exv10w2



 







Exhibit 10.2




Vestin Realty Trust II, Inc.




and




StockTrans, Inc.




as Rights Agent




RIGHTS AGREEMENT




Dated as of ,                                         2005





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	Section 1.

	 	Certain Definitions
	 	 	1	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	6	 
	Section 3.

	 	Issuance of Rights Certificates
	 	 	6	 
	Section 4.

	 	Form of Rights Certificates
	 	 	8	 
	Section 5.

	 	Countersignature and Registration
	 	 	9	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
	 	 	9	 
	Section 7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	10	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	12	 
	Section 9.

	 	Reservation and Availability of Preferred Stock
	 	 	12	 
	Section 10.

	 	Preferred Stock Record Date
	 	 	14	 
	Section 11.

	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights
	 	 	14	 
	Section 12.

	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	23	 
	Section 13.

	 	Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power
	 	 	23	 
	Section 14.

	 	Fractional Rights and Fractional Shares
	 	 	27	 
	Section 15.

	 	Rights of Action
	 	 	28	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	29	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	29	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	30	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	30	 
	Section 20.

	 	Duties of Rights Agent
	 	 	31	 
	Section 21.

	 	Change of Rights Agent
	 	 	33	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	33	 
	Section 23.

	 	Redemption and Termination
	 	 	34	 
	Section 24.

	 	Notice of Certain Events
	 	 	35	 
	Section 25.

	 	Notices
	 	 	36	 
	Section 26.

	 	Supplements and Amendments
	 	 	36	 
	Section 27.

	 	Successors
	 	 	37	 
	Section 28.

	 	Determinations and Actions by the Board of Directors, etc
	 	 	37	 






i









 






	 	 	 	 	 	 	 
	Section 29.

	 	Benefits of this Agreement
	 	 	37	 
	Section 30.

	 	Severability
	 	 	38	 
	Section 31.

	 	Governing Law
	 	 	38	 
	Section 32.

	 	Counterparts
	 	 	38	 
	Section 33.

	 	Descriptive Headings
	 	 	38	 
	Section 34.

	 	Exchange
	 	 	38	 
	 
	 	 	 	 	 	 
	Exhibit A.

	 	Form of Rights Certificate	 	 	 	 
	Exhibit B.

	 	Form of Summary of Rights	 	 	 	 
	Exhibit C

	 	Form of Articles Supplementary for Series A Preferred Stock	 	 	 	 







ii









 








RIGHTS AGREEMENT




     RIGHTS AGREEMENT, dated as of                     , 2005 (the “Agreement”), between Vestin Realty Trust
II, Inc., Maryland corporation (the “Company”), and StockTrans, Inc., a Delaware
corporation, as rights agent (the “Rights Agent”).



     WHEREAS, effective                     , 2005 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company (the “Board of Directors”) (i) authorized and declared a dividend
of one right (“Right”) for each share of Common Stock, par value $0.0001 per share, of the
Company (the “Company Common Stock”) outstanding at the Close of Business on                     , 2005 (the
“Record Date”), and (ii) authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant hereto) for each share of Company Common Stock issued between the
Record Date and the earlier of the Distribution Date and the Expiration Date and, in certain
circumstances, for each share of Company Common Stock issued after the Distribution Date but before
the Expiration Date; and



     WHEREAS, each Right initially represents the right to purchase, upon the terms and subject to
the conditions hereinafter set forth, one Unit of Series A Preferred Stock;



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



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



          (a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the
shares of Company Common Stock then outstanding. Notwithstanding the foregoing:





(i) an “Acquiring Person” shall not include:




          (A) the Company;




          (B) any Subsidiary of the Company;




          (C) any employee benefit plan maintained by the Company or any of its
Subsidiaries;




          (D) any trustee or fiduciary with respect to such employee benefit plan acting
in such capacity or a trustee or fiduciary holding shares of Company Common Stock
for the purpose of funding any such plan;




          (E) any Person if:




          (1) the Board of Directors determines in good faith that such Person
who would otherwise be an “Acquiring Person” became such inadvertently
(including, without limitation, because (x) such Person was unaware that it
beneficially owned a percentage of Company Common



1









 






Stock that would otherwise cause such Person to be an “Acquiring
Person” or (y) such Person was aware of the extent of its Beneficial
Ownership of Company Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without
any intention of changing or influencing control of the Company;




          (2) such Person does not become the Beneficial Owner of any additional
shares of Company Common Stock after such Person becomes aware that such
Person would be an Acquiring Person (but for the operation of this clause
(F)); and




          (3) such Person as promptly as practicable (as determined in good faith
by the Board of Directors) divested or divests itself of Beneficial
Ownership of a sufficient number of shares of Company Common Stock so that
such Person would no longer be an “Acquiring Person;”



          or





          (F) any Person who becomes the Beneficial Owner of 15% or more of the
then-outstanding shares of Company Common Stock as a result of the acquisition of
shares of Company Common Stock directly from the Company in one or more transactions
approved by a majority of the Board of Directors,



     and




          (ii) no Person shall be deemed an “Acquiring Person” as a result of the acquisition of
shares of Company Common Stock by the Company which, by reducing the number of shares of
Company Common Stock outstanding, increases the proportional number of shares beneficially
owned by such Person; provided, however, that if (x) a Person would become
an Acquiring Person (but for the operation of this subclause (ii)) as a result of the
acquisition of shares of Company Common Stock by the Company and (y) after such share
acquisition by the Company, such Person becomes the Beneficial Owner of any additional
shares of Company Common Stock (other than pursuant to the grant or exercise of an option
under a Company stock option plan or pursuant to a dividend or distribution paid or made by
the Company on the outstanding shares of Company Common Stock or pursuant to a split or
subdivision of the Company Common Stock), then such Person shall be deemed an Acquiring
Person unless, upon becoming the Beneficial Owner of such additional shares, such Person is
the Beneficial Owner of less than 15% of the outstanding shares of Company Common Stock.


Each Person identified in subclauses (A), (B), (C), (D), and (E) of this Section (1)(a) is
individually an “Exempt Person” and collectively “Exempt Persons.”




          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as in effect on the date hereof.




2









 








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





          (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of under Rule
13d-3 of the General Rules and Regulations under the Exchange Act (the “Exchange Act
Regulations”) as in effect on the date hereof, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership”
of or to “beneficially own”, any securities under this subparagraph (i) as a result of an
agreement, arrangement or understanding to vote such securities if such agreement,
arrangement or understanding (A) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the Exchange Act and the Exchange Act Regulations, and (B) is
not reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report);




          (ii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate of such other Person) with which such Person (or any of such Person’s
Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in the proviso to subparagraph (i) of this paragraph (c)) or
disposing of such securities; or




          (iii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise;


provided, however, that under this paragraph (c) a Person shall not be deemed the
“Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own”, any securities





          (A) tendered pursuant to a tender or exchange offer made in accordance with
Exchange Act Regulations by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange,




          (B) that may be issued upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or




          (C) that may be issued upon exercise of Rights from and after the occurrence of
a Triggering Event, which Rights were acquired by such Person or any of such
Person’s Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(c) or Section 22 hereof (the “Original Rights”) or pursuant



3









 






to Section 11(i) hereof in connection with an adjustment made with respect to
any Original Rights; and


further provided, however, that:





          (x) nothing in this paragraph (c) shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, to have “Beneficial Ownership”
of, or to “beneficially own” any securities acquired through such Person’s participation in
good faith in a firm commitment underwriting until the expiration of forty days after the
date of such acquisition,




          (y) no decision reached, or action taken, by the Board of Directors or any committee
thereof shall cause any Person (or any Affiliate or Associate of such Person) who is a
member of the Board of Directors or such committee to be deemed, for the purposes of this
Agreement, to be a Beneficial Owner of any securities beneficially owned by any other Person
(or any Affiliate or Associate of such Person) who is a member of the Board of Directors or
any committee thereof solely by reason of such membership of the Board of Directors or any
committee thereof or participation in the decisions or actions thereof on the part of either
or both of such Persons, and




          (z) no Person who is an officer, director or employee of an Exempt Person shall be
deemed, solely by reason of such Person’s status or authority as such, to be the “Beneficial
Owner” of, to have “Beneficial Ownership” of, or to “beneficially own” any securities that
are “beneficially owned” (as defined in this paragraph (c)), including, without limitation,
in a fiduciary capacity, by an Exempt Person or by any other such officer, director or
employee of an Exempt Person.



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




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




          (f) “Common Stock” of any Person other than the Company shall mean the capital stock
of such Person with the greatest voting power, or, if such Person shall have no capital stock, the
equity securities or other equity interest having power to control or direct the management of such
Person.




          (g) “Company” has the meaning given it in the first paragraph of this Agreement, and
also means a Principal Party to the extent provided in Section 13(a).




          (h) “Person” shall mean any individual, partnership, firm, limited liability company,
corporation, association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act as in effect on
the date hereof.




4









 








          (i) “Preferred Stock” shall mean the Series A Preferred Stock, par value $0.0001 per
share, of the Company having the voting powers, designation, preferences and relative,
participating, optional or other special rights and qualifications, limitations and restrictions
described in the Articles Supplementary set forth as Exhibit C hereto and as amended from
time to time.




          (j) “Stock Acquisition Date” shall mean the first date of public announcement
(including, without limitation, the filing of any report, or any amendment to any report, pursuant
to Section 13(d) of the Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person that an Acquiring Person has become such; provided, however, that
if such Person is determined not to have become an Acquiring Person pursuant to Section 1(a)
hereof, then no Stock Acquisition Date shall be deemed to have occurred.




          (k) “Subsidiary” shall mean, with reference to any Person, any other Person of which
an amount of voting securities or equity interests sufficient to elect at least a majority of the
directors or equivalent governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or any other Person otherwise controlled by such first-mentioned
Person.




