Exhibit 4.1





 


 


 


 


 


 


SHAREHOLDER PROTECTION RIGHTS
AGREEMENT


dated as of


June 9, 2010


between


Forward Industries, Inc.


and


American Stock Transfer &
Trust Company LLC


 


 










 











 


 


 


 


Table of Contents


	 	Page
	

ARTICLE I
Certain Definitions


			1
	

Section 1.1         Certain
Definitions


			1
	

ARTICLE
II The Rights


			7
	

Section 2.1    Summary of Rights


			7
	

Section 2.2    Legend on Common Stock Certificates


			7
	

Section 2.3    Exercise of Rights; Separation of Rights


			8
	

Section 2.4    Adjustments to Exercise Price; Number of Rights


			9
	

Section 2.5    Date on Which Exercise is Effective


			10
	

Section 2.6    Execution, Authentication, Delivery and Dating of Rights
Certificates


			11
	

Section 2.7    Registration, Registration or Transfer and Exchange


			11
	

Section 2.8    Mutilated, Destroyed, Lost and Stolen Rights Certificates


			12
	

Section 2.9    Persons Deemed Owners


			12
	

Section 2.10  Delivery and Cancellation of Certificates


			12
	

Section 2.11  Agreement of Rights Holders


			13
	

ARTICLE
III Adjustments to the Rights in the Event of Certain Transactions


			13
	

Section 3.1    Flip-in


			13
	

Section 3.2    Flip-over


			15
	

ARTICLE
IV The Rights Agent


			16
	

Section 4.1    General


			16
	

Section 4.2    Merger or Consolidation or Change of Name of Rights Agent


			16
	

Section 4.3    Duties of Rights Agent


			17
	

Section 4.4    Change of Rights Agent


			18
	

ARTICLE
V Miscellaneous


			19
	

Section 5.1    Redemption


			19
	

Section 5.2    Expiration


			20
	

Section 5.3    Issuance of New Rights Certificates


			20
	

Section 5.4    Supplements and Amendments


			20
	

Section 5.5    Fractional Shares


			21
	

Section 5.6    Rights of Action


			21
	

Section 5.7    Holder of Rights Not Deemed a Shareholder


			21
	

Section 5.8    Notice of Proposed Actions


			21
	

Section 5.9    Notices


			21
	

Section 5.10  Suspension of Exercisability


			22
	

Section 5.11  Costs of Enforcement


			22
	

Section 5.12  Successors


			22
	

Section 5.13  Benefits of this Agreement


			23
	

Section 5.14  Determination and Actions by the Board of Directors


			23
	

Section 5.15  Descriptive Headings


			23



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Section 5.16  Governing Law


			23
	

Section 5.17  Counterparts


			23
	

Section 5.18  Severability


			23



EXHIBIT



Exhibit A                  
Form of Rights Certificate and Form of Election to Exercise                                

 

 

 

 

 

 

 

 

 

 

 

 

 


ii

 


 










 











 


 


 


 


This SHAREHOLDER PROTECTION RIGHTS AGREEMENT, dated as of
June 9, 2010 (as amended from time to time, this “Agreement”), between
Forward Industries, Inc., a New York corporation (the “Company”), and
American Stock Transfer & Trust Company LLC, a New York limited liability
trust company, as Rights Agent (the “Rights Agent”, which term shall
include any successor Rights Agent hereunder).


WITNESSETH:


WHEREAS, the Board of Directors of the Company (the “Board
of Directors”) has determined that it is in the best interests of the
Company and its shareholders (the “Shareholders”) to adopt a shareholder
rights plan (the “Rights Plan”);


WHEREAS, in order to implement the Rights Plan, the Board of
Directors has (a) authorized and declared a dividend of one right (“Right”)
in respect of each share of Common Stock (as hereinafter defined) held of
record as of the close of business on June 21, 2010 (the “Record Time”)
and (b) as provided in Section 2.4, authorized the issuance of one Right
in respect of each share of Common Stock issued after the Record Time and prior
to the Separation Time (as hereinafter defined) and, to the extent provided in Section
5.3, each share of Common Stock issued after the Separation Time;


WHEREAS, subject to the terms and conditions hereof, each
Right entitles the holder thereof, after the Separation Time, to purchase
securities of the Company (or, in certain cases, of certain other entities)
pursuant to the terms and subject to the conditions set forth herein; and


WHEREAS, the Company desires to appoint the Rights Agent to
act on behalf of the Company, and the Rights Agent is willing so to act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;


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


ARTICLE I

Certain Definitions



Section 1.1     Certain Definitions. 
For purposes of this Agreement, the following terms have the meanings indicated:


 










 






 


 


 


 



(a)      “Acquiring Person” shall mean any Person who is a
Beneficial Owner of 28% or more of the outstanding shares of Common Stock; provided,
however, that the term “Acquiring Person” shall not
include any Person (i) who is the Beneficial Owner of 28% or more of the
outstanding shares of Common Stock on the date of this Agreement or who shall
become the Beneficial Owner of 28% or more of the outstanding shares of Common
Stock solely as a result of an acquisition by the Company of shares of Common
Stock, until such time hereafter or thereafter as any of such Persons shall
become the Beneficial Owner (other than by means of a stock dividend or stock
split) of any additional shares of Common Stock, (ii) who is the Beneficial
Owner of 28% or more of the outstanding shares of Common Stock but who acquired
Beneficial Ownership of shares of Common Stock without any plan or intention to
seek or affect control of the Company, if such Person promptly enters into an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
shares), sufficient shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) so that such Person ceases
to be the Beneficial Owner of 28% or more of the outstanding shares of Common
Stock, (iii) who becomes a Beneficial Owner as a result of the consummation of
a Qualified Offer, or (iv) who Beneficially Owns shares of Common Stock
consisting solely of one or more of (A) shares of Common Stock Beneficially
Owned pursuant to the grant or exercise of an option granted to such Person (an
“Option Holder”) by the Company in connection with an agreement to merge
with, or acquire, the Company entered into prior to a Flip-in Date, (B) shares
of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock), Beneficially Owned by such Option Holder or its
Affiliates or Associates at the time of grant of such option, (C) shares of
Common Stock (or securities convertible into, exchangeable into or exercisable
for Common Stock) acquired by Affiliates or Associates of such Option Holder
after the time of such grant which, in the aggregate, amount to less than 1% of
the outstanding shares of Common Stock and (D) shares of Common Stock (or
securities convertible into, exchangeable into or exercisable for Common Stock)
which are held by such Option Holder in trust accounts, managed accounts and
the like or otherwise held in a fiduciary capacity, that are beneficially owned
by third Persons who are not Affiliates or Associates of such Option Holder or
acting together with such Option Holder to hold such shares, or which are held
by such Person in respect of a debt previously contracted.  In addition, the
Company, any wholly-owned Subsidiary of the Company and any employee stock
ownership or other employee benefit plan of the Company or a wholly-owned
Subsidiary of the Company shall not be an Acquiring Person.



