Company as shall equal the result obtained by multiplying the Exercise Price in effectimmediately prior to the occurrence of the Triggering Event by the number of one one-thousandths ofa Preferred Share for which a Right was exercisable (or would have been exercisable if theDistribution Date had occurred) immediately prior to the first occurrence of a Triggering Event,and dividing that product by 50% of the Current Per Share Market Price for shares of Common Stockon the date of occurrence of the Triggering Event (the “Adjusted Shares”);provided, however, that the Exercise Price and the number of shares of Common Stockof the Company so receivable upon exercise of a Right shall be subject to further adjustment asappropriate in accordance with Section 11(e) hereof to reflect any events occurring in respect ofthe shares of Common Stock of the Company after the occurrence of the Triggering Event.               (iii) In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof,the Company may, if the Company’s Board of Directors determines that such action is necessary orappropriate and not contrary to the interest of holders of Rights and, in the event that the numberof shares of Common Stock which are authorized by the Company’s Certificate of Incorporation butnot outstanding or reserved for issuance for purposes other than upon exercise of the Rights arenot sufficient to permit the exercise in full of the Rights, or if any necessary regulatoryapproval for such issuance has not been obtained by the Company, the Company shall: (A) determinethe excess of (1) the value of the shares of Common Stock issuable upon the exercise of a Right(the “Current Value”) over (2) the Exercise Price (such excess, the “Spread”) and(B) with respect to each Right, make adequate provision to substitute for such shares of CommonStock, upon exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) otherequity securities of the Company (including, without limitation, shares or units of shares of anyseries of preferred stock which the Company’s Board of Directors has deemed to have the same valueas Common Stock (such shares or units of shares of preferred stock are herein called “CommonStock Equivalents”)), except to the extent that the Company has not obtained any necessarystockholder or regulatory approval for such issuance, (4) debt securities of the Company, except tothe extent that the Company has not obtained any necessary stockholder or regulatory approval forsuch issuance, (5) other assets or (6) any combination of the foregoing, having an aggregate valueequal to the Current Value, where such aggregate value has been determined by the Company’s Boardof Directors based upon the advice of a nationally recognized investment banking firm selected bythe Company’s Board of Directors; provided, however, if the Company shall not have made adequateprovision to deliver value pursuant to clause (B) above within thirty (30) days following the laterof (x) the first occurrence of a Triggering Event and (y) the date on which the Company’s right ofredemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein asthe “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, uponthe surrender for exercise of a Right and without requiring payment of the Exercise Price, CommonStock (to the extent available), except to the extent that the Company has not obtained anynecessary stockholder or regulatory approval for such issuance, and then, if necessary, cash, whichshares and/or cash have an aggregate value equal to the Spread. If the Company’s Board of Directorsshall determine in good faith that it is likely that sufficient additional Common Stock could beauthorized for issuance upon exercise in full of the Rights or that any necessary regulatoryapproval for such issuance will be obtained, the thirty (30) day period set forth above may beextended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)Trigger Date, in order that the Company may seek stockholder approval for the authorization of
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such additional shares or take action to obtain such regulatory approval (such period, as itmay be extended, the “Substitution Period”). To the extent that the Company determines thatsome action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii),the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall applyuniformly to all outstanding Rights and (y) may suspend the exercisability of the Rights until theexpiration of the Substitution Period in order to seek any authorization of additional shares, totake any action to obtain any required regulatory approval and/or to decide the appropriate form ofdistribution to be made pursuant to such first sentence and to determine the value thereof. In theevent of any such suspension, the Company shall issue a public announcement stating that theexercisability of the Rights has been temporarily suspended, as well as a public announcement atsuch time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), thevalue of the Common Stock shall be the Current Per Share Market Price of the Common Stock on theSection 11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to havethe same value as the Common Stock on such date.          (b) In case the Company shall, at any time after the date of this Agreement, fix a record datefor the issuance of rights, options or warrants to all holders of Preferred Shares entitling suchholders (for a period expiring within forty-five (45) calendar days after such record date) tosubscribe for or purchase Preferred Shares or Equivalent Shares or securities convertible intoPreferred Shares or Equivalent Shares at a price per share (or having a conversion price per share,if a security convertible into Preferred Shares or Equivalent Shares) less than the then CurrentPer Share Market Price of the Preferred Shares or Equivalent Shares on such record date, then, ineach such case, the Exercise Price to be in effect after such record date shall be determined bymultiplying the Exercise Price in effect immediately prior to such record date by a fraction, thenumerator of which shall be the number of Preferred Shares and Equivalent Shares (if any)outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as thecase may be, which the aggregate offering price of the total number of Preferred Shares orEquivalent Shares, as the case may be, to be offered or issued (and/or the aggregate initialconversion price of the convertible securities to be offered or issued) would purchase at suchcurrent market price, and the denominator of which shall be the number of Preferred Shares andEquivalent Shares (if any) outstanding on such record date, plus the number of additional PreferredShares or Equivalent Shares, as the case may be, to be offered for subscription or purchase (orinto which the convertible securities so to be offered are initially convertible);provided, however, that in no event shall the consideration to be paid upon theexercise of one Right be less than the aggregate par value of the shares of capital stock of theCompany issuable upon exercise of one Right. In case such subscription price may be paid in aconsideration part or all of which shall be in a form other than cash, the value of suchconsideration shall be as determined in good faith by the Company’s Board of Directors, whosedetermination shall be described in a statement filed with the Rights Agent and shall be binding onthe Rights Agent and the holders of the Rights. Preferred Shares and Equivalent Shares owned by orheld for the account of the Company shall not be deemed outstanding for the purpose of any suchcomputation. Such adjustment shall be made successively whenever such a record date is fixed, andin the event that such rights, options or warrants are not so issued, the Exercise Price shall beadjusted to be the Exercise Price which would then be in effect if such record date had not beenfixed.