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




          In addition, the following terms are defined in the Sections indicated below:




	 	 	 
	Defined Term	 	Section Number
	Adjustment Shares
	 	11(a)(ii)
	common stock equivalents
	 	11(a)(iii)
	Company Common Stock
	 	Whereas clause
	current market price
	 	11(d)
	Current Value
	 	11(a)(iii)
	Distribution Date
	 	3(a)
	Equivalent Preferred Stock
	 	11(b)
	Exchange Act
	 	1(b)
	Exchange Act Regulations
	 	1(c)
	Exchange Ratio
	 	34(a)
	Exempt Person
	 	1(a)
	Expiration Date
	 	7(a)
	Final Expiration Date
	 	7(a)
	Nasdaq
	 	11(d)(i)
	Original Rights
	 	1(c)
	Purchase Price
	 	7(b)
	Record Date
	 	Whereas clause
	Redemption Price
	 	23(a)
	Registered Common Stock
	 	13(b)(ii)
	Registration Date
	 	9(c)
	Registration Statement
	 	9(c)
	Right
	 	Whereas clause
	Rights Certificates
	 	3(a)
	Rights Dividend Declaration Date
	 	Whereas clause
	Section 11(a)(ii) Event
	 	11(a)(ii)






5









 






	 	 	 
	Defined Term	 	Section Number
	Section 11(a)(iii) Trigger Date
	 	11(a)(iii)
	Section 13 Event
	 	13(a)
	Securities Act
	 	9(c)
	Spread
	 	11(a)(iii)
	Summary of Rights
	 	3(b)
	Trading Day
	 	11(d)(i)
	Unit
	 	7(b)






     Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights
agents as it may deem necessary or desirable. The Rights Agent shall have no duty to supervise,
and in no event shall be liable for, the acts or omissions of any such co-rights agent.



     Section 3. Issuance of Rights Certificates.



          (a) Until the earlier of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date, and (ii) the Close of Business on the tenth Business Day (or such later date as
may be determined by action of a majority of the Board of Directors prior to the occurrence of a
Section 11(a)(ii) Event) after the date that a tender or exchange offer by any Person (other than
an Exempt Person) is first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation thereof such Person would be
an Acquiring Person (including, in the case of both clause (i) and (ii), any such date which is
after the date of this Agreement and prior to the issuance of the Rights) (the earlier of (i) and
(ii) above being the “Distribution Date”):





          (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for shares of Company Common Stock registered in the names of
the holders of shares of Company Common Stock as of and subsequent to the Record Date (which
certificates for shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and




          (y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock including a transfer to the Company;


provided, however, that if a tender or exchange offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender
or exchange offer. As soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of shares of Company Common
Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, one or more rights certificates, in substantially the form of
Exhibit A hereto (the “Rights Certificates”), evidencing one Right for each share
of Company Common Stock so held, subject to adjustment as provided herein.




6









 








     In the event that an adjustment in the number of Rights per share of Company Common Stock has
been made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company may make the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.



          (b) As promptly as practicable following the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Stock, in substantially the form attached hereto as
Exhibit B (the “Summary of Rights”), by first-class, postage prepaid mail, to each
record holder of shares of Company Common Stock as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company. With respect to certificates for
Company Common Stock outstanding as of the Record Date or issued subsequent to the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date, until the Distribution Date
the Rights will be evidenced by such certificates registered in the names of the holders thereof.
Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for transfer of
any such certificate for Company Common Stock outstanding as of the Record Date shall also
constitute the transfer of the Rights associated with the Company Common Stock represented thereby.




          (c) Rights shall, without any further action, be issued in respect of all shares of Company
Common Stock which are issued (including any shares of Company Common Stock held in treasury) after
the Record Date but prior to the earlier of the Distribution Date and the Expiration Date. In
addition, Rights shall be issued with respect to all shares of Company Common Stock described in
the second sentence of Section 22 hereof, subject to the provisions thereof. Certificates
representing such shares of Company Common Stock issued after the Record Date shall bear the
following legend:





This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Vestin Realty Trust II, Inc (the “Company”) and
StockTrans, Inc. (the “Rights Agent”) dated as of                     , 2005, as amended from time
to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the office of the Rights Agent. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt of a written request therefor. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.


With respect to certificates representing shares of Company Common Stock that bear the foregoing
legend, until the earlier of the Distribution Date and the Expiration Date, the Rights


7









 






associated with the shares of Company Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of the shares of Company Common Stock
shall also be the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with the shares of Company
Common Stock represented by such certificates.




          (d) In the event that the Company purchases or acquires any shares of Company Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated with such shares of
Company Common Stock shall be deemed canceled and returned so that the Company shall not be
entitled to exercise any Rights associated with the shares of Company Common Stock that are no
longer outstanding.




          (e) Notwithstanding anything to the contrary contained herein, shares of Company Common Stock
and Rights (and any securities issuable on their exercise) may be issued and transferred by
book-entry and not represented by physical certificates. Where shares of Company Common Stock and
Rights (and any securities issuable on their exercise) are held in uncertificated form, the Company
and the Rights Agent shall cooperate in all respects to give effect to the intent of the provisions
contained herein.




     Section 4. Form of Rights Certificates.



          (a) The Rights Certificates (and the forms of election to purchase and of assignment and the
certificates to be printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit A hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time be listed or to
conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or in the case of Rights
issued with respect to Common Stock issued by the Company after the Record Date, as of the date of
issuance of such Common Stock) and on their face shall entitle the holders thereof to purchase such
number of Units of Preferred Stock as shall be set forth therein at the price set forth therein;
provided, however, that the amount and type of securities, cash or other assets
that may be acquired upon the exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.




          (b) Any Rights Certificate that represents Rights which are null and void pursuant to Section
7(e) of this Agreement and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:





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



8









 




The provisions of Section 7(e) hereof shall be operative whether or not the foregoing legend is
contained on any such Right Certificate.




     Section 5. Countersignature and Registration.



          (a) Any Rights Certificates shall be executed on behalf of the Company by its Chairman, its
Chief Executive Officer, its President or one of its Vice Presidents and shall be attested by its
Secretary, Treasurer or one of its Assistant Secretaries and shall have affixed thereto the
Company’s seal (if any) or a facsimile thereof. The signature of any of these officers on the
Rights Certificates may be manual or facsimile. Rights Certificates bearing the manual or
facsimile signatures of the individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the countersignature of such Rights Certificates or did not hold such offices
at the date of such Rights Certificates. No Rights Certificate shall be entitled to any benefit
under this Agreement or be valid for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual or facsimile signature of an
authorized signatory, and such countersignature upon any Rights Certificate shall be conclusive
evidence, and the only evidence, that such Rights Certificate has been duly countersigned as
required hereunder.




          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such books shall show the
name and address of each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.




	 	 	 	 	 
	 

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






          (a) Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder to purchase a like
number of Units of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder, in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and executed the certificate set forth
in the form of assignment on the reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) of
the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to the provisions of
Section 4, Section 7(e), Section 14 and Section 34 hereof,




9









 







countersign and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.




          (b) Subject to Section 7(e) hereof, if a Rights Certificate shall be mutilated, lost, stolen
or destroyed, upon request by the registered holder of the Rights represented thereby and upon
payment to the Company and the Rights Agent of all reasonable expenses incident thereto, there
shall be issued, in exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft or destruction of
such Rights Certificate and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.




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



          (a) Prior to the earlier of (i) the Close of Business on the tenth anniversary hereof (the
“Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, and (iii) the time at which the Rights are exchanged as provided in Section 34
hereof, at which time the Rights are deemed terminated (the earlier of (i), (ii), and (iii) being
the “Expiration Date”), the registered holder of any Rights Certificate may, subject to the
other provisions hereof, including without limitation Sections 7(e), 7(f), 9(c), 11(a) and 23
hereof, exercise the Rights evidenced thereby, in whole or in part, at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price
(as hereinafter defined) for the number of Units of Preferred Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) for which such surrendered
Rights are then exercisable.




          (b) The purchase price for each one one-thousandth of a share (each such one one-thousandth of
a share being a “Unit”) of Preferred Stock upon exercise of Rights shall be Ten Dollars
($10.00), subject to adjustment from time to time as provided in Sections 11 and 13(a) hereof (such
purchase price, as so adjusted, being the “Purchase Price”), and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.




          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to be purchased
thereby as set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly:




10









 






          (i) (A) requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent for the Preferred Stock) a certificate or
certificates for the number of Units of Preferred Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of Units of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing interests in such number of Units of
Preferred Stock as are to be purchased (in which case certificates for the Units of
Preferred Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to comply with
such request,




          (ii) after receipt of such certificates or depositary receipts, cause the same to be
delivered to or, upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,




          (iii) requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, and




          (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate.


In the event that the Company is obligated to issue Company Common Stock or other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such Company Common Stock, other securities, cash
and/or other property are available for distribution by the Rights Agent, if and when appropriate.
The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified or bank check or money order payable to the order of
the Company.




          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or names as may be designated by such holder,
subject to the provisions of Sections 6 and 14 hereof.




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of any Section 11(a)(ii) Event, any Rights beneficially owned by:





          (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,




          (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which
becomes a transferee after the Acquiring Person becomes such, or




          (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) which
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether



11









 






or not for consideration) from the Acquiring Person (or any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or
Affiliate) or to any Person with whom the Acquiring Person (or such Associate or Affiliate)
has any continuing agreement, arrangement or understanding regarding the transferred Rights,
shares of Company Common Stock or the Company or (B) a transfer which the Board of Directors
has determined to be part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e),


shall be null and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights or any other Person as a result of the Company’s failure to make or delay in making any
determinations with respect to an Acquiring Person or its Affiliates or Associates or any
transferee or any of them hereunder.




          (f) Notwithstanding anything in this Agreement or any Rights Certificate to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to
a registered holder upon the occurrence of any purported exercise by such registered holder unless
such registered holder shall have (i) completed and executed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate surrendered for such
exercise, (ii) not indicated an affirmative response to clause 1 or 2 thereof, and (iii) provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) of
the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the
Company shall reasonably request.




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



     Section 9. Reservation and Availability of Preferred Stock.



          (a) The Company shall, at all times prior to the occurrence of a Section 11(a)(ii) Event,
cause to be reserved and kept available, out of its authorized and unissued shares of preferred
stock or its authorized and issued shares of preferred stock held in its treasury, and, after the
occurrence of a Section 11(a)(ii) Event, to the extent reasonably practical, cause to be reserved
and kept available, out of its authorized but unissued shares of preferred stock, Company Common
Stock and/or other securities or its authorized and issued




12









 







shares held in its treasury, the number of shares of Preferred Stock (and, following the
occurrence of a Section 11(a)(ii) Event, Company Common Stock and/or other securities) that, as
provided in this Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights. Upon the occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock (or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make appropriate increases in
the number of shares so reserved to the extent reasonably practicable.