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



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(c)       A Person shall be deemed the “Beneficial Owner,” and to
have “Beneficial Ownership” of, and to “Beneficially Own,” any
securities as to which such Person or any of such Person’s Affiliates or
Associates is or may be deemed to be the beneficial owner of pursuant to Rule
13d-3 and 13d-5 under the Exchange Act, as such Rules are in effect on the date
of this Agreement as well as any securities as to which such Person or any of
such Person’s Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of
time or the occurrence of conditions) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the “Beneficial
Owner,” or to have “Beneficial Ownership” of, or to “Beneficially
Own,” any security (i) solely because such security has been tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person’s Affiliates or Associates until such tendered security is accepted for
payment or exchange or (ii) solely because such Person or any of such Person’s
Affiliates or Associates has or shares the power to vote or direct the voting
of such security pursuant to a revocable proxy given in response to a public
proxy or consent solicitation made to more than ten holders of shares of a
class of stock of the Company registered under Section 12 of the Exchange Act
and pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act, except if such power (or the arrangements relating
thereto) is then reportable under Item 6 of Schedule 13D under the Exchange Act
(or any similar provision of a comparable or successor report).  Notwithstanding
the foregoing, no officer or director of the Company shall be deemed to
Beneficially Own any securities of any other Person by virtue of any actions
such officer or director takes in such capacity.  For purposes of this
Agreement, in determining the percentage of the outstanding shares of Common
Stock with respect to which a Person is the Beneficial Owner, all shares as to
which such Person is deemed the Beneficial Owner shall be deemed outstanding.



(d)      “Board Change of Control”, with respect to the Company,
shall mean and shall be deemed to have occurred as of the date and time at
which a majority of the Board of Directors shall not be composed exclusively
of:


(i) Persons, while such Persons are members of the
Board of Directors, who each (A) are not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate, and (B) were a member
of the Board of Directors prior to the date of this Agreement; or


(ii) Persons who subsequently became members of
the Board of Directors, while such Persons are members of the Board of
Directors, who each are not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative or nominee of an Acquiring Person
or of any such Affiliate or Associate; provided that each such Person’s
nomination for election or election to the Board of Directors is recommended or
approved by a majority of the members of the Board of Directors satisfying
either subclause (i) directly above or this subclause (ii).



(e)          “Business Day” shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in The City of New York or the
community in which the principal office of the Rights Agent is located are
generally authorized or obligated by law or executive order to close.



(f)           “Close of Business” on any given date shall mean 5:00 p.m.
New York City time on such date, (or if such date is not a Business Day, 5:00
p.m. New York City time on the next succeeding Business Day).



(g)          “Common Stock” shall mean the shares of common stock, par
value $0.01 per share, of the Company.



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



(i)           “Exchange Time” shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 3.1(c).



(j)           “Exercise Price” shall mean, as of any date, the price at
which a holder may purchase the securities issuable upon exercise of one whole
Right.  Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall equal $4.00.



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(k)          “Expiration Time” shall mean the earliest of (i) the
Exchange Time, (ii) the Redemption Time, (iii) the close of business on the
six-month anniversary of the Record Time and (iv) immediately prior to the
effective time of a consolidation, merger or share exchange (each, a “Business
Combination”) of the Company (A) into another Person or (B) with another
Person in which the Company is the surviving corporation but Common Stock is
converted into cash or securities of another Person, in either case pursuant to
an agreement entered into prior to a Flip-in Date.



(l)            “Flip-in Date” shall mean the tenth Business Day after any
Stock Acquisition Date or such earlier or later date as the Board of Directors
may from time to time fix by resolution adopted prior to the Flip-in Date that
would otherwise have occurred; provided, however, that, if
there has been a Board Change of Control, then “Flip-in Date” shall mean the
tenth Business Day after any Stock Acquisition Date.



(m)          “Flip-over Entity,” for purposes of Section 3.2,
shall mean (i) in the case of a Flip-over Transaction or Event described in
clause (i) of the definition thereof, the Person issuing any securities into
which shares of Common Stock are being converted or exchanged and, if no such
securities are being issued, the other party to such Flip-over Transaction or
Event and (ii) in the case of a Flip-over Transaction or Event referred to in
clause (ii) of the definition thereof, the Person receiving the greatest
portion of the assets or earning power being transferred in such Flip-over
Transaction or Event, provided in all cases if such Person is a subsidiary of a
corporation, the parent corporation shall be the Flip-Over Entity.



(n)           “Flip-over Stock” shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the election of
directors (or other persons similarly responsible for direction of the business
and affairs) of the Flip-Over Entity.


(o)           “Flip-over Transaction or Event” shall mean a transaction
or series of transactions after a Flip-in Date in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate in a
share exchange with any other Person if, at the time of the consolidation,
merger or share exchange or at the time the Company enters into any agreement
with respect to any such consolidation, merger or share exchange, the Acquiring
Person Controls the Board of Directors and either (A) any term of or
arrangement concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of the Common
Stock or (B) the Person with whom the transaction or series of transactions occurs
is the Acquiring Person or an Affiliate or Associate of the Acquiring Person or
(ii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than
50% of the assets (measured by either book value or fair market value) or (B)
generating more than 50% of the operating income or cash flow, of the Company
and its Subsidiaries (taken as a whole) to any Person (other than the Company
or one or more of its wholly owned Subsidiaries) or to two or more such Persons
which are Affiliates or Associates or otherwise acting in concert, if, at the
time of the entry by the Company (or any such Subsidiary) into an agreement
with respect to such sale or transfer of assets, the Acquiring Person Controls
the Board of Directors.  An Acquiring Person shall be deemed to Control the
Company’s Board of Directors when, following a Flip-in Date, the persons who
were directors of the Company before the Flip-in Date shall cease to constitute
a majority of the Company’s Board of Directors.