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          (c) In case the Company shall, at any time after the date of this Agreement, fix a record datefor the making of a distribution to all holders of the Preferred Shares or of any class or seriesof Equivalent Shares (including any such distribution made in connection with a consolidation ormerger in which the Company is the continuing or surviving corporation) of evidences ofindebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payablein Preferred Shares) or subscription rights, options or warrants (excluding those referred to inSection 11(b)), then, in each such case, the Exercise Price to be in effect after such record dateshall be determined by multiplying the Exercise Price in effect immediately prior to such recorddate by a fraction, the numerator of which shall be the Current Per Share Market Price of aPreferred Share or an Equivalent Share on such record date, less the fair market value perPreferred Share or Equivalent Share (as determined in good faith by the Board of Directors of theCompany, whose determination shall be described in a statement filed with the Rights Agent) of theportion of the cash, assets or evidences of indebtedness so to be distributed or of suchsubscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the casemay be, and the denominator of which shall be such Current Per Share Market Price of a PreferredShare or Equivalent Share on such record date; provided, however, that in no event shall theconsideration to be paid upon the exercise of one Right be less than the aggregate par value of theshares of capital stock of the Company issuable upon exercise of one Right. Such adjustments shallbe made successively whenever such a record date is fixed, and in the event that such distributionis not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have beenin effect if such record date had not been fixed.          (d) Notwithstanding anything to the contrary, no adjustment in the Exercise Price shall berequired unless such adjustment would require an increase or decrease of at least 1% in theExercise Price; provided, however, that any adjustments which by reason of this Section 11(d) arenot required to be made shall be carried forward and taken into account in any subsequentadjustment. All calculations under this Section 11 shall be made to the nearest cent or to thenearest ten-thousandth of a share of Common Stock or other share or one hundred-thousandth of aPreferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(d), anyadjustment required by this Section 11 shall be made no later than the earlier of (i) three (3)years from the date of the transaction which requires such adjustment or (ii) the Expiration Date.          (e) If as a result of an adjustment made pursuant to Section 11(a) or 13(a) hereof, the holderof any Right thereafter exercised shall become entitled to receive any shares of capital stockother than Preferred Shares, thereafter the number of such other shares so receivable upon exerciseof any Right and, if required, the Exercise Price thereof, shall be subject to adjustment from timeto time in a manner and on terms as nearly equivalent as practicable to the provisions with respectto the Preferred Shares contained in Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i),11(j), 11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to thePreferred Shares shall apply on like terms to any such other shares.          (f) All Rights originally issued by the Company subsequent to any adjustment made to theExercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, thenumber of one one-thousandths of a Preferred Share purchasable from time to time hereunder uponexercise of the Rights, all subject to further adjustment as provided herein.
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          (g) Unless the Company shall have exercised its election as provided in Section 11(h), uponeach adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and(c), each Right outstanding immediately prior to the making of such adjustment shall thereafterevidence the right to purchase, at the adjusted Exercise Price, that number of Preferred Shares(calculated to the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x) thenumber of Preferred Shares covered by a Right immediately prior to this adjustment, by (y) theExercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii)dividing the product so obtained by the Exercise Price in effect immediately after such adjustmentof the Exercise Price.          (h) The Company may elect on or after the date of any adjustment of the Exercise Price as aresult of the calculations made in Section 11(b) or (c) to adjust the number of Rights, insubstitution for any adjustment in the number of Preferred Shares purchasable upon the exercise ofa Right. Each of the Rights outstanding after such adjustment of the number of Rights shall beexercisable for the number of one one-thousandths of a Preferred Share for which a Right wasexercisable immediately prior to such adjustment. Each Right held of record prior to suchadjustment of the number of Rights shall become that number of Rights (calculated to the nearestone hundred-thousandth) obtained by dividing the Exercise Price in effect immediately prior toadjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment ofthe Exercise Price. The Company shall make a public announcement of its election to adjust thenumber of Rights, indicating the record date for the adjustment, and, if known at the time, theamount of the adjustment to be made. This record date may be the date on which the Exercise Priceis adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be atleast ten (10) days later than the date of the public announcement. If Rights Certificates havebeen issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), theCompany shall, as promptly as practicable, cause to be distributed to holders of record of RightsCertificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, theadditional Rights to which such holders shall be entitled as a result of such adjustment, or, atthe option of the Company, shall cause to be distributed to such holders of record in substitutionand 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 theRights to which such holders shall be entitled after such adjustment. Rights Certificates so to bedistributed shall be issued, executed and countersigned in the manner provided for herein (and maybear, at the option of the Company, the adjusted Exercise Price) and shall be registered in thenames of the holders of record of Rights Certificates on the record date specified in the publicannouncement.          (i) Irrespective of any adjustment or change in the Exercise Price or the number of PreferredShares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafterissued may continue to express the Exercise Price per one one-thousandth of a Preferred Share andthe number of one one-thousandths of a Preferred Share which were expressed in the initial RightsCertificates issued hereunder.          (j) Before taking any action that would cause an adjustment reducing the Exercise Price belowthe par or stated value, if any, of the number of one one-thousandths of a Preferred Share issuableupon exercise of the Rights, the Company shall take any corporate action which may, in the opinionof its counsel, be necessary in order that the Company may