          (b) If the shares of Preferred Stock (and, following the occurrence of a Section 11(a)(ii)
Event, Company Common Stock and/or other securities) to be issued and delivered upon the exercise
of the Rights may be listed on any national securities exchange or automated quotation system, the
Company shall use its best efforts to cause, from and after the time that the Rights become
exercisable, all securities reserved for such issuance to be listed on such exchange or quotation
system upon official notice of issuance upon such exercise.




          (c) The Company shall use its reasonable best efforts:





          (i) as soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event and a determination by the Company in accordance with Section
11(a)(iii) hereof of the consideration to be delivered by the Company upon exercise of the
Rights or, if so required by law, as soon as practicable following the Distribution Date
(such date being the “Registration Date”), to file a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the “Securities
Act”), with respect to the securities that may be acquired upon exercise of the Rights
(the “Registration Statement”),




          (ii) to cause the Registration Statement to become effective as soon as practicable
after such filing,




          (iii) to cause the Registration Statement to continue to be effective (and to include a
prospectus complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities covered by the
Registration Statement, and (B) the Expiration Date, and




          (iv) to take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the Rights
complies with any applicable state securities or “blue sky” laws. 


The Company may temporarily suspend, for a period of time not to exceed one hundred twenty (120)
days after the Registration Date, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no longer
in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.




13









 








          (d) The Company shall take all such action as may be necessary to ensure that all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, any other securities that may
be delivered upon exercise of Rights) shall be, at the time of delivery of the certificates or
depositary receipts for such securities (subject to payment of the Purchase Price), duly and
validly authorized and issued and fully paid and nonassessable.




          (e) The Company shall pay any documentary, stamp or other tax or charge imposed in connection
with the issuance or delivery of the Rights Certificates or of any Preferred Stock (or any other
securities or assets, as the case may be) upon the exercise of Rights; provided,
however, the Company shall not be required to pay any such tax or charge imposed in
connection with the issuance or delivery of Units of Preferred Stock, or any certificates or
depositary receipts for such Units of Preferred Stock (or, following the occurrence of a Triggering
Event, any other securities, cash or assets, as the case may be) to any Person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered for exercise. The
Company shall not be required to issue or deliver any certificates or depositary receipts for Units
of Preferred Stock (or, following the occurrence of a Triggering Event, any other securities, cash
or assets, as the case may be) to, or in a name other than that of, the registered holder upon the
exercise of any Rights until any such tax or charge shall have been paid (any such tax or charge
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax or charge is due.




     Section 10. Preferred Stock Record Date. Each Person in whose name any certificate or
depositary receipt for Units of Preferred Stock (or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of
the Units of Preferred Stock (or other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or other securities, as the case may be) transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such securities on, and
such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or
other securities) transfer books of the Company are open; further provided,
however, that if delivery of Units of Preferred Stock (or other securities, as the case may
be) is delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have become the
record holders of such Units of Preferred Stock (or other securities) only when such Units (or
other securities) first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.



     Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of securities purchasable upon exercise of
each Right and the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.



14









 






     (a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into
a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided for herein, including this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or other capital stock, as the case may be,
issuable on such date upon exercise of the Rights, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred
Stock or other capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the transfer books of the Company were
still open, such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.




          (ii) In the event any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person, other than pursuant to any transaction set forth in
Section 13(a) hereof, then, immediately upon the occurrence of such event (a “Section
11(a)(ii) Event”), each holder of a Right (except as otherwise provided herein,
including Section 7(e) hereof) shall thereafter have the right to receive, upon exercise of
such Right at the then-current Purchase Price in accordance with the terms of this
Agreement, in lieu of the number of Units of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event (whether
or not such Right was then exercisable), such number of Units of Preferred Stock as shall
equal the result obtained by:




          (A) multiplying the then-current Purchase Price by the number of Units of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (whether or not such Right was then
exercisable) (such product thereafter being, for all purposes of this Agreement,
other than Section 13 hereof, the “Purchase Price”), and




          (B) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per Unit of Preferred Stock on the date of such
first occurrence




(such Units of Preferred Stock being the “Adjustment Shares”); provided,
however, that the Purchase Price and the number of Units of Preferred Stock so
receivable upon exercise of a Right shall, following the Section 11(a)(ii) Event, be subject
to further adjustment as appropriate in accordance with this Section 11. Notwithstanding
the



15









 






foregoing, the Rights shall not be exercisable until the time period during which the Rights
may be redeemed pursuant to Section 23 hereof shall have expired. From and after the
occurrence of a Section 13(a) Event, any Rights that have not theretofore been exercised
pursuant to this Section 11(a)(ii) shall thereafter be exercisable only in connection with
Section 13 and not pursuant to this Section 11(a)(ii).




          (iii) The Company, by the vote of a majority of the Board of Directors, may at its
option substitute for a Unit of Preferred Stock issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii), shares of Company Common Stock or fractions
thereof having a current market price (as determined by Section 11(d) hereof) equal to the
current market price of a Unit of Preferred Stock on the date of the Section 11(a)(ii)
Event. In the event that the number of shares of Preferred Stock (or, if the Company shall
have determined to substitute shares of Company Common Stock for Units of Preferred Stock
pursuant to the preceding sentence, Company Common Stock)  which are authorized
by the Company’s Certificate of Incorporation, but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights, is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall, to the extent permitted by applicable law:




          (A) determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the “Current Value”) over (2) the Purchase
Price (such excess being the “Spread”), and




          (B) with respect to each Right (other than Rights which have become void
pursuant to Section 7(e)), make adequate provision to substitute, in whole or in
part, for such Adjustment Shares, upon exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
shares of Company Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock (such other
shares being “common stock equivalents”)), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value which, when added to the value of the Units of Preferred Stock
actually issued upon exercise of such Right, shall have an aggregate value equal to
the Current Value (less the amount of any reduction in such Purchase Price), where
such aggregate value has been determined by a majority of the Board of Directors,
after receiving advice from a nationally recognized investment banking firm;




provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (such thirty day period, as
it may be extended hereunder, being referred to herein as the “Substitution Period,”
and the later of (x) and (y) being referred to herein as the “Section 11(a)(iii) Trigger
Date”), then, subject to Section 34 hereof, the Company shall be obligated (to the
extent permitted by applicable law) to deliver, upon the surrender for exercise of a Right
and without



16









 






requiring payment of the Purchase Price, Units of Preferred Stock (to the extent available)
and then, if necessary, shares (or fractions of shares, at the discretion of the Board of
Directors) of Company Common Stock and cash, or a combination thereof, which Units of
Preferred Stock, shares (or fractions of shares) of Company Common Stock and/or cash shall
have an aggregate value equal to the Spread. If a majority of the Board of Directors
determines in good faith that it is likely that sufficient additional shares of Preferred
Stock or Company Common Stock could be authorized for issuance upon exercise in full of the
Rights, then the Substitution Period may be extended to the extent necessary, but not more
than ninety days after the Section 11(a)(iii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares.




     To the extent that the Company determines that some action need be taken pursuant to
the second and/or third sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made pursuant to such
second sentence and to determine the value thereof. If any such suspension occurs, the
Company shall issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at the time such suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value of a Unit of
Preferred Stock or share of Company Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Unit of Preferred Stock or share of Company
Common Stock, as the case may be, on the Section 11(a)(iii) Trigger Date and the value of
any common stock equivalent shall be deemed to have the same value as a Unit of Preferred
Stock on such date.



          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five calendar days after such record date) shares of Preferred Stock
(or shares having substantially the same rights, privileges and preferences as shares of Preferred
Stock (“Equivalent Preferred Stock”)) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or per share of Equivalent
Preferred Stock (or having a conversion price per share, if a security convertible into Preferred
Stock or Equivalent Preferred Stock) less than the current market price (as determined pursuant to
Section l1(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying:





          (i) the Purchase Price in effect immediately prior to such record date, by




          (ii) a fraction, (A) the numerator of which shall be the sum of the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of Preferred Stock
and/or Equivalent Preferred Stock so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would



17









 






purchase at such current market price, and (B) the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be offered are
initially convertible).


In case such subscription price may be paid by delivery of consideration, part or all of which may
be in a form other than cash, the value of such consideration shall be as determined in good faith
by a majority of the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. Shares of Preferred Stock
owned by or held for the account of the Company or any Subsidiary shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made successively whenever such
a record date is fixed, and in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.




          (c) In case the Company shall fix a record date for a distribution to all holders of shares of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular periodic cash dividend paid out of funds legally available therefor), assets
(other than a dividend payable in shares of Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights, options or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying:





          (i) the Purchase Price in effect immediately prior to such record date, by




          (ii) a fraction, (A) the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes) of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights, options or warrants distributable in
respect of a share of Preferred Stock and (B) the denominator of which shall be such current
market price per share of Preferred Stock.


Such adjustments shall be made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had not been fixed.





     (d) (i) For the purpose of any computation hereunder, the “current market
price” per share of Company Common Stock or Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such shares for the thirty
consecutive Trading Days immediately prior to such date; provided, however,
if prior to the expiration of such requisite thirty Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such shares or securities



18









 






convertible into such shares (other than the Rights), or (B) any subdivision,
combination or reclassification of such shares, and the ex-dividend date for such dividend
or distribution or the record date for such subdivision, combination or reclassification, as
the case may be, shall not have occurred prior to the commencement of the requisite thirty
Trading Day period, then, and in each such case, the “current market price” shall be
properly adjusted to take into account such event. The closing price for each day shall be:




          (x) the last sale price, regular way, or, in the case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which
such shares are listed or admitted to trading, or




          (y) if such shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq National Market (“Nasdaq”) or such other system then in use, or




          (z) if on any such date such shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by a majority of the Board of
Directors.