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(p)         “Market Price” per share of any securities on any date
shall mean the average of the daily closing prices per share of such securities
(determined as described below) on each of the 20 consecutive Trading Days through
and including the Trading Day immediately preceding such date (unless a
provision of this Agreement calls for a different period, in which case such
period shall be substituted for such 20 consecutive Trading Day period); provided,
however, that if an event of a type analogous to any of the
events described in Section 2.4 shall have caused the closing prices
used to determine the Market Price on any Trading Days during such period of 20
Trading Days not to be fully comparable with the closing price on such date,
each such closing price so used shall be appropriately adjusted in order to
make it fully comparable with the closing price on such date.  The closing
price per share of any securities on any date shall be the last reported sale
price, regular way, or, in case no such sale takes place or is quoted on such
date, the average of the closing bid and asked prices, regular way, for each
share of such securities, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NASDAQ Stock Market or, if the securities are not
listed or admitted to trading on the NASDAQ Stock Market, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the securities
are listed or admitted to trading or, if the securities are not listed or
admitted to trading on any national securities exchange, as reported by such
other system then in use, or, if on any such date the securities are not listed
or admitted to trading on any national securities exchange or quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the securities selected by
the Board of Directors; provided, however, that
if on any such date the securities are not listed or admitted to trading on a
national securities exchange or traded in the over-the-counter market, the
closing price per share of such securities on such date shall mean the fair
value per share of securities on such date as determined in good faith by the Board
of Directors, after consultation with a nationally recognized investment
banking firm, and set forth in a certificate delivered to the Rights Agent.



(q)       “Person” shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-5 under the Exchange Act,
as such Rule is in effect on the date of this Agreement), corporation or other
entity.



(r)       
“Qualified Offer” shall mean an all-cash tender offer for
all outstanding shares of Common Stock that meets all of the following
requirements:


(i)          on or prior to the date such offer is commenced within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, the Person making such offer:


(A)        has on hand cash or cash equivalents for the full amount
necessary to consummate such offer and has irrevocably committed in writing to
the Company to utilize such cash or cash equivalents for purposes of such offer
if consummated and to set apart and maintain available such cash or cash
equivalents for such purposes until the offer is consummated or withdrawn; or



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(B)       has all financing in the full amount necessary to consummate such
offer and has:


a.              entered into, and provided to the Company certified copies of,
definitive financing agreements (including exhibits and related documents) for
funds for such offer which, when added to the amount of cash and cash
equivalents available, committed in writing, set apart and maintained in the
same manner as described in clause (A) directly above, are in an amount not
less than the full amount necessary to consummate such offer, which agreements
are with one or more responsible financial institutions or other entities
having the necessary financial capacity and ability to provide such funds, and
are subject only to customary terms and conditions (which shall in no event
include conditions requiring access by such financial institutions or other
entities to non-public information to be provided by the Company, conditions
based on the accuracy of any information concerning the Company, or conditions
requiring the Company to make any representations, warranties or covenants in
connection with such financing), and


b.             provided to the Company copies of all written materials prepared
by such Person for such financial institutions or other entities in connection
with entering into such financing agreements; provided that, “the
full amount necessary to consummate such offer” in either clause (A) or (B)
directly above shall be an amount sufficient to pay for all the shares of
Common Stock outstanding on a fully diluted basis in cash pursuant to the offer
and all related expenses;


(ii)          such offer remains open for at least 60 calendar days;


(iii)         the price to be paid to holders of Common Stock pursuant to the
offer is greater than or equal to the higher of (a) 120% of the average Market
Price during the 90 calendar days preceding the offer and (b) 100% of the
highest Market Price during the 52 weeks preceding such offer;


(iv)         such offer is supported by a written opinion, in customary form,
of a nationally recognized investment banking firm retained by the Company that
is not being compensated on a “percentage of the deal” basis, which opinion
must (a) be addressed to the Company and the holders of Common Stock, (b) state
that the price to be paid to holders pursuant to the offer is fair from a
financial point of view to such holders, and (c) include any written
presentation of such firm showing the analysis and range of values underlying
such conclusions; such written opinion and such presentation must be updated
and provided to the Company within two Business Days prior to the date such
offer is consummated; and


(v)          in addition to each of the requirements set forth above, such
offer is not subject to any condition relating to completion of or satisfaction
with any due diligence or similar investigation, and, subject to the foregoing,
otherwise provides for usual and customary terms and conditions.



(s)         “Redemption Price” shall mean an amount equal to $0.001.



(t)         “Redemption Time” shall mean the time at which the right
to exercise the Rights shall terminate pursuant to Section 5.1.



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(u)         “Separation Time” shall mean the close of business on the
earlier of (i) the tenth Business Day (or such later date as the Board of
Directors may from time to time fix by resolution adopted prior to the
Separation Time that would otherwise have occurred) after the date on which any
Person commences a tender or exchange offer which, if consummated, would result
in such Person’s becoming an Acquiring Person and (ii) the Flip-in Date; provided
that if the foregoing results in the Separation Time being prior to the
Record Time, the Separation Time shall be the Record Time and provided, further,
that if any tender or exchange offer referred to in clause (i) of this
paragraph is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any shares of Common Stock pursuant
thereto, such offer shall be deemed, for purposes of this paragraph, never to
have been made.



(v)          “Stock Acquisition Date” shall mean the later of the first
date of public announcement (by any means, including, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or
an Acquiring Person of facts indicating that an Acquiring Person has become
such, or, if such public announcement has been made prior to the date of this
Agreement, the date of this Agreement.



(w)         “Subsidiary” of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the equity interest is Beneficially Owned,
directly or indirectly, by such Person.



(x)          “Trading Day,” when used with respect to any securities,
shall mean a day on which the NASDAQ Stock Market is open for the transaction
of business or, if such securities are not listed or admitted to trading on the
NASDAQ Stock Market, a day on which the principal national securities exchange
on which such securities are listed or admitted to trading is open for the
transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.


ARTICLE II

The Rights



Section 2.1         Summary of Rights.  As soon as practicable after the Record Time, the
Company will mail a letter summarizing the terms of the Rights to each holder
of record of Common Stock as of the Record Time, at such holder’s address as
shown by the records of the Company.



Section 2.2         Legend on Common Stock Certificates.  Certificates for the Common Stock issued after the
Record Time but prior to the Separation Time shall evidence one Right for each
share of Common Stock represented thereby and shall have impressed on, printed
on, written on or otherwise affixed to them the following legend as follows:



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Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement, dated as of June
9, 2010 (as such may be amended from time to time, the “Rights Agreement”),
between Forward Industries, Inc. (the “Company”) and American Stock
Transfer & Trust Company LLC, as Rights Agent, the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company.  Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be redeemed, may become
exercisable for securities or assets of the Company or of another entity, may
be exchanged for shares of Common Stock or other securities or assets of the
Company, may expire, may become void (if they are “Beneficially Owned” by an
“Acquiring Person” or an Affiliate or Associate thereof, as such terms are
defined in the Rights Agreement, or by any transferee of any of the foregoing)
or may be evidenced by separate certificates and may no longer be evidenced by
this certificate.  The Company will mail or arrange for the mailing of a copy
of the Rights Agreement to the holder of this certificate without charge after
the receipt of a written request therefor.


