Amended Rights Agreement


    
      

    

     

    

      


      


      U.S.
        ENERGY CORP.

      Issuer
        and Company

      


      and

      


      


      COMPUTERSHARE
        TRUST COMPANY, INC

      Rights
        Agent

      


      


      


      RIGHTS
        AGREEMENT

      


      Rights
        Record Date: September 19, 2001

      


      


      Amended
        as of September 30, 2005 and

      Effective
        for All Purposes as of the

      Rights
        Record Date (September 19, 2001)

      



      
        
          
          

        

        
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                TABLE
                  OF CONTENTS

              
	 	 	 
	 	 	
                Page

              
	
                Section
                  1.

              	
                Definitions

              	
                4

              
	 	 	 
	
                Section
                  2.

              	
                Appointment
                  of Rights Agent

              	
                7

              
	 	 	 
	
                Section
                  3.

              	
                Definition
                  of Distribution Date and Offer Date; When Right Certificates Will
                  Issue

              	
                7

              
	 	 	 
	
                Section
                  4.

              	
                Form
                  of Right Certificates

              	
                8

              
	 	 	 
	
                Section
                  5.

              	
                Countersignature
                  and Registration

              	
                9

              
	 	 	 
	
                Section
                  6.

              	
                Transfer,
                  Split Up, Combination and Exchange of Right Certificates;

              	 
	 	
                Mutilated,
                  Destroyed, Lost or Stolen Right Certificates

              	
                9

              
	 	 	 
	
                Section
                  7.

              	
                Exercise
                  of Rights; Purchase Price; Expiration Date of Rights

              	
                10

              
	 	 	 
	
                Section
                  8.

              	
                Cancellation
                  and Destruction of Right Certificates

              	
                11

              
	 	 	 
	
                Section
                  9.

              	
                Reservation
                  and Availability of Shares; Registration

              	
                11

              
	 	 	 
	
                Section
                  10.

              	
                Record
                  Date

              	
                12

              
	 	 	 
	
                Section
                  11.

              	
                Adjustment
                  of Purchase Price, Number and Kind of Shares or Number of Rights
                  

              	 
	 	
                (Including
                  Flip-In Provision)

              	
                12

              
	 	 	 
	
                Section
                  12.

              	
                Certification
                  of Adjusted Purchase Price or Number of Shares

              	
                17

              
	 	 	 
	
                Section
                  13.

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

              	 
	 	
                (Including
                  Flip-Over Provision?)

              	
                18

              
	 	 	 
	
                Section
                  14.

              	
                Fractional
                  Rights and Fractional Shares

              	
                20

              
	 	 	 
	
                Section
                  15.

              	
                Rights
                  of Action..

              	
                21

              
	 	 	 
	
                Section
                  16.

              	
                Agreement
                  of Right Holders

              	
                21

              
	 	 	 
	
                Section
                  17.

              	
                Right
                  Certificate Holder Not Deemed a Stockholder

              	
                21

              
	 	 	 
	
                Section
                  18.

              	
                Concerning
                  the Rights Agent

              	
                21

              
	 	 	 
	
                Section
                  19.

              	
                Merger
                  or Consolidation or Change of Name of Rights Agent

              	
                22

              
	 	 	 
	
                Section
                  20.

              	
                Duties
                  of Rights Agent

              	
                22

              
	 	 	 
	
                Section
                  21.

              	
                Change
                  of Rights Agent

              	
                24

              
	 	 	 


      


      
        
          
          

        

        
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                Section
                  22.

              	
                Issuance
                  of New Right Certificates

              	
                24

              
	 	 	 
	
                Section
                  23.

              	
                Redemption
                  Right and Termination of Redemption Right

              	
                24

              
	 	 	 
	
                Section
                  24.

              	
                Notice
                  of Proposed Actions

              	
                25

              
	 	 	 
	
                Section
                  25.

              	
                Notices
                  in General 

              	
                25

              
	 	 	 
	
                Section
                  26.

              	
                Supplements
                  and Amendments

              	
                26

              
	 	 	 
	
                Section
                  27.

              	
                Exchange
                  of Rights for Shares of Common Stock Without Cash Payment

              	
                27

              
	 	 	 
	
                Section
                  28.

              	
                Successors

              	
                27

              
	 	 	 
	
                Section
                  29.

              	
                Determinations
                  and Actions Taken by the Board of Directors

              	
                27

              
	 	 	 
	
                Section
                  30.

              	
                Benefits
                  of this Agreement

              	
                27

              
	 	 	 
	
                Section
                  31.

              	
                Governing
                  Law; Choice of Venue

              	
                27

              
	 	 	 
	
                Section
                  32.

              	
                Counterparts

              	
                28

              
	 	 	 
	
                Section
                  33.

              	
                Section
                  Headings

              	
                28

              
	 	 	 
	
                Section
                  34.

              	
                Severability

              	
                28

              
	 	 	 
	
                Signature
                  Page

              	 	
                28

              
	 	 	 
	
                Exhibit
                  A

              	
                Form
                  of Right Certificate

              	
                29

              
	 	 	 
	
                Exhibit
                  B

              	
                Summary
                  of Rights

              	
                34

              
	 	 	 
	
                Exhibit
                  C

              	
                Certificate
                  of Designation for Series P Preferred Stock

              	
                37

              


      


      
        
          
          

        

        
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      RIGHTS
        AGREEMENT

      


      This
        RIGHTS AGREEMENT, dated as of September 19, 2001, and amended on September
        30,
        2005, is entered into by U.S. Energy Corp., a Wyoming corporation (the
        "Company"),
        and
        Computershare Trust Company, Inc. as the Rights Agent. As amended pursuant
        to
        Section 26, (i) the Company has delivered to the Rights Agent a certificate
        signed by the president of the company and the Rights Agent has executed
        this
        Rights Agreement, as amended; and (ii) this Rights Agreement, as amended,
        remains effective as of September 19, 2001. 

      


      RECITALS

      


      The
        board
        of directors of the Company has determined that provision should be made
        to
        supplement Wyoming law, in a manner consistent with that law, to protect
        the
        shareholders by facilitating obtaining a higher value for the Company through
        negotiated transactions, in the event of an attempted unfair takeover of
        the
        Company without the consent of the board of directors. Subject to the express
        provisions of this Rights Agreement, Exhibit C to this Agreement, and
        proceedings of the board of directors of the Company, the general purpose
        of
        this Rights Agreement is to encourage a person or company to discuss a potential
        acquisition of the Company through a Qualified Offer, before acquiring more
        than
        15% of the total voting power of the stock of the Company. Under Section
        31, if
        there is conflict between this Agreement and the Wyoming Management Stability
        Act, that law will control. 

      


      Therefore,
        the board of directors has authorized and declared the distribution of one
        Right
        for every share of Common Stock of the Company outstanding at the Close of
        Business on September 19, 2001 (the "Rights
        Record Date"),
        each
        Right representing the right to purchase one Unit, being (initially and before
        any adjustments as provided for herein) one one-thousandth (1/1,000) of a
        share
        of Series P Preferred Stock. Further, the board of directors has authorized
        and
        declared this dividend to cover every additional share of Common Stock which
        may
        become outstanding between the Rights Record Date and the first to occur
        of the
        Distribution Date, or the Expiration Date, or the date, if any, when the
        Rights
        may be redeemed, all upon the terms and subject to the conditions stated
        below.

      


      NOW,
        THEREFORE, the parties agree as follows:

      


      AGREEMENT

      


      Section
        1. DEFINITIONS.