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validly and legally issue as fully paid and nonassessable shares such number of oneone-thousandths of a Preferred Share at such adjusted Exercise Price.          (k) In any case in which this Section 11 shall require that an adjustment in the ExercisePrice be made effective as of a record date for a specified event, the Company may elect to deferuntil the occurrence of such event the issuing to the holder of any Right exercised after suchrecord date of the number of one one-thousandths of a Preferred Share and other capital stock orsecurities of the Company, if any, issuable upon such exercise over and above the number of oneone-thousandths of a Preferred Share and other capital stock or securities of the Company, if any,issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment;provided, however, that the Company shall deliver to such holder a due bill orother appropriate instrument evidencing such holder’s right to receive such additional shares(fractional or otherwise) upon the occurrence of the event requiring such adjustment.          (l) Notwithstanding anything in this Section 11 to the contrary, prior to the DistributionDate, the Company shall be entitled to make such reductions in the Exercise Price, in addition tothose adjustments expressly required by this Section 11, as and to the extent that it in its solediscretion shall determine to be advisable in order that any (i) consolidation or subdivision ofthe Preferred Shares or Common Stock, (ii) issuance wholly for cash of any Preferred Shares orCommon Stock at less than the current market price, (iii) issuance wholly for cash of PreferredShares or Common Stock or securities which by their terms are convertible into or exchangeable forPreferred or Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrantsreferred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares orCommon Stock shall not be taxable to such stockholders.          (m) The Company covenants and agrees that, after the Distribution Date, it will not, except aspermitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) any action if at the timesuch action is taken it is reasonably foreseeable that such action will diminish substantially orotherwise eliminate the benefits intended to be afforded by the Rights.          (n) In the event the Company shall at any time after the date of this Agreement (A) declare adividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstandingshares of Common Stock, (C) combine the outstanding Common Stock (by reverse stock split orotherwise) into a smaller number of shares of Common Stock, or (D) issue any shares of its capitalstock in a reclassification of the shares of Common Stock (including any such reclassification inconnection with a consolidation or merger in which the Company is the continuing or survivingcorporation), then, in each such event, except as otherwise provided in Section 11(a) and Section7(e) hereof: (1) each share of Common Stock (or shares of capital stock issued in suchreclassification of the Common Stock) outstanding immediately following such time shall haveassociated with it the number of Rights as were associated with one share of Common Stockimmediately prior to the occurrence of the event described in clauses (A)-(D) above; (2) theExercise Price in effect at the time of the record date for such dividend or of the effective dateof such subdivision, combination or reclassification shall be adjusted so that the Exercise Pricethereafter shall equal the result obtained by multiplying the Exercise Price in effect immediatelyprior to such time by a fraction, the numerator of which shall be the total number of shares ofCommon Stock outstanding immediately prior to the event described in clauses (A)-(D) above, and thedenominator of which
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shall be the total number of shares of Common Stock outstanding immediately after such event;provided, however, that in no event shall the consideration to be paid upon theexercise of one Right be less than the aggregate par value of the shares of capital stock of theCompany issuable upon exercise of such Right; and (3) the number of one one-thousandths of aPreferred Share (or shares of such other capital stock) issuable upon the exercise of each Rightoutstanding after such event shall equal the number of one- thousandths of a Preferred Share (orshares of such other capital stock) as were issuable with respect to one Right immediately prior tosuch event. Each share of Common Stock that shall become outstanding after an adjustment has beenmade pursuant to this Section 11(n) shall have associated with it the number of Rights, exercisableat the Exercise Price and for the number of one one-thousandths of a Preferred Share (or shares ofsuch other capital stock) as one share of Common Stock has associated with it immediately followingthe adjustment made pursuant to this Section 11(n). If an event occurs which would require anadjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided forin this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment requiredpursuant to Section 11(a)(ii) hereof.     12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustmentis made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare acertificate setting forth such adjustment and a brief statement of the facts accounting for suchadjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares acopy of such certificate and (c) if a Distribution Date has occurred, mail a brief summary thereofto each holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding theforegoing sentence, the failure of the Company to make such certification or give such notice shallnot affect the validity of such adjustment or the force or effect of the requirement for suchadjustment. The Rights Agent shall be fully protected in relying on any such certificate and on anyadjustment contained therein and shall not be deemed to have knowledge of such adjustment unlessand until it shall have received such certificate.     13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.          (a) In the event that, following a Triggering Event, directly or indirectly:               (i) the Company shall consolidate with, or merge with and into, any other Person (other than awholly owned Subsidiary of the Company in a transaction the principal purpose of which is to changethe jurisdiction of incorporation of the Company and which complies with Section 11(m) hereof);               (ii) any Person shall consolidate with the Company, or merge with and into the Company and theCompany shall be the continuing or surviving corporation of such consolidation or merger and, inconnection with such merger, all or part of the shares of Common Stock shall be changed into orexchanged for stock or other securities of any other person (or the Company); or               (iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shallsell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50%or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) toany other Person or Persons (other than the Company or one or more of its
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wholly owned Subsidiaries in one or more transactions, each of which individually (andtogether) complies with Section 11(m) hereof), then, concurrently with and in each such case:                    (A) each holder of a Right (except as provided in Section 7(e) hereof) shall thereafter havethe right to receive, upon the exercise thereof, at a price equal to the Total Exercise Priceapplicable immediately prior to the occurrence of the Section 13 Event in accordance with the termsof this Agreement, such number of validly authorized and issued, fully paid, nonassessable andfreely tradeable shares of Common Stock of the Principal Party (as hereinafter defined), free ofany liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to theresult obtained by dividing such Total Exercise Price by 50% of the Current Per Share Market Priceof the shares of Common Stock of such Principal Party on the date of consummation of such Section13 Event, provided, however, that the Exercise Price and the number of shares of Common Stock ofsuch Principal Party so receivable upon exercise of a Right shall be subject to further adjustmentas appropriate in accordance with Section 11(e) hereof;                    (B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of suchSection 13 Event, all the obligations and duties of the Company pursuant to this Agreement;                    (C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it beingspecifically intended that the provisions of Section 11 hereof shall apply only to such PrincipalParty following the first occurrence of a Section 13 Event;                    (D) such Principal Party shall take such steps (including, but not limited to, the reservationof a sufficient number of its Common Stock) in connection with the consummation of any suchtransaction as may be necessary to ensure that the provisions hereof shall thereafter beapplicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafterdeliverable upon the exercise of the Rights; and                    (E) upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets orother extraordinary transaction in respect of such Principal Party, each holder of a Right shallthereupon be entitled to receive, upon exercise of a Right and payment of the Total Exercise Priceas provided in this Section 13(a), such cash, shares, rights, warrants and other property whichsuch holder would have been entitled to receive had such holder, at the time of such transaction,owned the shares of Common Stock of the Principal Party receivable upon the exercise of such Rightpursuant to this Section 13(a), and such Principal Party shall take such steps (including, but notlimited to, reservation of shares of stock) as may be necessary to permit the subsequent exerciseof the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and otherproperty.                    (F) For purposes hereof, the “earning power” of the Company and its Subsidiaries shall bedetermined in good faith by the Company’s Board of Directors on the basis of the operating earningsof each business operated by the Company and its Subsidiaries during the three fiscal yearspreceding the date of such determination (or, in the case of any business not operated by theCompany or any Subsidiary during three full fiscal years