Certificates representing shares of Common Stock that are
issued and outstanding at the Record Time shall evidence one Right for each
share of Common Stock evidenced thereby notwithstanding the absence of the
foregoing legend.


Section 2.3         Exercise of Rights; Separation of Rights.


(a)          Subject to Sections 3.1, 5.1 and 5.10 and
subject to adjustment as herein set forth, each Right will entitle the holder
thereof, after the Separation Time and prior to the Expiration Time, to
purchase, for the Exercise Price, one share of Common Stock.


(b)          Until the Separation Time, (i) no Right may be exercised and (ii)
each Right will be evidenced by the certificate for the associated share of
Common Stock (together, in the case of certificates issued prior to the Record
Time, with the letter mailed to the record holder thereof pursuant to Section
2.1) and will be transferable only together with, and will be transferred
by a transfer (whether with or without such letter) of, such associated share.


(c)          Subject to the terms and conditions hereof, after the Separation
Time and prior to the Expiration Time, the Rights (i) may be exercised and (ii)
may be transferred independent of shares of Common Stock.  Promptly following
the Separation Time, the Rights Agent will mail to each holder of record of
Common Stock as of the Separation Time (other than any Person whose Rights have
become void pursuant to Section 3.1(b)), at such holder’s address as
shown by the records of the Company (the Company hereby agreeing to furnish
copies of such records to the Rights Agent for this purpose), (A) a certificate
(a “Rights Certificate”) in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by such holder
at the Separation Time and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any national
securities exchange or other market on which the Rights may from time to time
be listed or traded, or to conform to usage, and (B) a disclosure statement
describing the Rights.



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(d)          Subject to the terms and conditions hereof, Rights may be
exercised on any Business Day after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate
evidencing such Rights with an Election to Exercise (an “Election to
Exercise”) substantially in the form attached to the Rights Certificate
duly completed, accompanied by payment in cash, or by certified or official
bank check or money order payable to the order of the Company, of a sum equal
to the Exercise Price multiplied by the number of Rights being exercised and a
sum sufficient to cover any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for shares or
depositary receipts (or both) in a name other than that of the holder of the
Rights being exercised.


(e)          Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and
subject to the terms and conditions hereof, the Rights Agent will thereupon
promptly (i)(A) requisition from a transfer agent stock certificates evidencing
such number of shares or other securities to be purchased (the Company hereby
irrevocably authorizing its transfer agent to comply with all such
requisitions) and (B) if the Company elects pursuant to Section 5.5 not
to issue certificates representing fractional shares, requisition from the
depositary selected by the Company depositary receipts representing the
fractional shares to be purchased or requisition from the Company the amount of
cash to be paid in lieu of fractional shares in accordance with Section 5.5
and (ii) after receipt of such certificates, depositary receipts or cash,
deliver the same to or upon the order of the registered holder of such Rights
Certificate, registered (in the case of certificates or depositary receipts) in
such name or names as may be designated by such holder.


(f)           In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder’s Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder’s duly authorized assigns.


(g)          The Company covenants and agrees that it will (i) take all such
action as may be necessary to ensure that all shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and fully paid and nonassessable; (ii) take all
such action as may be necessary to comply with any applicable requirements of
the Securities Act of 1933, as amended, or the Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights; and (iii)
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of any shares issued upon the exercise of Rights; provided
that the Company shall not be required to pay any transfer tax or charge
which may be payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or the issuance or delivery of certificates for
shares in a name other than that of the holder of the Rights being transferred
or exercised.


Section 2.4         Adjustments to Exercise Price; Number of Rights.



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(a)           In the event the Company shall at any time after the Record Time
and prior to the Separation Time (i) declare or pay a dividend on Common Stock
payable in Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares of Common
Stock, (x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment divided by
the number of shares of Common Stock (the “Expansion Factor”) that a
holder of one share of Common Stock immediately prior to such dividend,
subdivision or combination would hold thereafter as a result thereof and (y)
each Right held prior to such adjustment will become that number of Rights
equal to the Expansion Factor, and the adjusted number of Rights will be deemed
to be distributed among the shares of Common Stock with respect to which the
original Rights were associated (if they remain outstanding) and the shares issued
in respect of such dividend, subdivision or combination, so that each such
share of Common Stock will have exactly one Right associated with it.  Each
adjustment made pursuant to this paragraph shall be made as of the payment or
effective date for the applicable dividend, subdivision or combination.


In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue any shares of Common Stock
otherwise than in a transaction referred to in the preceding paragraph, each
such share of Common Stock so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such share.  To the extent provided in Section 5.3, Rights
shall be issued by the Company in respect of shares of Common Stock that are
issued or sold by the Company after the Separation Time.


(b)          In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue or distribute any securities or assets
in respect of, in lieu of or in exchange for Common Stock (other than pursuant
to a regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights or securities or other property purchasable upon
exercise of Rights as the Board of Directors, in its sole discretion, may deem
to be appropriate under the circumstances in order to adequately protect the
interests of the holders of Rights generally, and the Company and the Rights
Agent shall amend this Agreement as necessary to provide for such adjustments.


(c)          Each adjustment to the Exercise Price made pursuant to this Section
2.4 shall be calculated to the nearest cent.  Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.4, the Company shall
(i) promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.


(d)          Rights certificates shall represent the securities purchasable
under the terms of this Agreement, including any adjustment or change in the
securities purchasable upon exercise of the Rights, even though such
certificates may continue to express the securities purchasable at the time of
issuance of the initial Rights Certificates.



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Section
2.5         Date on Which Exercise is Effective.  Each person in whose name any certificate for shares
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares represented thereby on the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price for such Rights (and any applicable taxes and
other governmental charges payable by the exercising holder hereunder) was
made; provided, however, that if the date of such
surrender and payment is a date upon which the stock transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the stock transfer books of the Company are
open.


Section 2.6         Execution, Authentication, Delivery and Dating of Rights
Certificates.


(a)          The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Senior Vice President,
the Secretary, Treasurer or Assistant Treasurer under its corporate seal
reproduced thereon attested by its Secretary, Treasurer or its Assistant
Treasurer.  The signature of any of these officers on the Rights Certificates
may be manual or facsimile.  Rights Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.  Promptly after the Separation Time, the
Company will notify the Rights Agent of such Separation Time and will deliver
Rights Certificates executed by the Company to the Rights Agent for
countersignature, and, subject to Section 3.1(b), the Rights Agent shall
manually countersign and deliver such Rights Certificates to the holders of the
Rights pursuant to Section 2.3(c).  No Rights Certificate shall be valid
for any purpose unless manually countersigned by the Rights Agent.


(b)          Each Rights Certificate shall be dated the date of
countersignature thereof.