If on any such date no market maker is making a market in such shares, or if such shares are
not publicly held or so listed or traded, “current market price” per share shall
mean the fair value per share as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. The term “Trading Day” shall mean, if
such shares are listed or admitted to trading on any national securities exchange, a day on
which the principal national securities exchange on which such shares are listed or admitted
to trading is open for the transaction of business or, if such shares are not so listed or
admitted, a Business Day.




          (ii) For the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth for Company
Common Stock in clause (i) of this Section 11(d) (other than the penultimate sentence
thereof). If the current market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held or listed or traded
in a manner described in clause (i) of this Section 11(d), the “current market
price” per share of Preferred Stock shall be conclusively deemed to be an amount equal
to (A) 1000 (as such amount may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to Company Common Stock occurring after
the date of this Agreement) multiplied by (B) the current market price per share of Company
Common Stock. If neither Company Common Stock nor Preferred Stock is publicly held or so
listed or traded, “current market price” per share of the Preferred Stock shall mean
the fair value per share as determined in good



19









 






faith by a majority of the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all purposes. For
all purposes of this Agreement, the “current market price” of a Unit of Preferred
Stock shall be equal to (A) the current market price of one share of Preferred Stock divided
by (B) 1000.



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




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




          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of Units of Preferred Stock (or other securities or amount of cash or combination thereof)
that may be acquired from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.




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




          (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights, in lieu of any adjustment in the number of Units of Preferred Stock
that may be acquired upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of Units of Preferred Stock
for which a Right was exercisable immediately prior to such




20









 




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




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




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the par or stated value, if any, of the number of Units of Preferred Stock or other shares of
capital stock issuable upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Company may validly and
legally issue such fully paid and nonassessable number of Units of Preferred Stock or other shares
at such adjusted Purchase Price.




          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date of that number of Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder’s right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.




21









 





          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in their good faith judgment a majority of the Board
of Directors shall determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock, shall not be taxable to such holders or
shall reduce the taxes payable by such holders.




          (n) The Company shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets, cash flow or earning power aggregating more than 50% of the assets, cash flow
or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its wholly owned Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if:





     (x) at the time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, or




     (y) prior to, simultaneously with or immediately after such consolidation,
merger, sale or transfer, the Person which constitutes, or would constitute, the
“Principal Party” for purposes of Section 13(a) hereof shall have
distributed or otherwise transferred to its stockholders or other persons holding an
equity interest in such Person Rights previously owned by such Person or any of its
Affiliates and Associates.



          (o) After the Distribution Date, the Company shall not, except as permitted by Section 23,
Section 26 or Section 34 hereof, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.




          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Company Common Stock payable in shares of Company
Common Stock, (ii) subdivide the outstanding shares of Company Common Stock or (iii) combine the
outstanding shares of Company Common Stock into a smaller number of shares, the number of Rights
associated with each share of Company Common Stock then outstanding, or issued or delivered
thereafter prior to the Distribution Date or in accordance with Section 22 hereof, shall be
proportionately adjusted so that the number of




22









 




Rights thereafter associated with each share of Company Common Stock following any such event
shall equal the result obtained by multiplying:





     (x) the number of Rights associated with each share of Company Common Stock
immediately prior to such event, by




     (y) a fraction, (A) the numerator of which shall be the total number of shares
of Company Common Stock outstanding immediately prior to the occurrence of the event
and (B) the denominator of which shall be the total number of shares of Company
Common Stock outstanding immediately following the occurrence of such event.



     Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Company Common Stock) in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of such adjustment or the force or
effect of the requirement for such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.



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



          (a) In the event that, following the first occurrence of a Section 11(a)(ii) Event, directly
or indirectly, either:





          (x) the Company shall consolidate with, or merge with and into, any other Person (other
than a wholly owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving corporation of such
consolidation or merger,




          (y) any Person (other than a wholly owned Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Company Common Stock shall be changed into or exchanged for stock
or other securities of the Company or any other Person or cash or any other property, or




          (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) to any Person or Persons (other than the Company or any of
its wholly owned Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), in one or more transactions, assets, cash flow



23









 






or earning power aggregating 50% or more of the assets, cash flow or earning power of
the Company and its Subsidiaries (taken as a whole)


(any such event being a “Section 13 Event”), then, and in each such case, proper provision
shall be made so that:





          (i) each holder of a Right (other than Rights which have become void as provided in
Section 7(e) hereof) shall thereafter have the right to receive, upon the exercise thereof
at the then-current Purchase Price, in accordance with this Agreement and in lieu of Units
of Preferred Stock or shares of Company Common Stock, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party, which shares shall not be subject to any liens, encumbrances, rights of
call or first refusal, transfer restrictions or other adverse claims, as shall be equal to
the result obtained by:




          (A) multiplying (x) the then-current Purchase Price by (y) the number of Units
of Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying
(x) the number of such Units for which a Right was exercisable hereunder
immediately prior to such first occurrence of a Section 11(a)(ii) Event by (y) the
Purchase Price in effect immediately prior to such first occurrence), and




          (B) dividing that product (which, following the first occurrence of a Section
13 Event, shall be the “Purchase Price” for all purposes of this Agreement)
by 50% of the current market price (determined pursuant to Section 11(d) hereof) per
share of the Common Stock of such Principal Party on the date of consummation of
such Section 13 Event;




provided, however, that the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the occurrence of
such Section 13 Event;




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




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




          (iv) such Principal Party shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the



24









 






consummation of any such transaction as may be necessary to assure that the provisions
of this Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the exercise of the
Rights;




          (v) such Principal Party shall take such steps as may be necessary to assure that, upon
the subsequent occurrence of any merger, consolidation, sale of all or substantially all of
the assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase
Price, such cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property; and




          (vi) the provisions of Section 11(a)(ii) hereof shall be of no further effect following
the first occurrence of any Section 13 Event.




(b) “Principal Party” shall mean:




          (i) in the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a) hereof, (A) the Person that is the issuer of any securities into which
shares of Company Common Stock are converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of Common Stock that has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof) and (B) if no securities
are so issued, the Person that is the other party to such merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d) hereof); and




          (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a) hereof, the Person that is the party receiving the largest portion of the
assets, cash flow or earning power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or transactions receives the same
portion of the assets, cash flow or earning power transferred pursuant to such transaction
or transactions or if the Person receiving the largest portion of the assets, cash flow or
earning power cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section 11(d) hereof);


provided, however, that in any such case:





          (1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve-month period registered under



25









 





Section 12 of the Exchange Act (“Registered Common Stock”) or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another Person that
has Registered Common Stock outstanding, “Principal Party” shall refer to such other
Person;




          (2) if the Common Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another Person but
is not a direct or indirect Subsidiary of another Person which has Registered Common Stock
outstanding, “Principal Party” shall refer to the ultimate parent entity of such
first-mentioned Person;




          (3) if such Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price (determined pursuant to Section
11(d) hereof); and




          (4) if such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have Registered Common Stock outstanding, “Principal
Party” shall refer to whichever ultimate parent entity is the corporation having the
greatest stockholders equity or, if no such ultimate parent entity is a corporation, shall
refer to whichever ultimate parent entity is the entity having the greatest net assets.



          (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13, and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that the
Principal Party, as soon as practicable after the date of such Section 13 Event, at its own
expense, shall:





          (i) (A) file on an appropriate form a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of the Rights, (B)
use its best efforts to cause such registration statement to become effective as soon as
practicable after filing and remain effective (and to include a prospectus complying with
the requirements of the Securities Act) until the Expiration Date, and (C) take all such
action as may be required to enable the Principal Party to issue the securities purchasable
upon exercise of the Rights and to assure that any acquisition of such securities upon the
exercise of the Rights complies with any applicable state securities or “blue sky” laws,
including but not limited to the registration or qualification of such securities under all
requisite securities and “blue sky” laws of the various states and the listing of such
securities on such exchanges and trading markets as may be necessary or appropriate; and




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



26









 





          (d) In case the Principal Party which is to be a party to a transaction referred to in this
Section 13 has a provision in any of its authorized securities or in its certificate of
incorporation or by-laws or other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section 13, shares of Common
Stock or common stock equivalents of such Principal Party at less than the then current market
price per share (determined pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock or common stock equivalents of such Principal Party at less than
such then current market price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection with the issuance
of the Common Stock of such Principal Party pursuant to the provisions of this Section 13; then, in
such event, the Company shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.




          (e) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall occur, any
Rights which theretofore have not been exercised pursuant to Section 11(a)(ii) shall thereafter be
exercisable only in the manner and for the securities described in Section 13(a).




     Section 14. Fractional Rights and Fractional Shares.



          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of issuing such fractional Rights, there shall be paid to the
Persons to which such fractional Rights would otherwise be issuable an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this Section 14(a), the market
value of a whole Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be:





          (x) the last sale price, regular way, or, in the case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or




          (y) if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such other system then
in use, or




          (z) if on any such date the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a




27









 







professional market maker making a market in the Rights selected by a majority of the
Board of Directors.


If on any such date no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by a majority of the Board of Directors shall be
used and such determination shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence such fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share
of Preferred Stock); provided, however, that in lieu of fractions of shares of
Preferred Stock which are integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may provide for the issuance of depositary receipts pursuant to Section 7(c) hereof.
In lieu of such fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to the same fraction
of the then current market price of a share of Preferred Stock on the day of exercise, determined
in accordance with Section 11(d) hereof.




          (c) The Company shall not be required to issue fractions of shares of Company Common Stock
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Company Common Stock. In lieu of such fractional shares of Company Common Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current market value of one (1)
share of Company Common Stock. For purposes of this Section 14(c), the current market value of one
share of Company Common Stock shall be the closing price per share of Company Common Stock (as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to the date of
such exercise.




          (d) The holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.




     Section 15. Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of certificates representing shares of Company Common Stock); and any
registered holder of a Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Company Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Company Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced
by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders




28









 







of Rights, it is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.




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



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




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




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




          (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree, judgment or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree, judgment or
ruling lifted or otherwise overturned as promptly as practicable.




     Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of shares of Preferred Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or, except as provided in Section 24 hereof,
to receive notice of meetings or other actions affecting stockholders, or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof. This



29









 




Section 17 shall also apply to holders, as such, of Rights prior to the issuance of Rights
Certificates.




     Section 18. Concerning the Rights Agent.