      


      (a) For
        purposes of this Agreement, the following terms have the meanings
        indicated:

      


      "ACQUIRING
        PERSON"
        means
        any Person who or which, alone or together with all of the Affiliates and
        Associates of such Person, is the Beneficial Owner of a Substantial Block
        of
        Voting Stock, but does not include
        (i)
        an
        Exempt Person or
        (ii)
        any
        Person who or which acquires a Substantial Block of Voting Stock in connection
        with a transaction or series of transactions approved prior to such transaction
        or transactions by the board of directors of the Company. However, no person
        shall become an Acquiring Person solely as a result of a reduction in the
        number
        of shares of Voting Stock outstanding, unless and until such Person thereafter
        becomes the Beneficial Owner of additional shares constituting 1% or more
        of the
        general voting power of the Company.

      



      
        
          
          

        

        
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      "AFFILIATE"
        and
        "ASSOCIATE"
        have
        the respective meanings ascribed in rule 12b-2 of the General Rules and
        Regulations under the Exchange Act.

      


      "BENEFICIAL OWNER."
        A
        Person is deemed to be the Beneficial Owner of any securities:

      


      (i) which
        such Person or any of his or its Affiliates or Associates beneficially owns,
        directly or indirectly;

      


      (ii) which
        such Person or any of his or its Affiliates or Associates has
        (A) the
        right
        to acquire (whether such right is exercisable immediately or only after the
        passage of time) pursuant to any agreement, arrangement or understanding
        (whether or not in writing), or upon the exercise of any conversion, exchange
        or
        purchase rights (other than the Rights), warrants or options, or otherwise;
        provided, however, that a Person shall not be deemed the "Beneficial Owner"
        of
        securities tendered pursuant to a tender or exchange offer made by or on
        behalf
        of such Person or any of such Person's Affiliates or Associates until such
        tendered securities are accepted for payment or exchange; or
        (B)
        the
        right to vote or to direct the voting of, pursuant to any agreement, arrangement
        or understanding (whether or not in writing);
        or (C)
        the
        right to dispose or to direct the disposition of, pursuant to any agreement,
        arrangement or understanding (whether or not in writing); or

      


      (iii) which
        are
        beneficially owned, directly or indirectly, by any 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 or disposing of any securities of the Company;
        provided, however, that a Person shall not be deemed the Beneficial Owner
        of, or
        to Beneficially Own, any security if the agreement, arrangement or understanding
        to vote such security (1)
        arises
        solely from the grant of a revocable proxy or consent given to such Person
        in
        connection with a public proxy or consent solicitation made pursuant to,
        and in
        accordance with, the applicable rules and regulations under the Exchange
        Act,
and
        (2) is
        not
        also then reportable on Schedule 13(d) or successor report under the Exchange
        Act; provided, further, that a Person engaged in business as an underwriter
        of
        securities shall not be deemed the "Beneficial Owner" of securities acquired
        through such person's participation in good faith in a firm commitment
        underwriting until the expiration of the 40-day period immediately following
        the
        date of such acquisition.

      


      "BUSINESS
        DAY"
        means
        any day other than a Saturday, Sunday or day on which banking institutions
        in
        the State Wyoming are authorized or obligated by law or executive order to
        close.

      


      "CLOSE
        OF BUSINESS"
        means
        5:00 p.m., Wyoming time, on a Business Day; provided, however, that if such
        is
        not a Business Day it shall mean 5:00 p.m., Wyoming time, on the next succeeding
        Business Day.

      


      "COMMON
        STOCK"
        means
        the Company?s
        Common
        Stock; and "common stock" when used with reference to Persons other than
        the
        Company means: (i)
        for
        Persons organized in corporate form, the capital stock or equity security
        with
        the greatest voting power of such Person or, if such Person is a Subsidiary
        of
        another Person, of the Person or Persons which ultimately control such Person;
        and
        (ii)
        in the
        case of Persons not organized in corporate form, the units of beneficial
        interest which
        (A)
        represent the right to participate generally in the profits and losses of
        such
        Person (including without limitation any flow-through tax benefits resulting
        from an ownership interest in such Person)
        and (B)
        are
        entitled to exercise the greatest voting power of such Person or, in the
        case of
        a limited partnership, shall have the power to remove the general partner
        or
        partners.

      



      
        
          
          

        

        
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      "DISTRIBUTION
        DATE"
        has the
        meaning assigned in Section 3(a).

      


      "EQUIVALENT
        STOCK"
        has the
        meaning assigned in Section 7(a).

      


      "EXCHANGE
        ACT"
        means
        the Securities Exchange Act of 1934 and its future amendments. 

      


      "EXEMPT
        PERSON"
        means
        the Company, any Subsidiary of the Company and any employee benefit plan
        or
        employee stock plan of the Company or of any Subsidiary of the Company, or
        any
        trust or other entity organized, established or holding shares of Common
        Stock
        by, for or pursuant to, the terms of any such plan.

      


      "EXPIRATION
        DATE"
        has the
        meaning assigned in Section 7(a).

      


      "OFFER
        DATE"
        has the
        meaning assigned in Section 3(a).

      


      "PERSON"
        means
        any individual, firm, corporation, partnership, trust or other entity and
        shall
        include any of their successors.

      


      "PRINCIPAL
        PARTY"
        has the
        meaning assigned in Section 13(b).

      


      "PURCHASE
        PRICE"
        means
        the price (initially $200.00) payable for one Unit (1/1,000 share of Series
        P
        Preferred Stock) upon exercise of a Right.

      


      "QUALIFIED
        OFFER"
        means a
        tender or exchange offer for all outstanding Common Stock at a price and
        on
        terms determined to be adequate and otherwise in the best interests of the
        Company and its stockholders (other than the Person or an Affiliate or Associate
        thereof on whose behalf the offer is made) by at least a majority of the
        Directors who are not representatives of or affiliated with the Person making
        such offer or any Affiliate or Associate of such Person.

      


      "REDEMPTION
        PRICE"
        has the
        meaning assigned in Section 23(a), initially $0.01 per Right.

      


      "RIGHT"
        has the
        meaning assigned in the Recitals to this Agreement.

      


      "RIGHTS
        RECORD DATE"
        is
        defined in the Recitals to this Agreement.

      


      "SUBJECT
        SHARES"
        means
        the class or series of shares then issuable on exercise of the
        Rights.

      


      "STOCK
        ACQUISITION DATE"
        means
        the date of the first public announcement by the Company or an Acquiring
        Person
        (which for purposes of this definition shall include, without limitation,
        a
        report filed pursuant to Section 13(d) under the Exchange Act) that an Acquiring
        Person has become such.

      


      "SUBSIDIARY"
        means,
        with respect to any Person, a corporation or other entity the securities
        or
        other ownership interests of which having ordinary voting power sufficient
        to
        elect a majority of the board of directors or other persons performing similar
        functions are at the time directly or indirectly owned by such Person and
        any
        Affiliate of such Person.

      



      
        
          
          

        

        
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      "SUBSTANTIAL
        BLOCK"
        means a
        number of shares of Voting Stock having in the aggregate 15 percent or more
        of
        the general voting power.

      


      "TRADING
        DAY"
        has the
        meaning assigned to it in Section 11(d).

      


      "UNIT"
        means
        the shares or other securities issuable upon exercise of one Right, initially
        one one-thousandth of a share of Series P Preferred Stock of the Company
        having
        the rights and preferences stated in Exhibit C, before any adjustment pursuant
        to Section 11(a)(ii) or Section 13.

      


      "VOTING
        STOCK"
        means
        shares of the Company's capital stock the holders of which have general voting
        power.

      


      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 Agent or Agents as it may deem necessary or desirable and determine
        the respective duties of the Rights Agent and the Co-Rights Agent or
        Agents.

      


      Section
        3. DEFINITION
        OF DISTRIBUTION DATE AND OFFER DATE; WHEN RIGHT CERTIFICATES WILL
        ISSUE.