Section 2.7         Registration, Registration or Transfer and Exchange.


(a)         After the Separation Time, the Company will cause to be kept a
register (the “Rights Register”) in which, subject to such reasonable
regulations as it may prescribe, the Company will provide for the registration
and transfer of Rights.  The Rights Agent is hereby appointed “Rights
Registrar” for the purpose of maintaining the Rights Register for the
Company and registering Rights and transfers of Rights after the Separation
Time as herein provided.  In the event that the Rights Agent shall cease to be
the Rights Registrar, the Rights Agent will have the right to examine the
Rights Register at all reasonable times after the Separation Time.


After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Sections 2.7(c) and (d),
the Company will execute, and the Rights Agent will countersign and deliver, in
the name of the holder or the designated transferee or transferees, as required
pursuant to the holder’s instructions, one or more new Rights Certificates evidencing
the same aggregate number of Rights as did the Rights Certificate so
surrendered.


(b)        Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be
entitled to the same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.


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(c)          Every Rights Certificate surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company or the Rights Agent, as the
case may be, duly executed by the holder thereof or such holder’s attorney duly
authorized in writing.  As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.


(d)          The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section
3.1(b), been exchanged under Section 3.1(c) or been redeemed under Section
5.1.


Section 2.8         Mutilated, Destroyed, Lost and Stolen Rights Certificates.


(a)          If any mutilated Rights Certificate is surrendered to the Rights
Agent prior to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c)
and 5.1, the Company shall execute and the Rights Agent shall
countersign and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
surrendered.


(b)          If there shall be delivered to the Company and the Rights Agent
prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1
and in the absence of notice to the Company or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Company
shall execute and upon its request the Rights Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a
new Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.


(c)          As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.


(d)          Every new Rights Certificate issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall
evidence an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b) shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Rights duly issued hereunder.



Section 2.9         Persons Deemed Owners.  Prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name such
Rights Certificate (or, prior to the Separation Time, such Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, including the payment of the
Redemption Price, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.  As used in this Agreement, unless the
context otherwise requires, the term “holder” of any Rights shall mean
the registered holder of such Rights (or, prior to the Separation Time, the
associated shares of Common Stock).



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Section
2.10      Delivery and Cancellation of Certificates.  All Rights Certificates surrendered upon exercise or
for registration of transfer or exchange shall, if surrendered to any person
other than the Rights Agent, be delivered to the Rights Agent and, in any case,
shall be promptly cancelled by the Rights Agent.  The Company may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent.  No Rights Certificates shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled
as provided in this Section 2.10, except as expressly permitted by this
Agreement.  The Rights Agent shall destroy all cancelled Rights Certificates
and deliver a certificate of destruction to the Company.



Section 2.11       Agreement of Rights Holders.  Every holder of Rights by accepting the same consents
and agrees with the Company and the Rights Agent and with every other holder of
Rights that:


(a)           prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the associated
share of Common Stock;


(b)          after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;


(c)           prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate) for registration
of transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;


(d)          Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void; and


(e)           this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4.


ARTICLE III

Adjustments to the Rights in the Event of Certain
Transactions


Section 3.1         Flip-in


.


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(a)           In the event that prior to the Expiration Time a Flip-in Date
shall occur, except as provided in this Section 3.1, each Right shall
constitute the right to purchase from the Company, upon exercise thereof in
accordance with the terms hereof (but subject to Section 5.10), that
number of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on
or after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred
with respect to the Common Stock).


(b)          Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring
Person or an Affiliate or Associate thereof or by any transferee, direct or
indirect, of any of the foregoing shall become void and any holder of such
Rights (including transferees) shall thereafter have no right to exercise or
transfer such Rights under any provision of this Agreement.  If any Rights
Certificate is presented for assignment or exercise and the Person presenting
the same will not complete the certification set forth at the end of the form
of assignment or notice of election to exercise and provide such additional
evidence of the identity of the Beneficial Owner and its Affiliates and
Associates (or former Beneficial Owners and their Affiliates and Associates) as
the Company shall reasonably request, then the Company shall be entitled
conclusively to deem the Beneficial Owner thereof to be an Acquiring Person or
an Affiliate or Associate thereof or a transferee of any of the foregoing and
accordingly will deem the Rights evidenced thereby to be void and not transferable
or exercisable.


(c)           The Board of Directors may, at its option, to the extent
permitted by applicable law, at any time after a Flip-in Date, elect to
exchange all (but not less than all) of the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of Section
3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the
interests of holders of Rights generally in the event that after the Separation
Time an event of a type analogous to any of the events described in Section
2.4(a) or (b) shall have occurred with respect to the Common Stock
(such exchange ratio, as adjusted from time to time, being hereinafter referred
to as the “Exchange Ratio”); provided, however, that,
if there has been a Board Change of Control, such election shall, in addition
to the due election of the Board of Directors, require the approval of the
Shareholders who are the holders of a majority of the outstanding shares of
Common Stock that are not (i) Beneficially Owned by any Acquiring Person, or
(ii) held by any Acquiring Person, or any Affiliate or Associate of any
Acquiring Person.


Immediately upon the action of the Board of Directors (and,
in addition, if there has been a Board Change of Control, upon the approval of
the requisite Shareholders as provided above) electing to exchange the Rights,
without any further action and without any notice, the right to exercise the
Rights will terminate and each Right (other than Rights that have become void
pursuant to Section 3.1(b)) will thereafter represent only the right to
receive a number of shares of Common Stock equal to the Exchange Ratio. 
Promptly after the action of the Board of Directors electing to exchange the
Rights (and, in addition, if there has been a Board Change of Control, upon the
approval of the requisite Shareholders as provided above), the Company shall
give notice thereof (specifying the steps to be taken to receive shares of
Common Stock in exchange for Rights) to the Rights Agent and the holders of the
Rights (other than Rights that have become void pursuant to Section 3.1(b))
outstanding immediately prior thereto by mailing such notice in accordance with
Section 5.9.


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Each Person in whose name any certificate for shares is
issued upon the exchange of Rights pursuant to this Section 3.1(c) shall
for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of any applicable taxes and other governmental charges payable by the
holder was made; provided, however, that if the date of
such surrender and payment is a date upon which the stock transfer books of the
Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the stock transfer books of the Company are
open.