          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
out-of-pocket expenses, including reasonable fees and disbursements of its counsel, incurred in
connection with the execution and administration of this Agreement and the exercise and performance
of its duties hereunder.




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




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



          (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any document or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.




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




30









 








     Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:



          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion. The Rights Agent shall be entitled to employ such legal counsel and other experts as
the Rights Agent may deem necessary to advise the Rights Agent properly in connection with the
Rights Agent’s duties hereunder, may rely upon the advice of such counsel, may pay such counsel
reasonable compensation therefore, and shall be reimbursed by the Company for any such expenses.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of “current market price”) be proved or
established by the Company prior to taking or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be specified herein) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent;
provided, however, that so long as any Person is an Acquiring Person hereunder,
such certificate shall be signed and delivered by a majority of the Board of Directors; and such
certificate shall be full authorization to the Rights Agent for any action taken or omitted in good
faith by it under the provisions of this Agreement in reliance upon such certificate.




          (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or
willful misconduct. The Company agrees to indemnify and hold harmless the Rights Agent from any
and all claims, liabilities, costs or expenses, including reasonable counsel fees for defense
thereof, in any way arising from or relating to the duties or performance of the Rights Agent
hereunder other than any such claim, liability, cost or expense to the extent the same shall (a)
have been tax obligations in connection with Rights Agent’s fee hereunder, or (b) have been
determined by final, non-appealable judgment of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Rights Agent. Except as otherwise
specifically provided in this Agreement, the Rights Agent shall not have any liability under, nor
duty to inquire into, the terms and provisions of any agreement or instrument, other than this
Agreement. The duties of the Rights Agent are ministerial in nature, and the Rights Agent shall not
incur any liability whatsoever, and shall be fully protected by the other parties to this Agreement
against any claims, charges, suits, etc., including reasonable legal expenses, arising from
anything which the Rights Agent may do or refrain from doing in connection with this Agreement
other than for its own gross negligence, bad faith or willful misconduct; provided, however, that
Rights Agent’s aggregate liability during any term of this Agreement with respect to, arising from,
or arising in connection with this Agreement, or from all services provided or omitted to be
provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and
shall not exceed, the amounts paid hereunder by the Company to Rights Agent as fees and charges,
but not including reimbursable expenses.




31









 








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




          (e) The Rights Agent shall not be responsible for the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights Agent) or for the
validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or failure by the Company to satisfy
conditions contained in this Agreement or in any Rights Certificate; nor shall it be responsible
for any adjustment required under the provisions of Section 11 or Section 13 hereof or for the
manner, method or amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or any other securities to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Preferred Stock or any other securities will,
when so issued, be validly authorized and issued, fully paid and nonassessable.




          (f) The Company shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further acts, instruments and assurances as may
reasonably be required by the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.




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




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




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents.




          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties or in the
exercise of its rights hereunder if the Rights Agent shall have reasonable grounds




32









 







for believing that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.




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




     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon thirty days’ prior notice in
writing mailed to the Company and to each transfer agent for the Company Common Stock or Preferred
Stock, by registered or certified mail, and, if such resignation occurs after the Distribution
Date, to the holders of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty days’ prior notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent for the
Company Common Stock or Preferred Stock, by registered or certified mail, and, if such removal
occurs after the Distribution Date, to the holders of the Rights Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or any state of the
United States in good standing, shall be authorized under applicable laws to exercise corporate
trust or stock transfer or stockholder service powers and shall be subject to supervision or
examination by federal or state authorities and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a corporation
described in clause (a). After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Company Common Stock or Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent.



     Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or the Rights to the contrary, the Company may, at its option, issue



33









 




new Rights Certificates evidencing Rights in such form as may be approved by a majority of the
Board of Directors to reflect any adjustment or change made in accordance with the provisions of
this Agreement in the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates.




     In addition, in connection with the issuance or sale of shares of Company Common Stock
following the Distribution Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Company Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary
or appropriate by a majority of the Board of Directors, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.



     Section 23. Redemption and Termination.



          (a) Subject to Section 30 hereof, the Company may, at its option, by action of a majority of
the Board of Directors, at any time prior to the earlier of (i) the Close of Business on the tenth
Business Day following the Stock Acquisition Date or (ii) the Final Expiration Date, redeem all but
not less than all of the then-outstanding Rights at a redemption price of $.001 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being the “Redemption
Price”). The Company may, at its option, by action of a majority of the Board of Directors,
pay the Redemption Price either in shares of Company Common Stock (based on the current market
price, as defined in Section 11(d) hereof, of the shares of Company Common Stock at the time of
redemption) or cash or any other form of consideration deemed appropriate by the Board of Directors
and the redemption of the Rights shall be effective at such time and on the basis and with such
conditions as the Board of Directors may in its sole discretion establish. Notwithstanding
anything in this Agreement to the contrary, the Rights shall not be exercisable until such time as
the Company’s right of redemption has expired.




          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights as provided in Section 23(a) above (or at such later time as the Board of Directors may
establish for the effectiveness of such redemption), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so held. The Company
shall promptly give notice of such redemption to the Rights Agent and the holders of the
then-outstanding Rights by mailing such notice to all such holders at each holder’s last address as
it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Company Common Stock, provided,
however, that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner herein provided shall be
deemed




34









 







given, whether or not the holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.




          (c) The Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the Rights in
accordance with this Agreement, and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights as their last addresses as they appear on the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent of the
Company Common Stock, and upon such action, all outstanding Rights and Rights Certificates shall be
null and void without any further action by the Company.




     Section 24. Notice of Certain Events.



          (a) In case the Company shall propose, at any time after the Distribution Date:





          (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other than a regular
periodic cash dividend paid out of funds legally available therefor),




          (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options,




          (iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of Preferred Stock),




          (iv) to effect any consolidation or merger into or with any other Person (other than a
wholly owned Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions, of more
than 50% of the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or any of its
wholly owned Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or




          (v) to effect the liquidation, dissolution or winding up of the Company,


then, in each such case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least twenty (20) days prior
to the date of the taking of such proposed action or the date of participation therein by the
holders of the shares




35









 







of Preferred Stock, whichever shall be the earlier; provided, however, no such
notice shall be required pursuant to this Section 24, if any wholly owned Subsidiary of the Company
effects a consolidation or merger with or into, or effects a sale or other transfer of assets, cash
flow or earnings power to, any other wholly owned Subsidiary of the Company.




          (b) In case any Triggering Event shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13 hereof, as the case may be, and (ii) all references in the preceding paragraph (a) to
Preferred Stock shall be deemed thereafter to refer also to Company Common Stock and/or, if
appropriate, other securities of the Company.




     Section 25. Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by telex, telegram or cable) and
mailed or sent or delivered, if to the Company, at its address at:


Vestin Realty Trust II, Inc.

8379 West Sunset Road

Las Vegas, Nevada 89113

Attention: Chief Financial Officer



and if to the Rights Agent, at its address at:



StockTrans, Inc.

44 West Lancaster Ave

Ardmore, Pennsylvania 19003




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



     Section 26. Supplements and Amendments. Prior to the Distribution Date, and subject
to the other provisions of this Section 26, the Company may, in its sole and absolute discretion,
and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of certificates representing Rights or
shares of Company Common Stock. From and after the Distribution Date, the Company may, in its sole
and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates in order:




          (i) to cure any ambiguity,




          (ii) to correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein,



36









 






          (iii) to shorten or lengthen any time period hereunder, or




          (iv) to change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person);


provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) subject to Section 30 hereof, a time
period relating to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Associate or Affiliate of an Acquiring Person).




     Upon the delivery of a certificate from an appropriate officer of the Company which states
that the proposed supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment.



     Prior to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Company Common Stock.



     Section 27. 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 28. Determinations and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Company Common Stock
outstanding at any particular time, including for purposes of determining the particular percentage
of such outstanding shares of Company Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically provided herein, the
Board of Directors shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this Agreement, and (ii) to make
all determinations deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination whether to redeem or not redeem the rights or to
amend this Agreement and whether any proposed amendment adversely affects the interest of the
holders of Rights Certificates. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors or any member thereof to any liability to the holders of the Rights.



     Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the registered holders of the



37









 




Rights Certificates (and, prior to the Distribution Date, registered holders of shares of
Company Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution Date, registered
holders of shares of Company Common Stock).




     Section 30. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and a majority of the Board of Directors determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement and the Rights shall not then be redeemable, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close
of Business on the tenth Business Day following the date of such determination by a majority of the
Board of Directors.



     Section 31. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely in such State.



     Section 32. Counterparts. This Agreement may be executed (including by facsimile) in
one or more counterparts, and by the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.



     Section 33. Descriptive Headings. The headings contained in this Agreement are for
descriptive purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.



     Section 34. Exchange.



          (a) The Company, upon resolution of a majority of the Board of Directors, may, at its option,
at any time after the first occurrence of a Section 11(a)(ii) Event, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that have become void
pursuant to Section 7(e) hereof) for Units of Preferred Stock or shares of Company Common Stock (at
the election of the Board of Directors) at an exchange ratio of one Unit of Preferred Stock or one
share of Company Common Stock, as the case may be, per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Company Common Stock aggregating 50% or more of the shares of Company
Common Stock then outstanding. From and after the occurrence of a Section 13(a) Event, any Rights
that theretofore have not been exchanged




38









 







pursuant to this Section 34(a) shall thereafter be exercisable only in accordance with Section
13 and may not be exchanged pursuant to this Section 34(a). The exchange of the Rights by the
Board of Directors may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.




          (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 34(a), and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of Units of Preferred Stock or shares of Company Common Stock, as the
case may be, equal to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the Rights Agent;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange
shall state the method by which the exchange of Units of Preferred Stock or shares of Company
Common Stock, as the case may be, for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.