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preceding such date, during the period such business was operated by the Company or anySubsidiary).          (b) For purposes of this Agreement, the term “Principal Party” shall mean:               (i) in the case of any transaction described in clause (i) or (ii) of Section 13(a) hereof:(A) the Person that is the issuer of the securities into which the shares of Common Stock areconverted in such merger or consolidation, or, if there is more than one such issuer, the issuerthe shares of Common Stock of which have the greatest aggregate market value of shares outstanding,or (B) if no securities are so issued, (x) the Person that is the other party to the merger, ifsuch Person survives said merger, or, if there is more than one such Person, the Person the sharesof Common Stock of which have the greatest aggregate market value of shares outstanding or (y) ifthe Person that is the other party to the merger does not survive the merger, the Person that doessurvive the merger (including the Company if it survives) or (z) the Person resulting from theconsolidation; and               (ii) in the case of any transaction described in clause (iii) of Section 13(a) hereof, thePerson that is the party receiving the greatest portion of the assets or earning power transferredpursuant to such transaction or transactions, or, if more than one Person that is a party to suchtransaction or transactions receives the same portion of the assets or earning power so transferredand each such portion would, were it not for the other equal portions, constitute the greatestportion of the assets or earning power so transferred, or if the Person receiving the greatestportion of the assets or earning power cannot be determined, whichever of such Persons is theissuer of shares of Common Stock having the greatest aggregate market value of shares outstanding;provided, however, that in any such case described in the foregoing clause (b)(i)or (b)(ii), if the shares of Common Stock of such Person are not at such time or have not beencontinuously over the preceding 12-month period registered under Section 12 of the Exchange Act,then (1) if such Person is a direct or indirect Subsidiary of another Person the shares of CommonStock of which are and have been so registered, the term “Principal Party” shall refer to suchother Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than onePerson, the Common Stock of which are and have been so registered, the term “Principal Party” shallrefer to whichever of such Persons is the issuer of shares of Common Stock having the greatestaggregate market value of shares outstanding, or (3) if such Person is owned, directly orindirectly, by a joint venture formed by two or more Persons that are not owned, directly orindirectly by the same Person, the rules set forth in clauses (1) and (2) above shall apply to eachof the owners having an interest in the venture as if the Person owned by the joint venture was aSubsidiary of both or all of such joint venturers, and the Principal Party in each such case shallbear the obligations set forth in this Section 13 in the same ratio as its interest in such Personbears to the total of such interests.          (c) The Company shall not consummate any Section 13 Event unless the Principal Party shallhave a sufficient number of authorized shares of Common Stock that have not been issued or reservedfor issuance to permit the exercise in full of the Rights in accordance with this Section 13 andunless prior thereto the Company and such issuer shall have executed and delivered to the RightsAgent a supplemental agreement confirming that such Principal Party shall, upon consummation ofsuch Section 13 Event, assume this Agreement in accordance with Sections 13(a) and 13(b) hereof,that all rights of first refusal or preemptive rights in respect of
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the issuance of shares of Common Stock of such Principal Party upon exercise of outstandingRights have been waived, that there are no rights, warrants, instruments or securities outstandingor any agreements or arrangements which, as a result of the consummation of such transaction, wouldeliminate or substantially diminish the benefits intended to be afforded by the Rights and thatsuch transaction shall not result in a default by such Principal Party under this Agreement, andfurther providing that, as soon as practicable after the date of such Section 13 Event, suchPrincipal Party will:               (i) prepare and file a registration statement under the Securities Act with respect to theRights and the securities purchasable upon exercise of the Rights on an appropriate form, use itsbest efforts to cause such registration statement to become effective as soon as practicable aftersuch filing and use its best efforts to cause such registration statement to remain effective (witha prospectus at all times meeting the requirements of the Securities Act) until the ExpirationDate, and similarly comply with applicable state securities laws;               (ii) use its best efforts to list (or continue the listing of) the Rights and the securitiespurchasable upon exercise of the Rights on a national securities exchange or to meet theeligibility requirements for quotation on Nasdaq and list (or continue the listing of) the Rightsand the securities purchasable upon exercise of the Rights on Nasdaq; and               (iii) deliver to holders of the Rights historical financial statements for such PrincipalParty which comply in all respects with the requirements for registration on Form F-1 (or anysuccessor form) under the Securities Act.     In the event that at any time after the occurrence of a Triggering Event some or all of theRights shall not have been exercised at the time of a transaction described in this Section 13, theRights which have not theretofore been exercised shall thereafter be exercisable in the mannerdescribed in Section 13(a) (without taking into account any prior adjustment required bySection 11(a)(ii)).          (d) In case the “Principal Party” for purposes of Section 13(b) hereof has provision in any ofits authorized securities or in its certificate of incorporation or by-laws or other instrumentgoverning its corporate affairs, which provision would have the effect of (i) causing suchPrincipal Party to issue (other than to holders of Rights pursuant to Section 13 hereof), inconnection with, or as a consequence of, the consummation of a Section 13 Event, shares of CommonStock or Equivalent Shares of such Principal Party at less than the then Current Per Share MarketPrice thereof or securities exercisable for, or convertible into, shares of Common Stock orEquivalent Shares of such Principal Party at less than such then Current Per Share Market Price, or(ii) providing for any special payment, tax or similar provision in connection with the issuance ofthe shares of Common Stock of such Principal Party pursuant to the provisions of Section 13 hereof,then, in such event, the Company hereby agrees with each holder of Rights that it shall notconsummate any such transaction unless prior thereto the Company and such Principal Party shallhave executed and delivered to the Rights Agent a supplemental agreement providing that theprovision in question of such Principal Party shall have been canceled, waived or amended, or thatthe authorized securities shall be redeemed, so that the applicable provision will have no effectin connection with or as a consequence of, the consummation of the proposed transaction.