(d)          In the event that there shall not be sufficient treasury shares
or authorized but unissued shares of Common Stock of the Company to permit the
exercise or exchange in full of the Rights in accordance with Section 3.1(a)
or (c), and the Company elects not to, or is otherwise unable to, make
the exchange referred to in Section 3.1(c), the Company shall either (i)
call a meeting of shareholders seeking approval to cause sufficient additional
shares to be authorized (provided that if such approval is not
obtained the Company will take the action specified in clause (ii) of this
sentence) or (ii) take such action as shall be necessary to ensure and provide,
to the extent permitted by applicable law and any agreements or instruments in
effect on the Stock Acquisition Date to which it is a party, that each Right
shall thereafter constitute the right to receive, (A) at the Company’s option,
either (x) in return for the Exercise Price, debt or equity securities or other
assets (or a combination thereof) having a fair value equal to twice the
Exercise Price, or (y) without payment of consideration (except as otherwise
required by applicable law), debt or equity securities or other assets (or a
combination thereof) having a fair value equal to the Exercise Price, or (B) if
the Board of Directors (and, in addition, if there has been a Board Change of
Control, with the approval of the requisite Shareholders as provided above)
elects to exchange the Rights in accordance with Section 3.1(c), debt or
equity securities or other assets (or a combination thereof) having a fair
value equal to the product of the Market Price of a share of Common Stock on
the Flip-in Date times the Exchange Ratio in effect on the Flip-in Date, where
in any case set forth in (A) or (B) above the fair value of such debt or equity
securities or other assets shall be as determined in good faith by the Board of
Directors and, if there has been a Board Change of Control, such determination
shall, in addition to the approval of the Board of Directors, require the
approval of the Shareholders who are the holders of a majority of the
outstanding shares of Common Stock that are not (i) Beneficially Owned by any
Acquiring Person or (ii) held by any Acquiring Person, or any Affiliate or
Associate of any Acquiring Person, after consultation with a nationally
recognized investment banking firm.


Section 3.2         Flip-over

(a)          Prior to the Expiration Time, the Company shall not enter into
any agreement with respect to, consummate or permit to occur any Flip-over
Transaction or Event unless and until it shall have entered into a supplemental
agreement with the Flip-over Entity, for the benefit of the holders of the
Rights, providing that, upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with
the terms hereof, that number of shares of Flip-over Stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of consummation or
occurrence an event of a type analogous to any of the events described in Section
2.4(a) or (b) shall have occurred with respect to the Flip-over
Stock) and (ii) the Flip-over Entity shall thereafter be liable for, and shall
assume, by virtue of such Flip-over Transaction or Event and such supplemental
agreement, all the obligations and duties of the Company pursuant to this
Agreement.  The provisions of this Section 3.2 shall apply to successive
Flip-over Transactions or Events.


.


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(b)          Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to Section 5.1 in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instrument that would eliminate or otherwise diminish in any material respect
the benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.


(c)           The provisions of Sections 3.2(a) and (b) shall not
apply to a transaction that is affected pursuant to a Qualified Offer.


ARTICLE IV

The Rights Agent


Section 4.1          General.


(a)           The Company hereby appoints the Rights Agent to act as agent for
the Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment.  The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.


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


Section 4.2         
Merger or Consolidation or Change of Name of Rights Agent.


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(a)           Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any corporation succeeding
to the shareholder services business of the Rights Agent or any successor
Rights Agent, will be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 4.4. 
In case at the time such successor Rights Agent succeeds to the agency created
by this Agreement and any of the Rights Certificates have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.


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


Section 4.3         Duties of Rights Agent.  The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:


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


(b)          Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Chief Executive Officer, any Senior Vice President, the Treasurer,
Assistant Treasurer or the Secretary of the Company and delivered to the Rights
Agent; and such certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.


(c)           The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.


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


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(e)          The Rights Agent will not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any certificate for securities
purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the Company
of any covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 3.1(b))
or any adjustment required under the provisions of Section 2.4, 3.1
or 3.2 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.4 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether
any securities purchasable upon exercise of Rights will, when issued, be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable.


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


(g)          The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chief Executive Officer or any Senior
Vice President or the Secretary or the Treasurer or Assistant Treasurer of the
Company, and to apply to such persons for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such person.


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


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



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Section
4.4         Change of Rights Agent.  The Rights Agent may resign and be discharged from its
duties under this Agreement upon 90 days’ notice (or such lesser notice as is
acceptable to the Company) in writing mailed to the Company and to each
transfer agent of Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9.  The Company may
remove the Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent
and to each transfer agent of the Common Stock by registered or certified mail,
and to the holders of the Rights in accordance with Section 5.9.  If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent.  If the
Company fails to make such appointment within a period of 30 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
any Rights (which holder shall, with such notice, submit such holder’s Rights
Certificate for inspection by the Company), then the holder of any Rights may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent.  Any successor Rights Agent, whether appointed by the Company or by such
a court, shall be a corporation organized and doing business under the laws of
the United States or of the State of New York or any other state of the United
States, in good standing, which is authorized under such laws to exercise the
powers of the Rights Agent contemplated by this Agreement and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent shareholder’s equity of at least
$25,000,000.  After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.  Not later than
the effective date of any such appointment, the Company will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the holders of the
Rights.  Failure to give any notice provided for in this Section 4.4,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.


ARTICLE V

Miscellaneous


Section 5.1         Redemption.


(a)          The Board of Directors may, at its option, at any time prior to
the close of business on the Flip-in Date, elect to redeem all (but not less
than all) of the then outstanding Rights at the Redemption Price, and the
Company, at its option, may pay the Redemption Price either in cash or shares
of Common Stock or other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at least equivalent in
value to the Redemption Price; provided, however, that, if
there has been a Board Change of Control, such authorization shall, in addition
to the due authorization of the Board of Directors, require the approval of the
Shareholders who are the holders of a majority of the outstanding shares of
Common Stock that are not (i) Beneficially Owned by any Acquiring Person, or
(ii) held by any Acquiring Person, or any Affiliate or Associate of any
Acquiring Person.


19










 






 


 


 


 


(b)          Immediately upon the action of the Board of Directors (and, in
addition, if there has been a Board Change of Control, upon the approval of the
requisite Shareholders as provided above) electing to redeem the Rights
pursuant to Section 5.1(a) (or, if the resolution of the Board of
Directors electing to redeem the Rights (and, in addition, if there has been a
Board Change of Control, as approved by the requisite Shareholders as provided
above) states that the redemption will not be effective until the occurrence of
a specified future time or event, upon the occurrence of such future time or
event), without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price in cash or securities, as
determined by the Board of Directors (and, in addition, if there has been a
Board Change of Control, as approved by the requisite Shareholders as provided
above).  Promptly after the Rights are redeemed, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice in accordance with Section 5.9.


Section 5.2         Expiration.  The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1, 3.2 or 5.1.