          (c) In the event that the number of shares of Preferred Stock or Company Common Stock, as the
case may be, which are authorized by the Company’s Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to
permit any exchange of Rights as contemplated in accordance with this Section 34, the Company, at
the election of a majority of the Board of Directors, shall take all such action as may be
necessary to authorize additional shares of Preferred Stock or Company Common Stock, as the case
may be, for issuance upon exchange of the Rights or shall make adequate provision to substitute, in
whole or in part, (1) cash, (2) other equity securities of the Company, (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having an aggregate value for
each Right to be exchanged equal to the per share market price of one Unit of Preferred Stock or
share of Company Common Stock, as the case may be (determined pursuant to Section 11(d) hereof) as
of the date of a Section 11(a)(ii) Event, where such aggregate value has been determined by a
majority of the Board of Directors. To the extent that the Company determines that action must be
taken pursuant to the foregoing clauses of this Section 34(c), the Board of Directors may suspend
the exercisability of the Rights for a period of up to sixty days following the date on which the
event described in Section 34(a) shall have occurred, in order to seek any authorization of
additional shares of Company Common Stock and/or to decide the appropriate form of distribution to
be made pursuant to the above provision and to determine the value thereof.




          (d) The Company shall not be required to issue fractions of Units of Preferred Stock or
fractions of shares of Company Common Stock or to distribute certificates which evidence fractional
Units or fractional shares. In lieu of issuing fractional Units or fractional shares, the Company
may pay to the registered holders of Rights Certificates at the time such Rights are exchanged as
herein provided an amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d) hereof) of one Unit of Preferred




39









 







Stock or one share of Company Common Stock, as the case may be, on the Trading Day immediately
prior to the date of exchange pursuant to this Section 34.




40









 








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



	 	 	 	 	 	 	 
	 	 	Vestin Realty Trust II, Inc.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	   Name:	 	 
	 	 
	 

	 	   Title:	 	 
	 	 
	 
	 	 	 	 	 	 
	 	 	StockTrans, Inc.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	   Name:	 	 
	 	 
	 

	 	   Title:	 	 
	 	 







41









 








EXHIBIT A
TO RIGHTS AGREEMENT




FORM OF RIGHTS CERTIFICATE



Certificate No.                                                                                                                                                                       Rights




     NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO
BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR
ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.



Rights Certificate




VESTIN REALTY TRUST II, 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 and conditions of the Rights Agreement dated as of ___, 2005, as amended from
time to time (the “Rights Agreement”) (terms defined therein being used herein with the same
meaning unless otherwise defined herein), between Vestin Realty Trust II, Inc., a Delaware
corporation (the “Company”), and StockTrans, Inc., as Rights Agent (which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from the Company at any time after
the Distribution Date and prior to the Expiration Date, at the office of the Rights Agent, one
one-thousandth of a fully paid and nonassessable share of Series A Preferred Stock, par value
$0.0001 per share (the “Preferred Stock”), of the Company at the Purchase Price initially of Ten
Dollars ($10.00) per one one-thousandth share of Preferred Stock (each such one one-thousandth of a
share being a “Unit”), upon presentation and surrender of this Rights Certificate with the Election
to Purchase and related certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number and kind of shares which may be purchased upon exercise thereof) and
the Purchase Price per Unit set forth above, are the number and Purchase Price as of ___,
2005, based on the Preferred Stock as constituted at such date.



     Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person or (ii) under certain circumstances described in the Rights Agreement, a
direct or indirect transferee of any such Acquiring Person, Associate or Affiliate, including a
transferee of any person who, after such transfer, becomes an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof




A-1









 







shall have any right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.




     In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may
entitle the registered holder thereof to purchase capital stock of an entity other than the Company
or receive common stock, cash or other assets, all as provided in the Rights Agreement.



     As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including a Triggering Event.



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



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



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company under certain circumstances at its option at a redemption price of
$0.001 per Right (as such amount may be adjusted pursuant to the Rights Agreement), at any time
prior to the earlier of the Close of Business on (i) the tenth business day following the Stock
Acquisition Date and (ii) the Final Expiration Date. The Rights will not be exercisable until such
time as the Company’s right of redemption has expired. In addition, subject to the provisions of
the Rights Agreement, the Rights may be exchanged, in whole or in part, for Units of Preferred
Stock or shares of the Common Stock of the Company. Immediately upon the action of the Board of
Directors of the Company authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights which are not subject to such exchange) will terminate and
the Rights will only enable holders to receive the shares issuable upon such exchange.



     No fractional shares of Preferred Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of
a share of Preferred Stock, which may, at the election of the Company be evidenced by



A-2









 




depositary receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.




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



     WITNESS the facsimile signature of the proper officers of the Company. Dated as of ___
___, 2005



	 	 	 	 	 
	 	VESTIN REALTY TRUST II, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	President 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	Secretary 	 
	 


Countersigned:



STOCKTRANS, INC.



as Rights Agent




	 	 	 	 	 
	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 the Rights Certificate.)




     FOR
VALUE RECEIVED ______ hereby sells, assigns and transfers unto:
______
(Please print name and address of transferee) this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
______Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.



	 	 	 
	 

	 	Dated:                                                              ,                     
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:






Certificate




     The undersigned hereby certifies by checking the appropriate boxes in (1) and (2) that:



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



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



	 	 	 
	 

	 	Dated:                                                              ,                     
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 
	 	 
	 

	 	Signature Guaranteed:






A-4









 






NOTICE




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



     Signatures must be guaranteed by an approved eligible financial institution acceptable to the
Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.



     In the event the certification set forth above is not completed, the Company will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and, in the case
of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange
for this Rights Certificate.



A-5









 





FORM OF ELECTION TO PURCHASE




(To be executed if the registered holder desires to exercise

Rights represented by the Rights Certificate.)




To: VESTIN REALTY TRUST II, INC.




     The
undersigned hereby irrevocably elects to exercise ______ Rights represented
by this Rights Certificate to purchase the Units of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any other person or other property which
may be issuable upon the exercise of the Rights) and requests that certificates for such Units (or
such other securities) be issued in the name of and delivered to: ______
(Please print name and address) ______
(Please insert social security or other identifying number).



     If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in the name of and
delivered to: ______ (Please print name
and address) ______ (Please insert social security or other
identifying number).



	 	 	 
	 

	 	Dated:                                                              ,                     
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:






A-6









 






Certificate




     The undersigned hereby certifies by checking the appropriate boxes in (1) and (2) that:



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



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



	 	 	 
	 

	 	Dated:                                                              ,                     
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	Signature Guaranteed:






NOTICE




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



     Signatures must be guaranteed by an approved eligible financial institution acceptable to the
Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.



     In the event the certification set forth above is not completed, the Company will deem the
Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and the election
to purchase will not be honored.




A-7









 








EXHIBIT B
TO RIGHTS AGREEMENT




UNDER CERTAIN CIRCUMSTANCES

SET FORTH IN THE RIGHTS AGREEMENT,

RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN

ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF

(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),

WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,

MAY BECOME NULL AND VOID.




SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK




     On ___, 2005, the Board of Directors of Vestin Realty Trust II, Inc. (the “Company”)
authorized and declared a dividend of one right (“Right”) for each outstanding share of its Common
Stock, par value $0.0001 per share (the “Company Common Stock”), to stockholders of record at the
close of business on ___, 2005 (the “Record Date”), and authorized the issuance of one Right
for each share of Company Common Stock issued by the Company (except as otherwise provided in the
Rights Agreement, as defined below) between the Record Date and the Distribution Date (as defined
below). Each Right entitles the registered holder, subject to the terms of the Rights Agreement
(as defined below), to purchase from the Company one one-thousandth of a share (a “Unit”) of Series
A Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), at a purchase price of Ten
Dollars ($10.00) per Unit, subject to adjustment. The purchase price is payable in cash or by
certified or bank check or money order payable to the order of the Company. The description and
terms of the Rights are set forth in a Rights Agreement between the Company and StockTrans, Inc.,
as Rights Agent, dated as of ___, 2005, as amended from time to time (the “Rights
Agreement”).



     Copies of the Rights Agreement and the Certificate of Designation for the Preferred Stock have
been filed with the Securities and Exchange Commission as exhibits to a Registration Statement on
Form 8-A dated ___, 2005. Copies of the Rights Agreement and the Certificate of Designation
are available free of charge from the Company. This summary description of the Rights and the
Preferred Stock does not purport to be complete and is qualified in its entirety by reference to
all of the provisions of the Rights Agreement and the Certificate of Designation, including the
definitions therein of certain terms, which Rights Agreement and Certificate of Designation are
incorporated herein by reference.



     The Rights Agreement




     Certificates; Distribution Date. Initially, the Rights will attach to all certificates
representing shares of outstanding Company Common Stock, and no separate Rights Certificates will
be distributed. Subject to the provisions of the Rights Agreement, the Rights will separate from
the Company Common Stock and the “Distribution Date” will occur upon the earlier of (i) ten
business days following a public announcement (the date of such announcement being the




B-1









 







“Stock Acquisition Date”) that a person or group of affiliated or associated persons (an
“Acquiring Person”) has acquired or otherwise obtained beneficial ownership of 15% or more of the
then-outstanding shares of Company Common Stock, and (ii) ten business days (or such later date as
may be determined by action of the Board of Directors prior to such time as any person becomes an
Acquiring Person) following the commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person. Until the Distribution Date, (i) the Rights
will be evidenced by Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock certificates issued after the
Record Date (also including shares distributed from Treasury) will contain a notation incorporating
the Rights Agreement by reference and (iii) the surrender for transfer of any certificates
representing outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.




     An “Acquiring Person” does not include certain persons specified in the Rights Agreement.



     The Rights are not exercisable until the Distribution Date and will expire at the close of
business on the tenth anniversary of the Rights Agreement unless earlier redeemed or exchanged by
the Company as described below. Under certain circumstances the exercisability of the Rights may
be suspended. In no event, however, will the Rights be exercisable prior to the expiration of the
period in which the Rights may be redeemed as described below.



     As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of Company Common Stock as of the close of business on the Distribution Date (and
to each initial holder of certain shares of Company Common Stock issued after the Distribution
Date) and, thereafter, the separate Rights Certificates alone will represent the Rights.



     Flip-In. If a person becomes an Acquiring Person, then each holder of a Right will thereafter
have the right to receive, upon exercise, Units of Preferred Stock or, at the option of the
Company, shares of Company Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price of the Right. The
exercise price is the purchase price multiplied by the number of Units of Preferred Stock issuable
upon exercise of a Right prior to the event described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or any affiliate or associate thereof (or certain transferees of any thereof)
will be null and void.