      


      (a) Until
        the
        Close of Business on the earlier of
        (i) the
        tenth
        Business Day after a Stock Acquisition Date
        or (ii) the
        tenth
        Business Day (or such later date as the Company's board of directors shall
        determine) after the date of the commencement by any Person (other than an
        Exempt Person) of, or the date of the first public announcement (such
        commencement date or announcement is the "Offer
        Date")
        of the
        intent of any Person (other than an Exempt Person) to commence a tender or
        exchange offer upon the successful consummation of which such Person, together
        with its Affiliates and Associates, would be the Beneficial Owner of 15 percent
        or more of the then outstanding Voting Stock (regardless of whether any shares
        are actually purchased pursuant to such offer) (the tenth Business Day after
        the
        first to occur of a Stock Acquisition Date or an Offer Date is the "Distribution
        Date"),

      


      (i) the
        Rights will automatically attach to, and be evidenced by, the certificates
        for
        Common Stock registered in the names of the holders of Common Stock (which
        certificates for Common Stock shall be deemed also to be Right Certificates)
        and
        not by separate Right Certificates, and

      


      (ii) each
        Right will be transferable only in connection with the transfer of the
        underlying shares of Common Stock.

      


      (b) As
        soon
        as practicable after the Rights Record Date, the Company will send by
        first-class mail to each record holder of Common Stock as of the Close of
        Business on the Rights Record Date a copy of the Summary of Rights (see Exhibit
        B).

      


      For
        certificates for Common Stock issued after the Rights Record Date (including
        replacement certificates for shares of Common Stock outstanding on or prior
        to
        the Rights Record Date), but prior to the earliest of the Distribution Date,
        the
        Expiration Date and the date, if any, on which the Rights may be redeemed,
        the
        Company will have printed on or otherwise affixed to them the following
        legend:

      



      
        
          
          

        

        
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      This
        certificate also entitles the holder hereof to certain Rights as set forth
        in
        the Rights Agreement between the Company and Corporate Stock Transfer, Inc.
        as
        Rights Agent as the same shall be 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 principal executive offices of the Company.
        Under certain circumstances, as set forth in the Rights Agreement, such Rights
        will be evidenced by separate certificates and will no longer be evidenced
        by
        this Common Stock certificate. The Company will mail to the holder of this
        certificate a copy of the Rights Agreement without charge after receipt of
        a
        written request therefor. Under certain circumstances set forth in the Rights
        Agreement, Rights issued to, or held by, any Person who is, was or becomes
        an
        Acquiring Person or any Affiliate or Associate thereof (as such terms are
        defined in the Rights Agreement) or certain transferees of any thereof, whether
        currently held by or on behalf of such Person or by any subsequent holder,
        may
        be limited as provided in Section 7(f) of the Rights Agreement.

      


      For
        certificates containing the legend, until the Distribution Date, the Rights
        associated with Common Stock represented by such certificates shall be evidenced
        only by such certificates; transfer of any such certificates also shall
        constitute transfer of the Rights associated with the Common Stock.

      


      (c) After
        the
        Distribution Date, the Rights will be evidenced solely by the Right
        Certificates.

      


      (d) As
        soon
        as practicable after the Distribution Date, the Rights Agent will mail by
        first-class insured mail to each record holder of Common Stock as of the
        Close
        of Business on the Distribution Date, as shown by the records of the Company
        at
        the Close of Business on the Distribution Date, at the address of such holder
        shown on such records, a Right Certificate, in substantially the form attached
        hereto as Exhibit A, evidencing one Right for each share of Common Stock
        so
        held.

      


      Section
        4. FORM
        OF RIGHT CERTIFICATES.

      


      (a) The
        Right
        Certificates (and the forms of assignment and certification and of election
        to
        purchase shares to be printed on the reverse thereof) shall be in substantially
        the form of Exhibit A hereto and may have such marks of identification or
        designation and such legends, summaries or endorsements as are not inconsistent
        with this Agreement, or as may be required to comply with any law or to conform
        to usage.

      


      (b) Any
        Right
        Certificate issued pursuant to Section 3(a) or Section 22 that represents
        Rights
        Beneficially Owned by: (i)
        an
        Acquiring Person or any Associate or Affiliate of any Acquiring Person;
(ii)
        a
        transferee of an Acquiring Person (or of any such Associate or Affiliate)
        who
        becomes a transferee after the Acquiring Person becomes such; or
        (iii)
        a
        transferee of an Acquiring Person (or of any such Associate or Affiliate)
        who
        becomes a transferee prior to or concurrently with the Acquiring Person becoming
        such and receives such Rights pursuant to either (A)
        a
        transfer (whether or not for consideration) from the Acquiring Person to
        holders
        of equity interests in such Acquiring Person or to any Person with whom such
        Acquiring Person has any continuing agreement, arrangement or understanding
        regarding the transferred Rights, or
        (B)
        a
        transfer which the board of directors of the Company has determined is part
        of a
        plan, arrangement or understanding which has as a primary purpose or effect
        avoidance of Section 7(f), and any Right Certificate issued pursuant to Section
        6 or Section 11 upon transfer, exchange, replacement or adjustment of any
        other
        Right Certificate referred to in this sentence, shall contain (to the extent
        feasible and reasonably identifiable as such) the following legend:

      


      The
        Rights represented by this Right 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 


      
        
          
          

        

        
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      defined
        in the Rights Agreement) or certain transferees thereof. Accordingly, under
        certain circumstances as provided in the Rights Agreement, this Right
        Certificate and the Rights represented hereby may be limited as provided
        in
        Section 7(f) of such Agreement.

      


      Section
        5. COUNTERSIGNATURE
        AND REGISTRATION.

      


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

      


      (b) Following
        the Distribution Date, the Rights Agent will keep or cause to be kept books
        for
        registration and transfer of the Right Certificates issued hereunder. Such
        books
        shall show the names and addresses of the respective holders of the Right
        Certificates, the number of Rights evidenced on its face by each Right
        Certificate, the date of each Right Certificate and the number of each Right
        Certificate. 

      


      Section
        6. TRANSFER,
        SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED,
        LOST OR STOLEN RIGHT CERTI-FICATES.

      


      (a) Subject
        to Sections 4(b), 7(f) and 14, at any time after the Close of Business on
        the
        Distribution Date, and prior to the Close of Business on the Expiration Date
        or
        the day prior to the day, if any, when the Rights are to be redeemed under
        Section 23, any Right Certificate or Certificates may be transferred, split
        up,
        combined or exchanged for another Right Certificate or Right Certificates,
        entitling the registered holder to purchase such number of Units as the Right
        Certificate(s) surrendered then entitled such holder to purchase. Any registered
        holder desiring to transfer, split up, combine or exchange any Right Certificate
        shall make such request in writing delivered to the Rights Agent, and shall
        surrender the Right Certificate(s) to be transferred, split up, combined
        or
        exchanged, with the form of assignment on the reverse side(s) thereof duly
        completed and executed, at the stock transfer office of the Rights Agent.
        The
        Rights Agent shall countersign and deliver to the persons entitled thereto
        the
        Right Certificate(s) requested. The Company may require payment of a sum
        sufficient to cover any tax or government charge that may be imposed in
        connection therewith. However, neither the Rights Agent nor the Company shall
        be
        obligated to take any action with respect to the transfer of any such
        surrendered Right Certificate unless and until the registered holder shall
        have
        completed and signed the certificate contained in the form of assignment
        on the
        reverse side of such Right Certificate and shall have provided such additional
        evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
        or
        Affiliates or Associates thereof as the Company shall reasonably
        request.