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          (e) The Company covenants and agrees that it shall not, at any time after the DistributionDate, effect or permit to occur any Section 13 Event, if (i) at the time or immediately after suchSection 13 Event there are any rights, warrants or other instruments or securities outstanding oragreements in effect which would substantially diminish or otherwise eliminate the benefitsintended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after suchSection 13 Event, the stockholders of the Person who constitutes, or would constitute, the“Principal Party” for purposes of Section 13(b) hereof shall have received a distribution of Rightspreviously owned by such Person or any of its Affiliates or Associates or (iii) the form or natureof organization of the Principal Party would preclude or limit the exercisability of the Rights.          (f) The provisions of this Section 13 shall similarly apply to successive mergers orconsolidations or sales or other transfers.     14. Fractional Rights and Fractional Shares.          (a) The Company shall not be required to issue fractions of Rights or to distribute RightsCertificates which evidence fractional Rights. In lieu of such fractional Rights, there shall bepaid to the registered holders of the Rights Certificates with regard to which such fractionalRights would otherwise be issuable, an amount in cash equal to the same fraction of the currentmarket value of a whole Right. For the purposes of this Section 14(a), the current market value ofa whole Right shall be the closing price of the Rights for the Trading Day immediately prior to thedate on which such fractional Rights would have been otherwise issuable, as determined pursuant tothis Agreement.          (b) The Company shall not be required to issue fractions of Preferred Shares (other thanfractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise ofthe Rights or to distribute certificates which evidence fractional Preferred Shares (other thanfractions that are integral multiples of one one-thousandth of a Preferred Share). Interests infractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may,at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriateagreement between the Company and a depositary selected by it; provided, that such agreement shallprovide that the holders of such depositary receipts shall have all the rights, privileges andpreferences to which they are entitled as beneficial owners of the Preferred Shares represented bysuch depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples ofone one-thousandth of a Preferred Share, the Company shall pay to the registered holders of RightsCertificates at the time such Rights are exercised as herein provided an amount in cash equal tothe same fraction of the current market value of a Preferred Share. For purposes of thisSection 14(b), the current market value of a Preferred Share shall be one thousand times theclosing price of a share of Common Stock (as determined pursuant to the terms hereof) for theTrading Day immediately prior to the date of such exercise.          (c) The Company shall not be required to issue fractions of shares of Common Stock or todistribute certificates which evidence fractional shares of Common Stock upon the exercise orexchange of Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to theregistered holders of Rights Certificates at the time such Rights are exercised as herein providedan amount in cash equal to the same fraction of the current market
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value of a share of Common Stock. For purposes of this Section 14(c), the current market valueof a share of Common Stock shall be the closing price of a share of Common Stock (as determinedpursuant to the terms hereof) for the Trading Day immediately prior to the date of such exercise.          (d) The holder of a Right by the acceptance of the Right expressly waives his or her right toreceive any fractional Rights or any fractional shares (other than fractions that are integralmultiples of one one-thousandth of a Preferred Share) upon exercise of a Right.     15. Rights of Action. All rights of action in respect of this Agreement, excepting therights of action given to the Rights Agent under Section 18 hereof, are vested in the respectiveregistered holders of the Rights Certificates (and, prior to the Distribution Date, the registeredholders of the shares of Common Stock); and any registered holder of any Rights Certificate (or,prior to the Distribution Date, of the shares of Common Stock), without the consent of the RightsAgent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of theshares of Common Stock), may, in his or her own behalf and for his or her own benefit, enforce, andmay institute and maintain any suit, action or proceeding against the Company to enforce, orotherwise act in respect of, his or her right to exercise the Rights evidenced by such RightsCertificate in the manner provided in such Rights Certificate and in this Agreement. Withoutlimiting the foregoing or any remedies available to the holders of Rights, it is specificallyacknowledged that the holders of Rights would not have an adequate remedy at law for any breach ofthis Agreement and will be entitled to specific performance of the obligations under, andinjunctive relief against actual or threatened violations of, the obligations of any Person subjectto this Agreement.     16. Agreement of Rights Holders. Every holder of a Right, by accepting the same,consents and agrees with the Company and the Rights Agent and with every other holder of a Rightthat:          (a) prior to the Distribution Date, the Rights will be transferable only in connection withthe transfer of the shares of Common Stock;          (b) after the Distribution Date, the Rights Certificates are transferable only on the registrybooks of the Rights Agent if surrendered at the principal office or offices of the Rights Agentdesignated for such purposes, duly endorsed or accompanied by a proper instrument of transfer andwith the appropriate forms and certificates fully executed; and          (c) subject to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may deem andtreat the person in whose name the Rights Certificate (or, prior to the Distribution Date, theassociated Common Stock certificate) is registered as the absolute owner thereof and of the Rightsevidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificatesor the associated Common Stock certificate made by anyone other than the Company or the RightsAgent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affectedby any notice to the contrary.     17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of anyRights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose to be
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the holder of the Preferred Shares or any other securities of the Company which may at anytime be issuable on the exercise of the Rights represented thereby, nor shall anything containedherein or in any Rights Certificate be construed to confer upon the holder of any RightsCertificate, as such, any of the rights of a stockholder of the Company or any right to vote forthe election of directors or upon any matter submitted to stockholders at any meeting thereof, orto give or withhold consent to any corporate action, or to receive notice of meetings or otheractions affecting stockholders (except as provided in Section 25 hereof), or to receive dividendsor subscription rights, or otherwise, until the Right or Rights evidenced by such RightsCertificate shall have been exercised in accordance with the provisions hereof.     18. The Rights Agent.          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all servicesrendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonableexpenses and counsel fees and other disbursements incurred in the administration and execution ofthis Agreement and the exercise and performance of its duties hereunder. The Company also agrees toindemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense,incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, foranything done or omitted by the Rights Agent in connection with the acceptance and administrationof this Agreement, including the costs and expenses of defending against any claim of liability inthe premises. In no event will the Rights Agent be liable for special, indirect, incidental orconsequential loss or damage of any kind whatsoever, even if the Rights Agent has been advised ofthe possibility of such loss or damage.          (b) The Rights Agent shall be protected and shall incur no liability for, or in respect of anyaction taken, suffered or omitted by it in connection with, its administration of this Agreement inreliance upon any Rights Certificate or certificate for the Preferred Shares or shares of CommonStock or for other securities of the Company, instrument of assignment or transfer, power ofattorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement orother paper or document reasonably believed by it to be genuine and to be signed, executed and,where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon theadvice of counsel as set forth in Section 20 hereof.     19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation intowhich the Rights Agent or any successor Rights Agent may be merged or with which it may beconsolidated, or any corporation resulting from any merger or consolidation to which the RightsAgent or any successor Rights Agent shall be a party, or any corporation succeeding to thecorporate trust business of the Rights Agent or any successor Rights Agent, shall be the successorto the Rights Agent under this Agreement without the execution or filing of any paper or anyfurther act on the part of any of the parties hereto; provided, however, that such corporationwould be eligible for appointment as a successor Rights Agent under the provisions of Section 21hereof. In case at the time such successor Rights Agent shall succeed to the agency created by thisAgreement, any of the Rights Certificates shall have been countersigned but not delivered, any suchsuccessor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliversuch Rights Certificates so countersigned; and in case at that time any of the Rights Certificatesshall not have been countersigned, any successor Rights Agent may countersign such RightsCertificates either in the name of the predecessor Rights Agent or
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in the name of the successor Rights Agent; and in all such cases such Rights Certificatesshall have the full force provided in the Rights Certificates and in this Agreement. In case at anytime the name of the Rights Agent shall be changed and at such time any of the Rights Certificatesshall have been countersigned but not delivered, the Rights Agent may adopt the countersignatureunder its prior name and deliver Rights Certificates so countersigned; and in case at that time anyof the Rights Certificates shall not have been countersigned, the Rights Agent may countersign suchRights Certificates either in its prior name or in its changed name; and in all such cases suchRights Certificates shall have the full force provided in the Rights Certificates and in thisAgreement.     20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligationsimposed by this Agreement upon the following terms and conditions, by all of which the Company andthe 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 theCompany), and the written advice or opinion of such counsel shall be full and completeauthorization and protection to the Rights Agent as to any action taken or omitted by it in goodfaith and in accordance with such written advice or opinion.          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deemit necessary or desirable that any fact or matter (including, without limitation, the identity ofany Acquiring Person and the determination of Current Per Share Market Price) be proved orestablished by the Company prior to taking or suffering any action hereunder, such fact or matter(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to beconclusively proved and established by a certificate signed by any one of the Chairman of theBoard, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer,the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and suchcertificate shall be full authorization to the Rights Agent for any action taken or suffered ingood faith by it under the provisions of this Agreement in reliance upon such certificate.          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only forits own negligence, bad faith or willful misconduct.          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact orrecitals contained in this Agreement or in the Rights Certificates (except its countersignaturethereof) or be required to verify the same, but all such statements and recitals are and shall bedeemed to have been made by the Company only.          (e) The Rights Agent shall not be under any responsibility in respect of the validity of thisAgreement or the execution and delivery hereof (except the due execution hereof by the RightsAgent) or in respect of the validity or execution of any Rights Certificate (except itscountersignature thereof); nor shall it be responsible for any breach by the Company of anycovenant or condition contained in this Agreement or in any Rights Certificate; nor shall it beresponsible for any change in the exercisability of the Rights or any adjustment in the terms ofthe Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23or 24, or the ascertaining of the existence of facts that would require any such change or
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adjustment (except with respect to the exercise of Rights evidenced by Rights Certificatesafter receipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing suchchange or adjustment); nor shall it by any act hereunder be deemed to make any representation orwarranty as to the authorization or reservation of any Preferred Shares to be issued pursuant tothis Agreement or any Rights Certificate or as to whether any Preferred Shares will, when issued,be validly authorized and issued, fully paid and nonassessable.          (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to beperformed, executed, acknowledged and delivered all such further and other acts, instruments andassurances as may reasonably be required by the Rights Agent for the carrying out or performing bythe Rights Agent of the provisions of this Agreement.          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect tothe performance of its duties hereunder from any one of the Chairman of the Board, the ChiefExecutive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary orany Assistant Secretary of the Company, and to apply to such officers for advice or instructions inconnection with its duties, and it shall not be liable for any action taken or suffered by it ingood faith in accordance with instructions of any such officer or for any delay in acting whilewaiting for those instructions. Any application by the Rights Agent for written instructions fromthe Company may, at the option of the Rights Agent, set forth in writing any action proposed to betaken or omitted by the Rights Agent under this Rights Agreement and the date on and/or after whichsuch action shall be taken or such omission shall be effective. The Rights Agent shall not beliable for any action taken by, or omission of, the Rights Agent in accordance with a proposalincluded in any such application on or after the date specified in such application (which dateshall not be less than five (5) Business Days after the date any officer of the Company actuallyreceives such application, unless any such officer shall have consented in writing to an earlierdate) 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 applicationspecifying the action to be taken or omitted.          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agentmay buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarilyinterested in any transaction in which the Company may be interested, or contract with or lendmoney to the Company or otherwise act as fully and freely as though it were not Rights Agent underthis Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacityfor 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 itor perform any duty hereunder either itself or by or through its attorneys or agents, and theRights Agent shall not be answerable or accountable for any act, default, neglect or misconduct ofany such attorneys or agents or for any loss to the Company resulting from any such act, default,neglect or misconduct, provided reasonable care was exercised in the selection and continuedemployment thereof.          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its ownfunds or otherwise incur any financial liability in the performance of any of its duties hereunderor in the exercise of its rights if there shall be reasonable grounds for believing