Section 5.3         Issuance of New Rights Certificates.  Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the number or
kind or class of shares of stock purchasable upon exercise of Rights made in
accordance with the provisions of this Agreement.  In addition, in connection
with the issuance or sale of shares of Common Stock by the Company following
the Separation Time and prior to the Expiration Time pursuant to the terms of
securities convertible or redeemable into shares of Common Stock or to options,
in each case issued or granted prior to, and outstanding at, the Separation
Time, the Company shall issue to the holders of such shares of Common Stock,
Rights Certificates representing the appropriate number of Rights in connection
with the issuance or sale of such shares of Common Stock; provided, however,
that, in each case, (i) no such Rights Certificate shall be issued, if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or to the Person to whom such Rights Certificates would be issued, (ii)
no such Rights Certificates shall be issued if, and to the extent that,
appropriate adjustment shall have otherwise been made in lieu of the issuance
thereof, and (iii) the Company shall have no obligation to distribute Rights
Certificates to any Acquiring Person or Affiliate or Associate of an Acquiring
Person or any transferee of any of the foregoing.



20










 






 


 


 


 


Section
5.4        Supplements and Amendments     The Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any holders of
Rights (i) prior to the close of business on the Flip-in Date, in any respect
and (ii) after the close of business on the Flip-in Date, to make any changes
that the Company may deem necessary or desirable and which shall not materially
adversely affect the interests of the holders of Rights generally or in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be inconsistent with any other provisions herein or otherwise
defective; provided, however, that, if there has been a
Board Change of Control, such supplement or amendment shall, in addition to the
due authorization of the Board of Directors, require the approval of the
Shareholders who are the holders of a majority of the outstanding shares of
Common Stock that are not (i) Beneficially Owned by any Acquiring Person, or
(ii) held by any Acquiring Person, or any Affiliate or Associate of any Acquiring
Person.  The Rights Agent shall duly execute and deliver any supplement or
amendment hereto requested by the Company which satisfies the terms of the
preceding sentence.



Section 5.5         Fractional Shares.  If the Company elects not to issue certificates
representing fractional shares upon exercise or redemption of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depositary receipts
issued pursuant to an appropriate agreement between the Company and a
depositary selected by it, providing that each holder of a depositary receipt
shall have all of the rights, privileges and preferences to which such holder
would be entitled as a beneficial owner of such fractional share, or (b) sell
such shares on behalf of the holders of Rights and pay to the Registered holder
of such Rights the appropriate fraction of price per share received upon such
sale.



Section 5.6         Rights of Action.  Subject to the terms of this Agreement (including Section
3.1(b)), rights of action in respect of this Agreement, other than rights
of action vested solely in the Rights Agent, are vested in the respective
holders of the Rights; and any holder of any Rights, without the consent of the
Rights Agent or of the holder of any other Rights, may, on such holder’s own
behalf and for such holders own benefit and the benefit of other holders of
Rights, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder’s
right to exercise such holder’s Rights in the manner provided in such holder’s
Rights Certificate and in this Agreement.  Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.


Section 5.7         Holder of Rights Not Deemed a Shareholder.  No holder, as such, of any Rights shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of shares or
any other securities which may at any time be issuable on the exercise of such
Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
5.8), or to receive dividends or subscription rights, or otherwise, until
such Rights shall have been exercised or exchanged in accordance with the
provisions hereof.



Section 5.8         Notice of Proposed Actions.  In case the Company shall propose after the Separation
Time and prior to the Expiration Time (i) to effect or permit a Flip-over
Transaction or Event or (ii) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Right, in accordance with Section 5.9, a notice of such
proposed action, which shall specify the date on which such Flip-over
Transaction or Event, liquidation, dissolution, or winding up is to take place,
and such notice shall be so given at least 20 Business Days prior to the date
of the taking of such proposed action.



21










 






 


 


 


 



Section 5.9            Notices.  Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights to or on the Company shall be sufficiently given or made if delivered or
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:


Forward Industries, Inc.

1801 Green Road, Suite E

Pompano Beach, FL 33064

Attention:  Chief Executive Officer


Any notice or demand authorized or required by this Agreement
to be given or made by the Company or by the holder of any Rights to or on the
Rights Agent shall be sufficiently given or made if delivered or 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

6201 15th Avenue


Brooklyn,
NY 11219


Attention:
Executive Vice-President


 


Notices or demands authorized or required by this Agreement
to be given or made by the Company or the Rights Agent to or on the holder of
any Rights shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or, prior
to the Separation Time, 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 the holder receives the notice.


Failure to give a notice pursuant to the provisions of this
Agreement shall not affect the validity of any action taken hereunder.



Section 5.10         Suspension of Exercisability.  To the extent that the Company determines in good
faith that some action will or need be taken pursuant to Section 3.1 or
to comply with federal or state securities laws, the Company may suspend the
exercisability of the Rights for a reasonable period in order to take such
action or comply with such laws.  In the event of any such suspension, the
Company shall issue as promptly as practicable a public announcement stating
that the exercisability or exchangeability of the Rights has been temporarily
suspended.  Notice thereof pursuant to Section 5.9 shall not be
required.


Section 5.11         Costs of Enforcement.  The Company agrees that if the Company or any other
Person the securities of which are purchasable upon exercise of Rights fails to
fulfill any of its obligations pursuant to this Agreement, then the Company or
such Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce such
holder’s rights pursuant to any Rights or this Agreement.



22










 






 


 


 


 


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


Section 5.13         Benefits of this Agreement.  Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the holders of the
Rights any legal or equitable right, remedy or claim under this Agreement, and
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the holders of the Rights.


Section 5.14         Determination and Actions by the Board of Directors.  The Board of Directors (with, where specifically
provided for in this Agreement, the approval of the Shareholders who are the
holders of a majority of the outstanding shares of Common Stock that are not
(i) Beneficially Owned by any Acquiring Person, or (ii) held by any Acquiring
Person, or any Affiliate or Associate of any Acquiring Person) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors or to the
Company (with, where specifically provided for in this Agreement, the approval
of the Shareholders who are the holders of a majority of the outstanding shares
of Common Stock that are not (i) Beneficially Owned by any Acquiring Person, or
(ii) held by any Acquiring Person, or any Affiliate or Associate of any
Acquiring Person), or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement.  All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors (with, where specifically
provided for in this Agreement, the approval of the Shareholders who are the
holders of a majority of the outstanding shares of Common Stock that are not
(i) Beneficially Owned by any Acquiring Person, or (ii) held by any Acquiring
Person, or any Affiliate or Associate of any Acquiring Person) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y) not subject any member
of the Board of Directors to any liability to the holders of the Rights.


Section 5.15         Descriptive Headings.  Descriptive headings appear herein for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.