      


      (b) Upon
        receipt by the Company and the Rights Agent of evidence reasonably satisfactory
        to them of the loss, theft, destruction or mutilation of a Right Certificate,
        and, in case of loss, theft or destruction, of indemnity or security reasonably
        satisfactory to them, and reimbursement to the Company 


      
        
          
          

        

        
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      and
        the
        Rights Agent of all reasonable expenses incident thereto, and upon surrender
        to
        the Rights Agent and cancellation of the Right Certificate, if mutilated,
        the
        Company will execute and deliver a new Right Certificate of like tenor to
        the
        Rights Agent for delivery to the registered owner in lieu of the Right
        Certificate so lost, stolen, destroyed or mutilated.

      


      Section
        7. EXERCISE
        OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.

      


      (a) Subject
        to Section 7(f), and unless earlier redeemed as provided in Section 23, the
        registered holder of any Right Certificate may exercise the Rights evidenced
        thereby in whole or in part at any time after the Distribution Date upon
        surrender of the Right Certificate, with the form of election to purchase
        on the
        reverse side thereof duly completed and executed, to the Rights Agent at
        the
        stock transfer office of the Rights Agent, together with payment of the Purchase
        Price for each Unit as to which the Rights are exercised, at or prior to
        the
        Close of Business on the tenth anniversary of the Rights Record Date or such
        other date to which the Rights may be extended as provided in this Agreement
        (the latest of such dates is the "Expiration
        Date").
        If at
        any time after the Distribution Date but prior to the Expiration Date the
        Company is unable, under its articles of incorporation, to issue the number
        and
        class of shares required to be issued upon the exercise of all of the
        outstanding Rights, the Company may issue upon exercise of any of the Rights
        shares of capital stock or other securities of the Company of value equivalent
        to the shares so required to be issued ("Equivalent Stock"), as determined
        by
        the board of directors.

      


      (b) The
        Purchase Price for each Unit pursuant to the exercise of a Right initially
        shall
        be US$200.00, subject to adjustment from time to time as provided in Sections
        11
        and 13. 

      


      (c) Upon
        receipt of a Right Certificate, with the form of election to purchase duly
        executed, accompanied by payment of the Purchase Price for the Units to be
        purchased and an amount equal to any applicable transfer tax in cash, or
        by
        certified check, bank draft or money order payable to the order of the Company,
        the Rights Agent shall thereupon promptly
        (i)
        requisition from the Company or any transfer agent of the Company (if different
        from the Rights Agent) a certificate for the number of shares to be purchased
        and the Company will comply, and hereby irrevocably authorizes its transfer
        agent to comply, with all such requests; (ii)
        requisition from the Company the amount of cash to be paid in lieu of issuance
        of a fractional share, when appropriate, in accordance with Section 14;
and
        (iii)
        promptly
        after receipt of such certificate from any such transfer agent, cause the
        same
        to be delivered to or upon the order of the registered holder of such Right
        Certificate, registered in the name(s) designated by such holder and cash
        for
        any fractional share. These same procedures shall be followed if Rights are
        exercised for Equivalent Stock. 

      


      (d) The
        Company shall not be required to pay any transfer tax which may be payable
        in
        respect of any transfer involved in the transfer or delivery of Right
        Certificates, or the issuance or delivery of certificates in a name other
        than
        the registered holder, or to issue or deliver any certificates upon the exercise
        of any Rights, until any such tax shall have been paid (any such tax being
        payable by the holder of such Right Certificate at the time of surrender)
        or
        until it has been established to the Company's satisfaction that no such
        tax is
        due.

      


      (e) If
        the
        registered holder exercises less than all the Rights, a new Right Certificate
        for the remaining unexercised Rights shall be issued by the Rights Agent
        to the
        registered holder of such Right Certificate or to his duly authorized assigns,
        subject to Section 14.

      



      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      (f) Notwithstanding
        any provision of this Agreement to the contrary, upon the occurrence of any
        of
        the events described in any of clauses (A), (B), (C) or (D) of Section
        11(a)(ii), or the occurrence of any of the events described in any of Section
        13(a)(i), 13(a)(ii) or 13(a)(iii), the adjustment and provision under Section
        11(a)(ii), and also the exchange provision under Section 27 and the redemption
        provision under Section 23, shall
        not apply
        with
        respect to any Rights that are at the time Beneficially Owned by
        (i)
        an
        Acquiring Person or by any Associate or Affiliate of such Acquiring Person
        (which Acquiring Person or Affiliate or Associate engages in, or realizes
        the
        benefit of, one or more of the transactions described in clause (A) or (B)
        of
        Section 11(a)(ii), realizes the benefits set forth in clause (C) of Section
        11(a)(ii) or, alone or together, become the Beneficial Owner(s) of a number
        of
        shares of Voting Stock which equals or exceeds the percentage of the general
        voting power as provided in clause (D) of Section 11(a)(ii), as the case
        may
        be), or
        (ii) a
        transferee of an Acquiring Person or of any Associate or Affiliate of such
        Acquiring Person (which engages in, or realizes the benefit of, one or more
        of
        the transactions described in clause (A) or (B) of Section 11(a)(ii), or
        realizes the benefits in clause (C) of Section 11(a)(ii), or, alone or together
        with such Acquiring Person or Associate or Affiliate, become the Beneficial
        Owner(s) of a number of shares of Voting Stock which equals or exceeds the
        percentage of the general voting power as provided in clause (D) of Section
        11(a)(ii), as the case may be) (A)
        who
        becomes a transferee after the Acquiring Person becomes such, or
        (B)
        who
        becomes a transferee prior to or concurrently with the Acquiring Person becoming
        such and receives such Rights either
        by (1)
        a
        transfer (whether or not for consideration) from the Acquiring Person to
        holders
        of equity interests in such Acquiring Person or to any Person with whom such
        Acquiring Person has any continuing agreement, arrangement or understanding
        regarding the transferred Rights, or
        (2)
        a
        transfer which the board of directors of the Company has determined is part
        of a
        plan, arrangement or understanding which has as a primary purpose or effect
        the
        avoidance of this Section 7(f). Upon the exercise of such Rights covered
        by this
        Section 7(f), the holders shall be entitled to receive, upon payment of the
        Purchase Price, the number of Units issuable upon exercise of such Rights
        without
        giving effect
        to the
        adjustment provided for under Section 11(a)(ii). The Company shall use all
        reasonable efforts to insure that the provisions of this Section 7(f) and
        Section 4(b) are complied with, but shall have no liability to any holder
        of
        Right Certificates or other Person as a result of its making or failing to
        make
        any determinations with respect to an Acquiring Person or its Affiliates,
        Associates or transferees hereunder.

      


      (g) Notwithstanding
        anything in this Agreement to the contrary, neither the Rights Agent nor
        the
        Company shall be obligated to undertake any action with respect to a registered
        holder upon the occurrence of any purported exercise as set forth in this
        Section 7 unless such registered holder shall have
        (i)
        completed and signed the certificate contained in the form of election to
        purchase set forth on the reverse side of the Right Certificate surrendered
        for
        such exercise,
        and (ii)
        provided
        such additional evidence of the identity of the Beneficial Owner (or former
        Beneficial Owner) or Affiliates or Associates thereof as the Company shall
        reasonably request.

      


      Section
        8. CANCELLATION
        AND DESTRUCTION OF RIGHT CERTIFICATES.
        All
        Right Certificates surrendered for the purpose of exercise, transfer, split
        up,
        combi-nation or exchange shall, if surrendered to the Company or to any of
        its
        agents, be delivered to the Rights Agent for cancellation or in canceled
        form,
        or, if surrendered to the Rights Agent, shall be cancelled by it, and no
        Right
        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 other
        Right
        Certificate purchased or acquired by the Company otherwise than upon the
        exercise thereof. The Rights Agent shall deliver all cancelled Right
        Certificates to the Company, or shall, at the written request of the Company,
        destroy such cancelled Right Certificates, and in such case shall deliver
        a
        certificate of destruction thereof to the Company.