     Flip-Over. If, at any time following the date that any person becomes an Acquiring Person,
(i) the Company is acquired in a merger or other business combination transaction and the Company
is not the surviving corporation, (ii) any person merges with the Company and all or part of the
Company Common Stock is converted or exchanged for securities, cash or property of the Company or
any other person or (iii) 50% or more of the Company’s assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been



B-2









 




voided as described above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise price of the Right.




     Redemption. At any time until ten business days following the Stock Acquisition Date, the
Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.001 per Right
(subject to adjustment in certain events) payable, at the election of the Board of Directors, in
cash, shares of Company Common Stock or other consideration considered appropriate by the Board of
Directors. Immediately upon the action of the Board of Directors ordering the redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights will be to receive
the redemption price.



     Exchange. The Company may, at any time after there is an Acquiring Person, until the time
specified in the Rights Agreement, exchange all or part of the then-outstanding and exercisable
Rights (other than Rights that shall have become null and void) for Units of Preferred Stock or
shares of Company Common Stock pursuant to a one-for-one exchange ratio, subject to adjustment.



     No Stockholder Rights; Taxation. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Units of Preferred Stock (or
other consideration) or for common stock of the acquiring company or in the event of the redemption
of Rights as set forth above.



     Amendment. Any of the provisions of the Rights Agreement may be amended without the approval
of the holders of the Rights or Company Common Stock at any time prior to the Distribution Date.
After such date, the provisions of the Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to shorten or lengthen any time period under the Rights
Agreement, or to make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person); provided, that no amendment
shall be made to lengthen (i) the time period governing redemption at such time as the Rights are
not redeemable or (ii) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights.



     Description of Preferred Stock




     The Units of Preferred Stock that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be issued by the
Company.



     If, as and when declared by the Board of Directors, each share of Preferred Stock will have a
minimum preferential quarterly dividend equal to the greater of (A) $.01 or (B) subject to
adjustment as set forth in the Articles Supplementary, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions (other than dividends payable in shares of



B-3









 




Common Stock), declared on the Common Stock since the immediately preceding quarterly dividend
payment date, or, with respect to the first quarterly dividend payment date, since the first
issuance of any share or fraction of a share of Preferred Stock.




     In the event of liquidation, dissolution or winding up of the Company, the holder of a share
of Preferred Stock will receive a preferred liquidation payment equal to $1,000 per share, plus
accrued and unpaid dividends thereon to the date of payment, which is referred to as the “Series A
Preferred Liquidation Preference.” After the payment to the holders of the shares of the Preferred
Stock of the full Series A Preferred Liquidation Preference, the holders of the Preferred Stock as
such shall have no right or claim to any of our remaining assets until the holders of common stock
shall have received an amount per share, referred to as the “common adjustment,” equal to the
quotient obtained by dividing the Series A Preferred Liquidation Preference by 1,000. Following
the payment of the full amount of the Series A Preferred Liquidation Preference and the common
adjustment, holders of Preferred Stock and common stock shall be entitled to receive their ratable
and proportionate share of our remaining assets to be distributed in the ratio of 1,000 to 1 with
respect to the Preferred Stock and the common stock, respectively. In the event that there are not
sufficient assets available after payment in full of the Series A Preferred Liquidation Preference
to permit payment in full of the common adjustment, then the remaining assets shall be distributed
ratably to the holders of the common stock..



     Each Unit of Preferred Stock will have one vote, voting together with the Company Common
Stock.



     In the event of any merger, consolidation or other transaction in which shares of Company
Common Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the per share
amount paid in respect of each share of Company Common Stock.



     The rights of holders of the Preferred Stock with respect to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by customary antidilution
provisions.



     Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the
economic value of one Unit of Preferred Stock that may be acquired upon the exercise of each Right
should approximate the economic value of one share of Company Common Stock.




B-4









 








EXHIBIT C




TO RIGHTS AGREEMENT




FORM OF




VESTIN REALTY TRUST II, INC.




ARTICLES SUPPLEMENTARY




SERIES A JUNIOR PARTICIPATING CUMULATIVE REDEEMABLE

PREFERRED STOCK




     Vestin Realty Trust II, Inc. a Maryland corporation, having its principal office in the City
of Baltimore, Maryland (the “Corporation”), hereby certifies to the State Department of Assessments
and Taxation of Maryland that:



     FIRST: Under a power contained in Article VI of the Articles of Incorporation, as amended
(the “Charter”), the Board of Directors of the Corporation (the “Board of Directors”), has duly
designated 1,000,000 shares (the “Shares”) of preferred stock, par value $0.0001 per share (the
“Preferred Stock”), of the Corporation.



     SECOND: Subject in all cases to the provisions of Article VII of the Charter of the
Corporation with respect to restrictions on transfer and ownership of shares, the following is a
description of the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividend qualifications and terms and conditions of redemption of the Preferred
Stock, which, upon any restatement of the Charter, shall become part of Article VI of the Charter,
with any necessary or appropriate renumbering or relettering of the sections or subsections
thereof:



     1. Designation and Number. A series of the Preferred Stock, designated the “Series A
Junior Participating Cumulative Redeemable Preferred Stock” (the “Series A Preferred”), is hereby
established. The number of shares of the Series A Preferred shall be 1,000,000. The Series A
Preferred is designated and shall be issued solely for purposes of the Rights Agreement by and
between the Corporation and StockTrans, Inc., dated on or about ___, 2005.



     2. Relative Seniority. In respect of rights to receive dividends and to participate
in distributions or payments in the event of any liquidation, dissolution or winding up of the
Corporation, the Series A Preferred shall rank senior to the Common Stock and any other stock of
the Corporation ranking, as to dividends and upon liquidation, junior to the Series A Preferred
(collectively, for purposes of the terms of the Series A Preferred, “Junior Stock”).



     3. Dividends. The holders of the then outstanding Series A Preferred shall be entitled
to receive, when and as authorized by the Board of Directors and declared by the Corporation out of
any funds legally available therefor, cumulative preferential cash dividends payable quarterly on
March 31, June 30, September 30 and December 31 (each such date being




C-1









 







referred to herein as a “Quarterly Dividend Payment Date” and each period beginning on the day
next following a Quarterly Dividend Payment Date and ending on the next following Quarterly
Dividend Payment Date being referred to herein as a “Dividend Period”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred, in an amount per share (rounded to the nearest cent) equal to the greater of
(A) $.01 or (B) subject to adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions (other than dividends payable in shares of Common
Stock, as constituted on the date of such payment), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A
Preferred.




     In the event the Corporation shall at any time after ___(the “Rights Dividend
Declaration Date”), (A) declare any dividend on the Common Stock payable in shares of Common Stock,
(B) subdivide the outstanding Common Stock, or (C) combine the outstanding shares of Common Stock
into a smaller number of shares, then in each such case the amount to which holders of shares of
the Series A Preferred were entitled immediately prior to such event under clause (B) of the
preceding paragraph shall be adjusted by multiplying such amount by a fraction (the “Adjustment
Factor”), the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.



     The Corporation shall declare a dividend or distribution on the Series A Preferred immediately
after it declares a dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend at the rate of $.01 per share on the
Series A Preferred shall nevertheless be declared payable on such subsequent Quarterly Dividend
Payment Date.



     Dividends on the shares of Series A Preferred shall accrue and be cumulative from and
including the Quarterly Dividend Payment Date next preceding the date of issue of such shares of
Series A Preferred, unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which event dividends on such shares shall accrue and be
cumulative from and including the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall accrue and be cumulative from
and including such Quarterly Dividend Payment Date, whether or not (A) the Corporation has
earnings, (B) dividends on such shares are declared or (C) on any Quarterly Dividend Payment Date
there shall be funds legally available for the payment of such dividends. When dividends are not
paid in full upon the shares of Series A Preferred and the shares of any other series of preferred
stock ranking on a parity as to dividends with the Series A Preferred (or a sum sufficient for such
full payment is not set apart therefor), all dividends declared upon shares of Series A Preferred
and any other series of preferred stock ranking on a parity as to dividends with the Series A
Preferred shall be declared pro rata so that the amount of dividends



C-2









 




declared per share on the Series A Preferred and such other series of preferred stock shall in
all cases bear to each other the same ratio that accrued dividends per share on the shares of
Series A Preferred and such other series of preferred stock bear to each other.




     Except as provided in the immediately preceding paragraph, unless full cumulative dividends on
the Series A Preferred have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment on the Series A Preferred for all past
dividend periods and the then current dividend period, (A) no dividends shall be declared or paid
or set apart for payment on the preferred stock of the Corporation ranking, as to dividends, on a
parity with or junior to the Series A Preferred for any period, and (B) no dividends (other than in
Junior Stock) shall be declared or paid or set aside for payment or other distribution or shall be
declared or made upon the Junior Stock or any other stock of the Corporation ranking on a parity
with the Series A Preferred as to dividends or upon liquidation (for purposes of this Section 6.6,
“Parity Stock”), nor shall any Junior Stock or any Parity Stock be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of Junior Stock or Parity Stock) by the Corporation (except by
conversion into or exchange for Junior Stock).



     Any dividend payment made on shares of the Series A Preferred shall first be credited against
the earliest accrued but unpaid dividend due with respect to such shares which remains payable.



     No dividends on shares of Series A Preferred shall be authorized by the Board or declared and
paid or set apart for payment by the Corporation at such time as the terms and provisions of any
agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.



     Accrued but unpaid dividends on the Series A Preferred will not bear interest. Holders of the
Series A Preferred will not be entitled to any dividends in excess of full cumulative dividends as
described above.



     Except as provided in this Charter, the Series A Preferred shall not be entitled to
participate in the earnings or assets of the Corporation.



     The Board may fix a record date for the determination of holders of shares of Series A
Preferred entitled to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment thereof.



     4. Liquidation Rights.



          (A) Upon the voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the holders of shares of the Series A Preferred then outstanding shall be entitled to
receive and to be paid out of the assets of the Corporation legally available for distribution to
its stockholders, before any distribution shall be made to the holders of Common Stock or any other
stock of the Corporation ranking junior to the Series A Preferred upon




C-3









 







liquidation, a liquidation preference of $1,000.00 per share, plus accrued and unpaid
dividends thereon to the date of payment (the “Series A Preferred Liquidation Preference”).