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that repayment of such funds or adequate indemnification against such risk or liability is notreasonably assured to it.          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise ortransfer, the certificate attached to the form of assignment or form of election to purchase, asthe case may be, has either not been completed or indicates an affirmative response to clause 1and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requestedexercise or transfer without first consulting with the Company.     21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resignand be discharged from its duties under this Agreement upon thirty (30) days’ written notice mailedto the Company and to each transfer agent of the Preferred Shares and the Common Stock byregistered or certified mail, and to the holders of the Rights Certificates by first-class mail.The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’written notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and toeach transfer agent of the Preferred Shares and the Common Stock by registered or certified mail,and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resignor be removed or shall otherwise become incapable of acting, the Company shall appoint a successorto the Rights Agent. If the Company shall fail to make such appointment within a period of thirty(30) days after giving notice of such removal or after receiving written notice of such resignationor incapacity by the resigning or incapacitated Rights Agent or by the holder of a RightsCertificate (who shall, with such notice, submit his or her Rights Certificate for inspection bythe Company), then the registered holder of any Rights Certificate may apply to any court ofcompetent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,whether appointed by the Company or by such a court, shall be a corporation organized and doingbusiness under the laws of the United States or of any state of the United States, in goodstanding, which is authorized under such laws to exercise corporate trust or stockholder servicespowers and is subject to supervision or examination by federal or state authority and which has atthe time of its appointment as Rights Agent a combined capital and surplus of at least U.S. $100million. 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 withoutfurther act or deed; but the predecessor Rights Agent shall deliver and transfer to the successorRights Agent any property at the time held by it hereunder, and execute and deliver any furtherassurance, conveyance, act or deed necessary for the purpose. Not later than the effective date ofany such appointment, the Company shall file notice thereof in writing with the predecessor RightsAgent and each transfer agent of the Preferred Shares and the Common Stock, and mail a writtennotice thereof to the registered holders of the Rights Certificates. Failure to give any noticeprovided for in this Section 21, however, or any defect therein, shall not affect the legality orvalidity of the resignation or removal of the Rights Agent or the appointment of the successorRights Agent, as the case may be.     22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of thisAgreement or of the Rights to the contrary, the Company may, at its option, issue new RightsCertificates evidencing Rights in such form as may be approved by its Board of Directors to reflectany adjustment or change in the Exercise Price and the number or kind or class of shares or othersecurities or property purchasable under the Rights Certificates made in accordance with theprovisions of this Agreement. In addition, in connection with the issuance or sale of shares of
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Common Stock following the Distribution Date and prior to the redemption or expiration of theRights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant tothe exercise of stock options or under any employee plan or arrangement or upon the exercise,conversion or exchange of other securities of the Company outstanding at the date hereof or uponthe 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 suchissuance or sale; provided, however, that (i) no such Rights Certificate shall beissued and this sentence shall be null and void ab initio if, and to the extent that, such issuanceor this sentence would create a significant risk of or result in material adverse tax consequencesto the Company or the Person to whom such Rights Certificate would be issued or would create asignificant risk of or result in such options’ or employee plans’ or arrangements’ failing toqualify for otherwise available special tax treatment and (ii) no such Rights Certificate shall beissued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu ofthe issuance thereof.     23. Redemption.          (a) The Company may, at its option and with the approval of the Board of Directors, at anytime prior to the Close of Business on the earlier of (i) the close of business on the tenth dayfollowing the Shares Acquisition Date and (ii) the Final Expiration Date, redeem all but not lessthan all the then outstanding Rights at a redemption price of U.S. $0.01 per Right, appropriatelyadjusted to reflect any stock split, stock dividend or similar transaction occurring after the datehereof (such redemption price being herein referred to as the “Redemption Price”) and theCompany may, at its option, pay the Redemption Price either in shares of Common Stock (based on theCurrent Per Share Market Price thereof at the time of redemption) or cash. Such redemption of theRights by the Company may be made effective at such time, on such basis and with such conditions asthe Board of Directors in its sole discretion may establish. The date on which the Board ofDirectors elects to make the redemption effective shall be referred to as the “RedemptionDate.”          (b) Immediately upon the action of the Board of Directors of the Company ordering theredemption of the Rights, evidence of which shall have been filed with the Rights Agent, andwithout any further action and without any notice, the right to exercise the Rights will terminateand the only right thereafter of the holders of Rights shall be to receive the Redemption Price.The Company shall promptly give public notice of any such redemption; provided ,however , that the failure to give or any defect in, any such notice shall not affect thevalidity of such redemption. Within ten (10) days after the action of the Board of Directorsordering the redemption of the Rights, the Company shall give notice of such redemption to theRights Agent and the holders of the then outstanding Rights by mailing such notice to all suchholders at their last addresses as they appear upon the registry books of the Rights Agent or,prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock.Any notice which is mailed in the manner herein provided shall be deemed given, whether or not theholder receives the notice. Each such notice of redemption will state the method by which thepayment of the Redemption Price will be made. Neither the Company nor any of its Affiliates orAssociates may redeem, acquire or purchase for value any Rights at any time in any manner
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other than that specifically set forth in this Section 23 or in Section 24 hereof, and otherthan in connection with the purchase of shares of Common Stock prior to the Distribution Date.     24. Exchange.          (a) (i) Subject to applicable laws, rules and regulations, and subject tosubsection 24(c) below, the Company may, at its option, by action of the Board of Directors, at anytime after the occurrence of a Triggering Event, exchange all or part of the then outstanding andexercisable Rights (which shall not include Rights that have become void pursuant to the provisionsof Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of CommonStock per Right, appropriately adjusted to reflect any stock split, stock dividend or similartransaction occurring after the date hereof (such exchange ratio being hereinafter referred to asthe “Section 24(a)(i) Exchange Ratio”). Notwithstanding the foregoing, the Board ofDirectors shall not be empowered to effect such exchange at any time after any Person (other thanthe Company, any Subsidiary of the Company, any employee benefit plan of the Company or any suchSubsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan or anExempted Person), together with all Affiliates and Associates of such Person, becomes theBeneficial Owner of 50% or more of the Common Stock then outstanding.               (ii) The Company may, at its option, at any time after any Person becomes an Acquiring Person,upon resolution adopted by a majority of the Company’s Board of Directors, exchange all or part ofthe then-outstanding and exercisable Rights (which shall not include Rights that have become voidpursuant to Section 7(e) hereof) for Preferred Shares at an exchange ratio specified in thefollowing sentence, as appropriately adjusted to reflect any stock split, stock dividend or similartransaction occurring after the date hereof. Subject to such adjustment, each Right may beexchanged for that number of Preferred Shares obtained by dividing the Adjustment Spread (asdefined below) by the then Current Per Share Market Price (as determined for purposes of thecalculations under Section 11(a)(iii)) per Preferred Share on the earlier of (i) the date on whichany Person becomes an Acquiring Person and (ii) the date on which a tender or exchange offer by anyPerson (other than an Exempt Person, the Company, any Subsidiary of the Company, any employeebenefit plan maintained by the Company or any of its Subsidiaries or any trustee or fiduciary withrespect to such plan acting in such capacity) is first published or sent or given within themeaning of Rule 14d-4(a) of the Exchange Act or any successor rule, if upon consummation thereofsuch Person would be the Beneficial Owner of 15% or more of the shares of the Company’s CommonStock then outstanding (such exchange ratio being the “Section 24(a)(ii) Exchange Ratio”).The “Adjustment Spread” shall equal (x) the aggregate market price on the date of suchevent of the number of Adjustment Shares determined pursuant to Section 11(a)(ii) hereof, minus (y)the Purchase Price. Notwithstanding the foregoing, the Company may not effect such exchange at anytime after any Person (other than an Exempt Person, the Company, any Subsidiary of the Company, anyemployee benefit plan maintained by the Company or any of its Subsidiaries, or any trustee orfiduciary with respect to such plan acting in such capacity), together with all Affiliates andAssociates of such Person, becomes the Beneficial Owner of 50% or more of the shares of theCompany’s Common Stock then outstanding.          (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rightspursuant to Section 24(a) and without any further action and without any
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notice, the right to exercise such Rights shall terminate and the only right thereafter of aholder of such Rights shall be to receive that number of shares of Common Stock or PreferredShares, as the case may be, equal to the number of such Rights held by such holder multiplied bythe Section 24(a)(i) Exchange Ratio or Section 24(a)(ii) Exchange Ratio, as the case may be. TheCompany shall 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 shallmail a notice of any such exchange to all of the holders of such Rights at their last addresses asthey appear upon the registry books of the Rights Agent. Any notice which is mailed in the mannerherein provided shall be deemed given, whether or not the holder receives the notice. Each suchnotice of exchange will state the method by which the exchange of the shares of Common Stock forRights will be effected and, in the event of any partial exchange, the number of Rights which willbe exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (otherthan Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by eachholder of Rights.          (c) In the event that there shall not be sufficient shares of Common Stock issued but notoutstanding or authorized but unissued to permit any exchange of Rights as contemplated inaccordance with Section 24(a), the Company shall either take such action as may be necessary toauthorize additional shares of Common Stock for issuance upon exchange of the Rights oralternatively, at the option of a majority of the Board of Directors, with respect to each Right(i) pay cash in an amount equal to the Current Value (as hereinafter defined), in lieu of issuingshares of Common Stock in exchange therefor, or (ii) issue debt or equity securities or acombination thereof, having a value equal to the Current Value, in lieu of issuing shares of CommonStock in exchange for each such Right, where the value of such securities shall be determined by anationally recognized investment banking firm selected by majority vote of the Board of Directors,or (iii) deliver any combination of cash, property, shares of Common Stock and/or other securitieshaving a value equal to the Current Value in exchange for each Right. For purposes of thisSection 24(c) only, the Current Value shall mean the product of the Current Per Share Market Priceof shares of Common Stock on the date of the occurrence of the event described above insubparagraph (a), multiplied by the number of shares of Common Stock for which the Right otherwisewould be exchangeable if there were sufficient shares available. To the extent that the Companydetermines that some action need be taken pursuant to clauses (i), (ii) or (iii) of thisSection 24(c), the Board of Directors may temporarily suspend the exercisability of the Rights fora period of up to sixty (60) days following the date on which the event described inSection 24(a) shall have occurred, in order to seek any authorization of additional shares ofCommon Stock and/or to decide the appropriate form of distribution to be made pursuant to the aboveprovision and to determine the value thereof. In the event of any such suspension, the Companyshall issue a public announcement stating that the exercisability of the Rights has beentemporarily suspended.          (d) The Company shall not be required to issue fractions of shares of Common Stock or todistribute certificates which evidence fractional shares of Common Stock. In lieu of suchfractional shares of Common Stock, there shall be paid to the registered holders of the RightsCertificates with regard to which such fractional shares of Common Stock would otherwise beissuable, an amount in cash equal to the same fraction of the current market value of a whole shareof Common Stock (as determined pursuant to the terms hereof).
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          (e) The Company may, at its option, by majority vote of the Board of Directors, at any timebefore any Person has become an Acquiring Person, exchange all or part of the then outstandingRights for rights of substantially equivalent value, as determined reasonably and with good faithby the Board of Directors, based upon the advice of one or more nationally recognized investmentbanking firms.          (f) Immediately upon the action of the Board of Directors ordering the exchange of any Rightspursuant to subsection 24(e) of this Section 24 and without any further action and without anynotice, the right to exercise such Rights shall terminate and the only right thereafter of a holderof such Rights shall be to receive that number of rights in exchange therefor as has beendetermined by the Board of Directors in accordance with subsection 24(e) above. The Company shallgive public notice of any such exchange; provided, however, that the failure to give, or any defectin, such notice shall not affect the validity of such exchange. The Company shall mail a notice ofany such exchange to all of the holders of such Rights at their last addresses as they appear uponthe registry books of the transfer agent for the shares of Common Stock of the Company. Any noticewhich is mailed in the manner herein provided shall be deemed given, whether or not the holderreceives the notice. Each such notice of exchange will state the method by which the exchange ofthe Rights will be effected.     25. Notice of Certain Events.          (a) In case the Company shall propose to effect or permit to occur any Triggering Event orSection 13 Event, the Company shall give notice thereof to each holder of Rights in accordance withSection 26 hereof at least twenty (20) days prior to occurrence of such Triggering Event or suchSection 13 Event.          (b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, theCompany shall as soon as practicable thereafter give to each holder of a Rights Certificate, inaccordance with Section 26 hereof, a notice of the occurrence of such event, which shall specifythe event and the consequences of the event to holders of Rights under Sections 11(a)(ii) and 13hereof.     26. Notices. Notices or demands authorized by this Agreement to be given or made bythe Rights Agent or by the holder of any Rights Certificate to or on the Company shall besufficiently given or made if sent by first-class mail, postage prepaid, addressed (until anotheraddress is filed in writing with the Rights Agent) as follows:     FreeSeas Inc.  89 Akti Miaouli & 4 Mavrokordatou Street  185 38 Piraeus, Greece  Attention: Chief Executive Officer   with a copy to: Broad and Cassel  Attn: A. Jeffry Robinson, Esq.  2 South Biscayne Boulevard  21st Floor  Miami, Florida 33131
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Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreementto be given or made by the Company or by the holder of any Rights Certificate to or on the RightsAgent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed(until another address is filed in writing with the Company) as follows:American Stock Transfer & Trust Company, LLC