      



      
        
          
          

        

        
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      Section
        9. RESERVATION
        AND AVAILABILITY OF SHARES; REGISTRATION.

      


      (a) The
        Company covenants and agrees that it shall (i)
        on
        or
        prior to the Rights Record Date, take all such action as shall be necessary
        to
        cause to be reserved and kept available out of its authorized and unissued
        capital stock, enough shares of Preferred Stock to permit the exercise in
        full
        of all Rights to be outstanding as of the Rights Record Date, (ii)
        no later
        than promptly following the Distribution Date, take all such action as shall
        be
        necessary to cause to be reserved and kept available out of its authorized
        and
        unissued capital stock, or its authorized and issued shares held in its
        treasury, the number of shares of Common Stock that will, from time to time,
        be
        sufficient to permit the exercise in full of all Rights from time to time
        outstanding; (iii)
        take all
        such action as may be necessary to insure that all shares delivered upon
        exercise of Rights shall be duly and validly authorized and issued and be
        fully
        paid and nonassessable; and
        (iv)
        pay when
        due any transfer taxes and charges in respect of the issuance or delivery
        of the
        Right Certificates or of any shares upon the exercise of Rights (except as
        otherwise provided in Section 7(d)).

      


      (b) The
        Company agrees to use its best efforts as soon as practicable following the
        Distribution Date, to file with the Securities and Exchange Commission a
        registration statement to permit the issuance of shares on exercise of the
        Rights under the Securities Act of 1933, and to take the steps necessary
        to
        permit such issuance under the securities "blue sky" laws of the states where
        registered holders reside. The Company may temporarily suspend for up to
        90 days
        the exercise of the Rights to file a registration statement and other documents
        as needed to allow exercise of the Rights. At the start and end of a suspension,
        the Company shall issue a public announcement and notify the Rights Agent
        that
        exercise has been suspended and the end of the suspension.

      


      (c) The
        Rights shall not be exercisable in any jurisdiction if not there legal.


      


      (d) 
        The
        Company shall use its reasonable efforts to cause all shares reserved for
        issuance upon exercise of Rights to be listed on the Company’s exchange or
        quotation market.

      


      Section
        10. RECORD DATE.
        Each
        Person in whose name any stock certificate is issued upon exercise of Rights
        shall be deemed to have become the holder of record of the shares represented
        thereby on, and such certificate shall be dated, the date when the Right
        Certificate was surrendered and the Purchase Price paid. Prior to exercise
        of
        the Rights, the holder of a Right Certificate shall not be entitled to any
        rights of a stockholder of the Company with respect to shares for which the
        Rights shall be exercisable, including without limitation the right to vote
        or
        to receive dividends or other distributions, and such holder 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 (INCLUDING
        FLIP-IN PROVISION).
        The
        Purchase Price, number and kind of shares or other securities covered by
        each
        Right and the number of Rights outstanding are subject to adjustment from
        time
        to time as provided in this Section 11.

      


      (a)  (i)
        If
        the
        Company shall at any time after the date of this Agreement (A)
        declare
        and pay a dividend on the shares which are subject to the Rights ("Subject
        Shares") payable in shares of stock of the Company,
        (B) subdivide
        or split the Subject Shares,
        (C) combine
        or consolidate the Subject Shares into a smaller number of shares or effect
        a
        reverse stock split of the Subject Shares, or
        (D)
        issue
        any shares of its capital stock in a reclassification of the Subject Shares
        (including any such reclassification in connection with a consolidation or
        merger in which the Company is the continuing or surviving
        corporation),
        then, and in each 


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      such
        event,
        except
        as otherwise provided in this Section 11(a), the Purchase Price in effect
        at the
        time of the record date for dividend or subdivision, split, reverse split,
        combination, consolidation or reclassification, and the number and kind of
        shares of capital stock issuable on such date, shall be proportionately adjusted
        so that the holder of any Right exercised after such time shall be entitled
        to
        receive the aggregate number and kind of shares of capital stock which, if
        such
        Right had been exercised immediately prior to such date and at a time when
        the
        transfer books of the Company were open, he would have received upon such
        exercise and been entitled to receive. If an event occurs which would require
        an
        adjustment under both this Section 11(a)(i) and Section 11(a)(ii), 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).
        

      


      (ii) If
        at any
        time after the date of this Agreement

      


      (A)
        any
        Acquiring Person, or any Associate or Affiliate of any Acquiring Person,
        directly or indirectly (1)
        shall
        merge into the Company or any of its Subsidiaries or otherwise combine with
        the
        Company or any of its Subsidiaries and the Company or such Subsidiary shall
        be
        the continuing or surviving corporation of such merger or combination and
        the
        Common Stock shall remain outstanding and the outstanding shares thereof
        shall
        not be changed into or exchanged for stock or other securities of the Company
        or
        of any other Person or cash or any other property,
        or (2)
        shall
        sell or otherwise transfer in one or more transactions, assets to the Company
        or
        any of its Subsidiaries in exchange for 15 percent or more of the shares
        of any
        class of capital stock of the Company or any of its Subsidiaries, and the
        Common
        Stock shall remain outstanding and unchanged, or

      


      (B)
        directly
        or indirectly, any Acquiring Person, or any Associate or Affiliate of any
        Acquiring Person, shall
        (1)
        in one
        or more transactions, transfer assets to the Company or any of its Subsidiaries
        in exchange (in whole or in part) for shares of any class of capital stock
        of
        the Company or any of its Subsidiaries or for securities exercisable for
        or
        convertible into shares of any class of capital stock of the Company or any
        of
        its Subsidiaries or otherwise obtain from the Company or any of its
        Subsidiaries, with or without consideration, any additional shares of any
        class
        of capital stock of the Company or any of its Subsidiaries or other securities
        exercisable for or convertible into shares of any class of capital stock
        of the
        Company or any of its Subsidiaries (other than as part of a pro rata
        distribution by the Company or such Subsidiary to all holders of Common Stock),
        or
        (2)
        sell,
        purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
        (in
        one or more transactions), to, from or with, as the case may be, the Company
        or
        any of its Subsidiaries, assets on terms and conditions less favorable to
        the
        Company or such Subsidiary than the Company or such Subsidiary would be able
        to
        obtain in arm's-length negotiation with an unaffiliated third party,
or
        (3)
        receive
        any compensation from the Company or any of the Company's Subsidiaries other
        than compensation for full-time employment as a regular employee, or fees
        for
        serving as director, at rates in accordance with the Company's (or its
        Subsidiaries') past practices, or
        (4)
        receive
        the benefit, directly or indirectly (except proportionately as a stockholder),
        of any loans, advances, guarantees, pledges or other financial assistance
        provided by the Company or any of its Subsidiaries, on terms and conditions
        less
        favorable to the Company or such Subsidiary than the Company or such Subsidiary
        would be able to obtain in arm's-length negotiation with an unaffiliated
        third
        party, or

       

      (C) during
        any such time as there is an Acquiring Person, there shall be any
        reclassification of securities (including any reverse stock split), or
        recapitalization of the Company, or any merger or consolidation of the Company
        with any of its Subsidiaries or any other similar transaction or series of
        transactions involving the Company or any of its Subsidiaries (whether or
        not
        with or into or otherwise involving an Acquiring Person or any Affiliate
        or
        Associate of such Acquiring Person) which has the effect, directly or
        indirectly, of increasing by more than one percent the proportionate share
        of
        the outstanding shares 


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      of
        any
        class of equity securities, or of securities exercisable for or convertible
        into
        equity securities, of the Company or any of its Subsidiaries which is directly
        or indirectly owned by any Acquiring Person or any Associate or Affiliate
        of any
        Acquiring Person, or
        

      