          (B) After the payment to the holders of the shares of the Series A Preferred of the full
Series A Preferred Liquidation Preference, the holders of the Series A Preferred as such shall have
no right or claim to any of the remaining assets of the Corporation until the holders of Common
Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient
obtained by dividing (1) the Series A Preferred Liquidation Preference by (2) 1,000 (as
appropriately adjusted as set forth in paragraph (D) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (the number determined
pursuant to clause (2) being hereinafter referred to as the “Adjustment Number”). Following the
payment of the full amount of the Series A Preferred Liquidation Preference in respect of all
outstanding shares of Series A Preferred, the full amount of any liquidation preference payable to
holders of any other shares of stock of the Corporation ranking as to any distribution upon any
voluntary or involuntary dissolution, liquidation or winding up of the Corporation on a parity with
the shares of the Series A Preferred and the full amount of the Common Adjustment, respectively,
holders of shares of Series A Preferred, holders of such other shares and holders of shares of
Common Stock shall receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such shares of Series A
Preferred, such other shares and shares of Common Stock, on a per share basis, respectively.




          (C) If, upon any voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the amounts payable with respect to the Series A Preferred Liquidation Preference and
the liquidation preference of any other shares of stock of the Corporation ranking as to any such
distribution on a parity with the shares of the Series A Preferred are not paid in full, the
holders of the shares of the Series A Preferred and of such other shares will share ratably in any
such distribution of assets of the Corporation in proportion to the full respective liquidation
preferences to which they are entitled. In the event, however, that there are not sufficient assets
available after payment in full of the Series A Preferred Liquidation Preference and such other
liquidation preferences to permit payment in full of the Common Adjustment, then the remaining
assets shall be distributed ratably to the holders of the Common Stock.




          (D) In the event the Corporation shall at any time after the Rights Dividend Declaration Date
(1) declare any dividend on the Common Stock payable in shares of Common Stock, (2) subdivide the
outstanding Common Stock, or (3) combine the outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by the Adjustment Factor.




          (E) Neither the sale, lease, transfer or conveyance of all or substantially all the property
or business of the Corporation, nor the merger or consolidation of the Corporation into or with any
other Corporation or the merger or consolidation of any other Corporation into or with the
Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this paragraph (iv).




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          (F) In determining whether a distribution (other that upon voluntary or involuntary
liquidation), by dividend, redemption or otherwise, is permitted under the Maryland General
Corporation Law (“MGCL”), amounts that would be needed, if the Corporation were to be dissolved at
the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders
whose preferential rights upon dissolution are superior to those receiving the distribution, will
not be added to the Corporation’s total liabilities.




     5. Redemption.



          (A) Right of Optional Redemption. The outstanding shares of Series A Preferred may be
redeemed at the option of the Corporation as a whole, but not in part, at any time, or from time to
time, at a price per share (the “Series A Redemption Price”) equal to (1) 100% of the product of
the Adjustment Number times the Average Market Value (as such term is hereinafter defined) of the
Common Stock, plus (2) all accrued and unpaid dividends to and including the date fixed for
redemption (the “Series A Redemption Date”). The “Average Market Value” is the average of the
closing sale prices of a share of the Common Stock during the 30-day period immediately preceding
the date before the redemption date quoted on the New York Stock Exchange, or, if the Common Stock
is not quoted on the New York Stock Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which the Common Stock is
listed, or, if the Common Stock is not listed on any such exchange, the average of the closing bid
quotations with respect to a share of Common Stock during such 30-day period on the Nasdaq National
Market, or if no such quotations are available, the fair market value of a share of Common Stock as
determined by the Board in good faith.




          (B) Procedures for Redemption.




               (1) Notice of any redemption will be (a) given by publication in a newspaper of general
circulation in the City of New York, New York, such publication to be made once a week for two
successive weeks commencing not less than 30 nor more than 60 days prior to the Series A Redemption
Date, and (b) mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days
prior to the Series A Redemption Date, addressed to the respective holders of record of the Series
A Preferred to be redeemed at their respective addresses as they appear on the stock transfer
records of the Corporation. No failure to give such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any Series A Preferred
except as to the holder to whom the Corporation has failed to give notice or except as to the
holder to whom notice was defective. In addition to any information required by law or by the
applicable rules of any exchange upon which Series A Preferred may be listed or admitted to
trading, such notice shall state: (a) the Series A Redemption Date; (b) the Series A Redemption
Price; (c) the place or places where certificates for Series A Preferred are to be surrendered for
payment of the Series A Redemption Price; and (d) that dividends on the Series A Preferred will
cease to accumulate on the Series A Redemption Date.



               (2) If notice of redemption of the Series A Preferred has been published and mailed in
accordance with subparagraph (v)(B)(1) above and provided that on or before the Series A Redemption
Date specified in such notice all funds necessary for such



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redemption shall have been irrevocably set aside by the Corporation, separate and apart from
its other funds in trust for the benefit of the holders of the Series A Preferred, so as to be, and
to continue to be available therefor, then, from and after the Series A Redemption Date, dividends
on the Series A Preferred shall cease to accrue, and the Series A Preferred shall no longer be
deemed to be outstanding and all rights of the holders thereof as stockholders of the Corporation
(except the right to receive the Series A Redemption Price) shall terminate. Upon surrender, in
accordance with said notice, of the certificates for the Series A Preferred (properly endorsed or
assigned for transfer, if the Corporation shall so require and the notice shall so state), the
Series A Preferred shall be redeemed by the Corporation at the Series A Redemption Price.




               (3) The deposit of funds with a bank or trust company for the purpose of redeeming Series A
Preferred shall be irrevocable except that:



                    (a) the Corporation shall be entitled to receive from such bank or trust company the interest
or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares
redeemed shall have no claim to such interest or other earnings; and



                    (b) any balance of moneys so deposited by the Corporation and unclaimed by the holders of the
Series A Preferred entitled thereto at the expiration of two years from the applicable Series A
Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to
the Corporation, and after any such repayment, the holders of the shares entitled to the funds so
repaid to the Corporation shall look only to the Corporation for payment without interest or other
earnings.



          (C) Rights to Dividends on Shares Called for Redemption. If the Series A Redemption
Date is after a record date for payment of dividends on the Series A Preferred and before the
related Quarterly Dividend Payment Date, the dividend payable on such Quarterly Dividend Payment
Date shall be paid to the holders in whose name the shares of Series A Preferred are registered at
the close of business on such record date notwithstanding the redemption thereof between such
record date and the related Quarterly Dividend Payment Date or the Corporation’s default in the
payment of the dividend due.




     Except as provided in this paragraph (v), the Corporation will make no payment or allowance
for unpaid dividends, whether or not in arrears, on called Series A Preferred.



     6. Voting Rights.



          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A
Preferred shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (1) declare any dividend on the Common Stock payable in shares of Common Stock,
(2) subdivide the outstanding Common Stock, or (3) combine the outstanding shares of Common Stock
into a smaller number of shares, then in each such case the number of votes per share to which
holders of shares of Series A Preferred were entitled immediately prior to such event shall be
adjusted by multiplying such number by the Adjustment Factor. Except as otherwise provided herein
or under applicable law, the holders of shares of Series A Preferred




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and the holders of shares of Common Stock shall vote together as one voting group on all
matters submitted to a vote of stockholders of the Corporation.



     (B) Whenever dividends on any shares of Series A Preferred shall be in arrears for six or more
consecutive quarterly periods, the holders of such shares of Series A Preferred (voting separately
as a class with all other series of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two additional
directors of the Corporation at a special meeting called by the holders of record of at least 10%
of the Series A Preferred or the holders of any other series of preferred stock so in arrears
(unless such request is received less than 90 days before the date fixed for the next annual or
special meeting of the stockholders) or at the next annual meeting of stockholders, and at each
subsequent annual meeting until all dividends accumulated on such shares of Series A Preferred for
the past Dividend Periods and the then current Dividend Period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In such case, the
entire Board will be increased by two directors.



     (C) The foregoing voting provisions will not apply if, at or prior to the time when the act
with respect to which such vote would otherwise be required shall be effected, all outstanding
shares of Series A Preferred shall have been redeemed or called for redemption upon proper notice
and sufficient funds shall have been deposited in trust to effect such redemption.



     (D) In the event that the Series A Preferred is listed or admitted to trading on the New York
Stock Exchange, then notwithstanding anything to the contrary in the Charter, including without
limitation Article VIII, approval by the holders of at least two-thirds of the outstanding shares
of the Series A Preferred shall be required for adoption of any amendment of the Charter that would
materially affect the existing terms of the Series A Preferred.




     7. Conversion of Series A Preferred. The Series A Preferred is not convertible into or
exchangeable for any other property or securities of the Corporation except as provided in Article
VII of the Charter.



     8. Consolidation, Merger, Share Exchange, etc. In case the Corporation shall enter
into any consolidation, merger, share exchange, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A Preferred shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (A) declare any dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine the outstanding shares of
Common Stock into a smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A Preferred shall be
adjusted by multiplying such amount by the Adjustment Factor.



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     9. Fractional Shares. Series A Preferred may be issued in fractions of one
one-thousandth of a share (and integral multiples thereof) which shall entitle the holder, in
proportion to such holders’ fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of holders of Series A
Preferred.



     THIRD: The Series A Preferred has been classified and designated by the Board of Directors
under the authority contained in the Charter.



     FOURTH: These Articles Supplementary have been approved by the Board of Directors in the
manner and by the vote required by law.



     FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary
to be the corporate act of the Corporation and, as to all matters or facts required to be verified
under oath, the undersigned President acknowledges that, to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.



[SIGNATURE PAGE FOLLOWS].




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     IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in
its name and on its behalf by its President and attested to by its Secretary on this [___] day of
[___], 2005.



	 	 	 	 	 
	ATTEST:

	 	 	 	VESTIN REALTY TRUST II, INC.
	 
	 	 	 	 
	By:                                                            

	 	 	 	By:                                                                                 (SEAL)
	Name:

	 	 	 	Name:
	Title: Secretary

	 	 	 	Title President







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