Section 5.16        Governing Law.  This Agreement and each Right issued hereunder,
including the interpretation and construction of this Agreement and such Rights
and any disputes arising out of or in connection with this Agreement or such
Rights, shall be governed by the laws of the State of New York applicable to
contracts made and performed entirely within the State of New York, without
regard to conflicts of laws principles.



Section 5.17        Counterparts.  This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.



23










 






 


 


 


 


Section
5.18         
Severability.  If any term or provision hereof or the application thereof
to any circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.


[remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

 

 


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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first hereinabove written.

 




	
  FORWARD INDUSTRIES, INC.

  
	
  By:

  	
  /s/ Douglas W. Sabra

  
	
  Name:

  	
  Douglas W. Sabra

  
	
  Title:

  	
  President

  
	
  AMERICAN STOCK TRANSFER & TRUST COMPANY LLC

  
	
  By:

  	
  /s/ Paula Caroppoli

  
	
  Name:

  	
  Paula Caroppoli

  
	
  Title:

  	
  Vice-President

  
				






 

 

 

 

 

 

 

 

 

 

 

 

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26










 











 


 


 


 


EXHIBIT A

FORM OF RIGHTS CERTIFICATE


	
  Certificate No. 

  	
  _______ Rights

  



 


THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE,
AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF
ANY OF THE FOREGOING WILL BE VOID.


______________________


Rights Certificate


______________________


FORWARD INDUSTRIES, INC.


This certifies that _______________________, or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions and conditions of the Shareholder Protection Rights Agreement, dated
as of June 9, 2010 (as amended from time to time, the “Rights Agreement”),
by and between Forward Industries, Inc., a New York corporation (the “Company”),
and American Stock Transfer & Trust Company LLC, a New York limited
liability trust company, as Rights Agent (the “Rights Agent,” which term
shall include any successor Rights Agent under the Rights Agreement), to
purchase from the Company at any time after the Separation Time (as such term
is defined in the Rights Agreement) and prior to the Expiration Time (as such
term is defined in the Rights Agreement), one fully paid share of common stock,
par value $0.01 per share (the “Common Stock”), of the Company (subject
to adjustment as provided in the Rights Agreement) at the Exercise Price
referred to below, upon presentation and surrender of this Rights Certificate
with the Form of Election to Exercise duly executed at the principal office of
the Rights Agent in New York, New York.  The Exercise Price shall initially be
$4.00 per Right and shall be subject to adjustment in certain events as
provided in the Rights Agreement.


In certain circumstances described in the Rights Agreement,
the Rights evidenced hereby may entitle the registered holder thereof to
purchase securities of an entity other than the Company or securities or assets
of the Company other than Common Stock, all as provided in the Rights
Agreement.  Under certain circumstances set forth in the Rights Agreement, the
decision to redeem the Rights shall require the approval of the Shareholders
who are the holders of a majority of the outstanding shares of Common Stock
that are not (i) Beneficially Owned by any Acquiring Person, or (ii) held by
any Acquiring Person, or any Affiliate or Associate of any Acquiring Person (as
such terms are defined in the Rights Agreement).


A-1










 






 


 


 


 


This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates.  Copies of the Rights Agreement are on file at the principal
office of the Company and are available without cost upon written request.


This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor evidencing an aggregate number of Rights equal to
the aggregate number of Rights evidenced by the Rights Certificate or Rights
Certificates surrendered.  If this Rights Certificate shall be exercised in
part, the registered holder shall be entitled to receive, upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.


Subject to the provisions of the Rights Agreement, each Right
evidenced by this Certificate may be (a) redeemed by the Company under certain
circumstances, at its option, at a redemption price of $0.001 per Right or (b)
exchanged by the Company under certain circumstances, at its option, for one
share of Common Stock per Right (or, in certain cases, other securities or
assets of the Company), subject in each case to adjustment in certain events as
provided in the Rights Agreement.


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


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


A-2










 






 


 


 


 


 


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


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FORWARD INDUSTRIES, INC.

	   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  	
   

  
	
   

  	
  Countersigned:

  	 

	
   

  	
  AMERICAN STOCK TRANSFER & TRUST COMPANY LLC

   

   

  	 

	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  	
   

  
						



 

A-3










 











 


 


 


 


[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to 

transfer this Rights Certificate.)


	
  FOR VALUE RECEIVED __________________________ sells, assigns
  and transfers unto

                                                                                                                                             
	hereby

  
	
  (Please
  print name and address of transferee)

  



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


	
  Dated:

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  
	
   

  	
  Signature

  (Signature must correspond to name as written upon the face
  of the attached Rights Certificate in every particular, without alteration or
  enlargement or any change whatsoever)

  



Signatures must be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee Medallion program),
pursuant to SEC Rule l7Ad-l5.


(To be completed if true)


The undersigned hereby
represents, for the benefit of all holders of Rights and shares of Common
Stock, that the Rights evidenced by this Rights Certificate are not, and, to
the knowledge of the undersigned, have never been, Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).




	
  Signature

  






NOTICE


In the event the certification set forth above is not
completed in connection with a purported assignment, the Company will deem the
Beneficial Owner of the Rights evidenced by the enclosed Rights Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) or a transferee of any of the foregoing and accordingly will
deem the Rights evidenced by such Rights Certificate to be void and not
transferable or exercisable.


A-4










 






 


 


 


 


[To be attached to each Rights Certificate]

FORM OF ELECTION TO EXERCISE

(To be executed if holder desires to

exercise the Rights Certificate.)


TO: FORWARD INDUSTRIES, INC.


The undersigned hereby irrevocably elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the shares of Common Stock issuable upon the exercise
of such Rights and requests that certificates for such shares be issued in the
name of:


	
  Address:

  	
   

  
	
  Social Security or Other Taxpayer

  	
   

  
	
  Identification Number:

  	
   

  
	
   

  	
   

  
				



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


	
  Address:

  	
   

  
	
  Social Security or Other Taxpayer

  	
   

  
	
  Identification Number:

  	
   

  
				



 


	
  Dated:

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  
	
   

  	
  Signature

  (Signature must correspond to name as written upon the face
  of the attached Rights Certificate in every particular, without alteration or
  enlargement or any change whatsoever)

  
				      



Signatures must be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee Medallion program),
pursuant to SEC Rule 17Ad-15.


A-5










 






 


 


 


 


 


(To be completed if true)


The undersigned hereby
represents, for the benefit of all holders of Rights and shares of Common
Stock, that the Rights evidenced by the attached Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned
by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).




	
  Signature

  






NOTICE


In the event the certification set forth above is not
completed in connection with a purported exercise, the Company will deem the
Beneficial Owner of the Rights evidenced by the attached Rights Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) or a transferee of any of the foregoing and accordingly will
deem the Rights evidenced by such Rights Certificate to be void and not
transferable or exercisable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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