      (D) any
        Person shall become an Acquiring Person otherwise than pursuant to a Qualified
        Offer, 

      then,
        and in each such case,
        but
        subject to Section 27 (covering exchange of Rights for shares of Common Stock,
        without requiring exercise of Rights) and to Section 23 (covering redemption
        of
        Rights), proper adjustment and provision shall be made so that each holder
        of a
        Right (except as provided below and in Section 7(f)) shall, on and after
        the
        later of (I)
        the date
        of the occurrence of an event described in clause (A), (B), (C) or (D) of
        this
        Section 11(a)(ii),
        or (II) the
        expiration of the period within which the Rights may be redeemed under Section
        23 (as the same may have been amended under Section 26), have the right to
        receive, upon exercise thereof at the then current Purchase Price, the number
        of
        shares of Common Stock equal to the result obtained by (x)
        multiplying the then current Purchase Price by the then number of Units for
        which a Right is then exercisable and dividing that product by (y)
        50
        percent of the current market price per share of Common Stock (determined
        in
        accordance with Section 11(d)) on the date of the occurrence of the relevant
        event listed above in clause (A), (B), (C) or (D) of this subparagraph (ii);
        PROVIDED,
        HOWEVER,
        that if
        the transaction that would otherwise give rise to the foregoing adjustment
        is
        also subject to the provisions of Section 13, then only the provisions of
        Section 13 (flip-over provisions) shall apply and no adjustment shall be
        made
        pursuant to this Section 11(a)(ii). The Company shall not consummate any
        such
        merger, combination, transfer or transaction referred to in any of such clauses
        (A), (B) and (C) unless prior thereto there shall be sufficient authorized
        but
        unissued Common Stock to permit the exercise in full of the Rights in accordance
        with the foregoing sentence, unless the Board of Directors has determined
        to
        issue Equivalent Stock in accordance with Section 7(a); PROVIDED,
        HOWEVER,
        that in
        no case may the Company consummate any such merger, combination, transfer
        or
        transaction if at the time of or immediately after such transaction 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.

      


      If
        the
        Company issues Equivalent Stock upon the exercise of any Rights pursuant
        to the
        immediately preceding paragraph, then, upon any such exercise, proper provision
        shall be made so that the holder of a Right (except as provided in Section
        7(f))
        shall have the right to receive, upon such exercise at the then current Purchase
        Price, such number of shares or other units of Equivalent Stock of the Company
        as shall equal the result obtained by
        (x)
        multiplying the then current Purchase Price by the number of Units for which
        a
        Right is then exercisable and dividing that product by (y)
        50
        percent of the current market price per share or other unit of the Equivalent
        Stock of the Company (determined on substantially the same basis as is
        prescribed by Section 11(d) with respect to the valuation of Common Stock)
        on
        the date of occurrence of the relevant event listed above in clause (A),
        (B),
        (C) or (D) of this subparagraph (ii). If at any time the Company should be
        prohibited by law, by any provision of its articles of incorporation, or
        by any
        instrument or agreement to which the Company is a party or by which it is
        bound,
        from issuing, or should be unable under its articles of incorporation to
        issue,
        sufficient Equivalent Stock to permit the exercise of all outstanding Rights
        in
        accordance with the foregoing sentence, then, in lieu of issuing such Equivalent
        Stock upon such exercise, the Company shall pay to each holder of a Right
        (except as provided in Section 7(f)) upon surrender of the Right as provided
        herein but without payment of the Purchase Price, an amount in cash for each
        Right equal to the Purchase Price.

      


      (b) If
        after
        the Rights Record Date the Company sets a record date for the issuance of
        rights
        or warrants to all holders of Common Stock or Subject Shares entitling them
        (for
        a period expiring 


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      


      within
        45
        calendar days after such record date) to subscribe for or purchase Common
        Stock
        or Subject Shares or securities convertible into Common Stock or Subject
        Shares
        at a price per share (or having a conversion price per share, if a security
        convertible into Common Stock) less than the current market price per share
        (determined with Section 11(d)) on such record date, the Purchase Price to
        be in
        effect after such record date shall be determined by multiplying the Purchase
        Price in effect immediately prior to such record date by a fraction; the
        numerator shall be the total number of shares of Common Stock and Subject
        Shares
        outstanding on such record date plus the number of shares of Common Stock
        which
        the aggregate offering price of the total number of shares so to be offered
        (and/or the aggregate initial conversion price of the convertible securities
        so
        to be offered) would purchase at such current market price, and the denominator
        shall be the total number of shares of Common Stock and Subject Shares
        outstanding on such record date plus the number of additional shares to be
        offered for subscription or purchase (or into which the convertible securities
        to be offered are initially convertible). In case such subscription or purchase
        price may be paid, in whole or in part, in a form other than cash, the value
        of
        such consideration shall be as determined in good faith by the board of
        directors of the Company, whose determination shall be described in a statement
        filed with the Rights Agent. Shares owned by or held for the account of the
        Company shall not be deemed outstanding for the purpose of any such computation.
        Such adjustment shall be made successively whenever such a record date is
        fixed,
        and if such rights or warrants are not so issued, the Purchase Price shall
        be
        adjusted to be the Purchase Price which would then be in effect if such record
        date had not been set.

      


      (c) If
        the
        Company at any time after the Rights Record Date sets a record date for making
        a
        distribution on shares of Common Stock or the Subject Shares, whether by
        way of
        a dividend, distribution, reclassification of stock, recapitalization,
        reorganization or partial liquidation of the Company or otherwise (and including
        any such distribution made in connection with a consolidation or merger in
        which
        the Company is the continuing corporation), of subscription rights or warrants
        (excluding those referred to in Section 11(b)), evidences of indebtedness
        or
        other assets (other than
        (i)
        regular
        periodic cash dividends, (ii)
        a
        dividend payable in Common Stock
        or (iii)
        a
        distribution which is part of or is made in connection with a transaction
        to
        which Section 11(a)(ii) or Section 13 applies), then the Purchase Price to
        be in
        effect after such record date shall be determined by multiplying the Purchase
        Price in effect immediately prior to such record date by a fraction, of which
        the numerator shall be the current market price per share of Common Stock
        (determined with Section 11(d)) on such record date, less the fair market
        value
        applicable to one share of Common Stock (as determined in good faith by the
        board of directors of the Company, whose determination shall be described
        in a
        statement filed with the Rights Agent) of such assets or evidences of
        indebtedness or of such subscription rights or warrants so to be distributed,
        and of which the denominator shall be such current market price per share
        of
        Common Stock. Such adjustments shall be made successively whenever such a
        record
        date is fixed; and if such distribution is not so made, the Purchase Price
        shall
        again be adjusted to be the Purchase Price which would then be in effect
        if such
        record date had not been fixed.

      


      (d) The
        "current
        market price"
        per
        share of Common Stock on any date shall be deemed to be the average of the
        daily
        closing prices per share of such Common Stock for the 30 consecutive Trading
        Days (defined below) immediately prior to such date; provided, however, that
        if
        the current market price per share of Common Stock is determined during a
        period
        following the announcement by the issuer of such Common Stock of a dividend
        or
        distribution on such Common Stock payable in shares of such Common Stock
        or
        securities convertible into shares of Common Stock (other than the Rights),
        and
        prior to the expiration of 30 Trading Days after the ex-dividend date for
        such
        dividend or distribution, then, and in each such case, the current market
        price
        shall be appropriately adjusted to reflect the current market price per share
        of
        Common Stock in connection with ex-dividend trading. The closing price for
        each
        day shall be the last sale price, or, in case no such sale takes place on
        such
        day, the average of the closing bid and asked prices, in either case as reported
        in the principal consolidated transaction reporting system of the principal
        market where the shares of 


      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      
        Common
          Stock are listed or admitted to trading. If the shares of Common Stock
          are not
          listed or admitted to trading on any national securities exchange, then
          closing
          price will be determined with reference to the average of the high bid
          and low
          asked prices in the over-the-counter market, as reported by the National
          Association of Securities Dealers, Inc., Automated Quotation System ("NASDAQ").
          If on any such date the shares of Common Stock are not quoted by any such
          organization, the fair market value of such shares on such date as determined
          in
          good faith by the board of directors shall be used. Any such determination
          of
          current market price shall be described in a statement filed with the Rights
          Agent.

        


        For
          the
          purpose of any computation hereunder, the "current
          market price"
          of a
          Unit shall be deemed to be equal to the current market price per share
          of Common
          Stock, and the "current market price" of a Subject Share shall be deemed
          to be
          equal to the current market price per share of Common Stock divided by
          the
          number of Subject Shares which comprise a Unit.

        


        For
          purposes of this Agreement, the term "Trading
          Day"
          shall
          mean a day on which the principal national securities exchange on which
          the
          shares of Common Stock are listed or admitted to trading is open for the
          transaction of business or, if the shares of Common Stock are not listed
          or
          admitted to trading on any national securities exchange, a Business
          Day.

        


        (e) No
          adjustment in the Purchase Price shall be required unless the adjustment
          would
          require an increase or decrease of at least one percent in 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-thousandth of a share, as the case
          may
          be. Notwithstanding the proviso to the first sentence of this Section 11(e),
          any
          adjustment required by this Section 11 shall be made no later than the
          earlier
          of three years from the date of the transaction which gives rise to such
          adjustment or the date of the expiration of the Rights.

        


        (f) If
          at any
          time, as a result of an adjustment made pursuant to Section 11(a), the
          holder of
          any Right thereafter exercised shall become entitled to receive any shares
          of
          capital stock of the Company other than shares of Common Stock, thereafter
          the
          number of such other shares so receivable upon exercise of any Right 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 such shares,
          contained in Sections 11(a) through (c), inclusive. The provisions of Sections
          7, 9, 10, 13 and 14 with respect to the shares of Common 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 represent the right to purchase, at the
          adjusted
          Purchase Price, the number of shares purchasable 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 under Section 11(i), when
          there is
          an 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 shares (calculated to the nearest
          one-thousandth) obtained by (i)
          multiplying
          (x)
          the
          number of shares covered by a Right immediately prior to such adjustment
          by
(y)
          the
          Purchase Price in effect immediately prior to such adjustment of the Purchase
          Price, and (ii)
          dividing
          the result by the Purchase Price in effect immediately after such adjustment.
          

        



        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        


        (i) The
          Company may elect, on or after the date of adjustment of the Purchase Price,
          to
          adjust the number of Rights, in substitution for any adjustment in the
          number of
          shares purchasable upon the exercise of each Right. Each of the Rights
          outstanding after such adjustment of the number of Rights shall be exercisable
          for the number of Units for which a Right was exercisable immediately prior
          to
          such adjustment. Each Right held of record prior to such adjustment of
          the
          number of Rights shall become that number of Rights (calculated to the
          nearest
          one-thousandth) obtained by dividing the Purchase Price in effect immediately
          prior to adjustment of the Purchase Price by the Purchase Price in effect
          immediately after adjustment of the Purchase Price. The Company shall make
          a
          public announcement of its election to adjust the number of Rights, indicating
          the record date for the adjustment, and, if known at the time, the amount
          of the
          adjustment to be made. This record date may be the date on which the Purchase
          Price is adjusted or any day thereafter, but, if the Right Certificates
          have
          been issued, shall be at least 10 days later than the date of the public
          announcement. If Right Certificates have been issued, upon each adjustment
          of
          the number of Rights the Company shall cause to be distributed to holders
          of
          record of Right Certificates on such record date, Right Certificates to
          show
          (subject to Section 14) the additional Rights to which the holders shall
          be
          entitled as a result of such adjustment. However, at its option, the Company
          may
          shall cause to be distributed in substitution and replacement for the Right
          Certificates held by the holders prior to the date of adjustment, and upon
          surrender thereof, if required by the Company, new Right Certificates to
          evidence all the Rights to which the holders are entitled after the adjustment.
          

        


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

        


        (k) If
          this
          Section 11 requires that an adjustment in the Purchase Price be made effective
          as of the 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 the additional shares or securities of
          the
          Company, if any, issuable as a consequence of 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 or securities upon the occurrence of such event.

        


        (l) Notwithstanding
          the other provisions of this Section 11, the Company shall be entitled
          to make
          such adjustments in the number of shares which may be acquired upon exercise
          of
          the Rights, and such adjustments in the Purchase Price, in addition to
          those
          adjustments expressly required by the other subsections of this Section
          11, as
          and to the extent that the Company, in its sole discretion, shall determine
          to
          be advisable, in order that (x)
          the
          holders of the Rights shall be treated equitably and in accordance with
          the
          purpose and intent of this Agreement, and
          (y)
          to the
          extent reasonably possible, such event shall not, in the opinion of counsel
          for
          the Company, result in the stockholders of the Company being subject to
          any
          United States federal income tax liability by such adjustments. The events
          which
          would enable the Company to make such further adjustments include (i)
          any
          reclassification, consolidation or subdivision of the Common Stock;
          (ii)
          any
          reorganization or partial liquidation of the Company or similar transaction;
          (iii)
          any
          issuance wholly for cash of any Common Stock at less than the current market
          price; (iv)
          any
          issuance wholly for cash of Common Stock or securities which by their terms
          are
          convertible into or exchangeable for Common Stock; (v)
          any
          stock
          dividends;
          or (vi)
          any
          issuance of rights, options or warrants to holders of Common Stock.


        


        Section
          12. CERTIFICATION
          OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
          If an
          adjustment is made under Section 11 or 13, the Company shall (i)
          promptly
          prepare a certificate setting forth such adjustment, and a brief statement
          of
          the facts accounting for such adjustment; (ii) 


        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        


        promptly
          file with the Rights Agent and any different transfer agent for the Common
          Stock
          a copy of such certificate;
          and (iii)
          mail a
          brief summary to each holder of a Right Certificate in accordance with
          Section
          25. Notwithstanding the foregoing sentence, the failure of the Company
          to give
          such notice shall not affect the validity of, or the force or effect of,
          the
          requirement for such adjustment.

        


        Section
          13. CONSOLIDATION,
          MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER (INCLUDING FLIP-OVER
          PROVISION).

        


        (a) If,
          at
          any time after an Acquiring Person has become such,

        


        (i) the
          Company shall consolidate with, or merge with and into, any other Person
          and the
          Company shall not be the continuing or surviving corporation of such
          consolidation or merger, or

        


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

        


        (iii) the
          Company shall sell or otherwise transfer (or one or more of its Subsidiaries
          shall sell or otherwise transfer), in one or more transactions, assets
          or
          earning power aggregating more than 50 percent of the assets or earning
          power of
          the Company and its Subsidiaries (taken as a whole) to any other Person,
          (other
          than a pro rata distribution by the Company of assets (including securities)
          of
          the Company or any of its Subsidiaries to all holders of the Company's
          Common
          Stock),
          then,
          on and
          after the later of
          (I) the
          date
          of the occurrence of an event described in clause (i), (ii) or (iii) of
          this
          Section 13(a), or
          (II)
          the date
          of the expiration of the period within which the Rights may be redeemed
          pursuant
          to Section 23 (as the same may have been amended as provided in Section
          26):

        


        (A) proper
          provision shall be made so that each holder of a Right shall thereafter
          have the
          right to receive, upon the exercise thereof at the then current Purchase
          Price,
          such number of shares of common stock of the Principal Party as shall be
          equal
          to the result obtained by (x)
          multiplying
          the then current Purchase Price by the number of Units for which a Right
          is then
          exercisable and dividing that product by
          (y)
          50
          percent of the current market price per share of the common stock of the
          Principal Party (determined in the same manner as the current market price
          of
          Common Stock is determined under Section 11(d)) on the date of consummation
          of
          such consolidation, merger, sale or transfer;

        


        (B) the
          Principal Party shall thereafter be liable for, and shall assume, by virtue
          of
          such consolidation, merger, sale or transfer, all the obligations and duties
          of
          the Company pursuant to this Agreement, provided that the Principal Party
          shall,
          prior to the first occurrence of an event described in clause (i), (ii)
          or (iii)
          of this Section 13(a), have caused to be reserved out of its authorized
          and
          unissued shares of common stock (or its authorized and issued shares of
          common
          stock held in its treasury), for issuance pursuant to this Agreement, the
          number
          of shares of common stock that will be sufficient to permit the exercise
          in full
          of the Rights after the occurrence of such event;

        


        (C) the
          term
          "Company" wherever used in this Agreement shall thereafter be deemed to
          refer to
          such Principal Party; and
          

        


        (D) the
          Principal Party shall, in addition to the reservation of shares of its
          common
          stock as provided in the proviso to clause (B) above, take such steps (including
          without limitation 


        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        


        compliance
          with the Company's other obligations as set forth in Section 9) in connection
          with such consummation as may be necessary to assure that the provisions
          hereof
          shall thereafter be applicable, as nearly as reasonably may be, in relation
          to
          the shares of its common stock thereafter deliverable upon the exercise
          of the
          Rights; provided, however, that, upon the subsequent occurrence of any
          merger,
          consolidation, sale of all or substantially all 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 such holder, 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.

        


        (b) For
          purposes of this Agreement, "Principal Party" shall mean

        


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

        


        (ii) in
          the
          case of any transaction described in clause (iii) of Section 13(a), the
          Person
          that is the party receiving the greatest portion of the assets or earning
          power
          transferred pursuant to such transaction or transactions, or, if each Person
          that is a party to such transaction or transactions receives the same portion
          of
          the assets or earning power so transferred or if the Person receiving the
          greatest portion of the assets or earning power cannot be determined, whichever
          of such Persons is the issuer of common stock having the greatest market
          value
          of shares outstanding; 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 12-month period registered under Section 12 of the Exchange
          Act, and such Person is a direct or indirect Subsidiary of another corporation
          the common stock of which is and has been so registered, "Principal Party"
          shall
          refer to such other corporation; (2)
          if the
          common stock of such Person is not and has not been so registered and such
          Person is not a direct or indirect Subsidiary of another corporation the
          common
          stock of which is and has been so registered, "Principal Party" shall refer
          to
          the corporation which ultimately controls such Person;
          (3)
          in case
          such Person is a Subsidiary, directly or indirectly, of more than one
          corporation, the common stocks of all of which are and have been so registered,
          "Principal Party" shall refer to whichever of such corporations is the
          issuer of
          common stock having the greatest market value of shares held by the public;
          and
(4)
          if
          the
          common stock of such Person is not and has not been so registered and such
          Person is owned, directly or indirectly, by a joint venture formed by two
          or
          more Persons that are not owned, directly or indirectly, by the same Person,
          the
          rules set forth in clauses (1), (2) and (3) above shall apply to each of
          the
          chains of ownership having an interest in such joint venture as if such
          Person
          were a "Subsidiary" of both or all of such joint venturers and the Principal
          Party in each such chain shall bear the obligations set forth in this Section
          13
          in the same ratio as its direct or indirect interests in such Person bear
          to the
          total of such interests.

        


        (c) The
          Company shall not consummate any such consolidation, merger, sale or transfer
          unless prior thereto the Company and the Principal Party shall have executed
          and
          delivered to the Rights Agent 


        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        


        a
          supplemental agreement making valid provision for the results described
          in
          clause (A) of Section 13(a) and confirming that the Principal Party will
          perform
          its obligations under this Section 13(a); provided, however, that in no
          case may
          the Company consummate any such consolidation, merger, sale or transfer
          if
(i)
          at the
          time of or immediately after such transaction 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 (ii)
          prior
          to, simultaneously with or immediately after such transaction, the stockholders
          of the Person which constitutes, or would constitute, the Principal Party
          for
          purposes of this Section 13 shall have received a distribution of Rights
          previously owned by such Person or any of its Affiliates and
          Associates.

        


        (d) The
          provisions of this Section 13 shall similarly apply to successive mergers
          or
          consolidations or sales or other transfers. This Section 13 shall not be
          applicable to a transaction described in Subparagraphs (i), (ii) or (iii)
          of
          Subsection (a) of this Section if
          (i)
          such
          transaction is consummated with a Person or Persons who acquired Common
          Stock
          pursuant to a Qualified Offer (or a wholly owned subsidiary of any such
          Person
          or Persons);
          (ii)
          the
          price per share of Common Stock offered in such transaction or distributable
          to
          stockholders upon conclusion of such transaction is not less than the price
          per
          share of Common Stock paid to all holders of Common Stock whose shares
          were
          purchased pursuant to such Qualified Offer;
          and (iii)
          the form
          of consideration being offered to the remaining holders of Common Stock
          pursuant
          to such transaction or distributable to stockholders upon conclusion of
          such
          transaction is the same as the form of consideration paid pursuant to such
          Qualified Offer. Upon conclusion of any transaction described in the foregoing
          sentence, all Rights shall expire.

        


        Section
          14. FRACTIONAL
          RIGHTS AND FRACTIONAL SHARES.

        


        (a) The
          Company shall not be required to issue fractions of Rights or distribute
          Right
          Certificates which evidence fractional Rights. If the Company shall elect
          not to
          issue such fractional Rights, in lieu of such fractional Rights, there
          shall be
          paid to the registered holders of the Right Certificates with regard to
          which
          such Fractional Rights would otherwise be issuable, cash equal to the same
          fraction of the current market value of a whole Right. For the purposes
          of this
          Section 14(a), the current market value of a whole Right shall be the closing
          price of the Rights for the Trading Day immediately prior to the date on
          which
          such fractional Rights would have been otherwise issuable. The closing
          price for
          any day shall be the last sale price, regular way, or, in case no such
          sale
          takes place on such day, the average of the closing bid and asked prices,
          regular way, in either case as reported in the principal consolidated
          transaction reporting system with respect to securities listed or admitted
          to
          trading on the New York Stock Exchange or, if the Rights are not listed
          or
          admitted to trading on the New York Stock Exchange, as reported in the
          principal
          consolidated transaction reporting system with respect to securities listed
          on
          the principal national securities exchange on which the Rights are listed
          or
          admitted to trading or, if the Rights are not listed or admitted to trading
          on
          any national securities exchange, the average of the high bid and low asked
          prices in the over-the-counter market, as reported by NASDAQ. If on any
          such
          date the Rights are not quoted by any such organization, the fair value
          of the
          Rights on such date as determined in good faith by the board of directors
          of the
          Company shall be used. Any such determination of current market value shall
          be
          described in a statement filed with the Rights Agent.

        


        (b) The
          Company shall not be required to issue fractions of shares upon exercise
          of a
          Right or to distribute certificates which evidence fractional shares. In
          lieu of
          fractional shares, the Company shall pay to the registered holders of Right
          Certificates at the time such Right Certificates are exercised, cash equal
          to
          the same fraction of the current market value of a share of Common Stock.
          For
          purposes of this Section 14, the current market value of a share of Common
          Stock
          shall be the closing price of a share of Common Stock for the Trading Day
          immediately prior to the date of such exercise.

        



        
          
            
            

          

          
            20

            
              

            

          

          
            
            

          

        


        (c) The
          holder of a Right by the acceptance thereof expressly waives his right
          to
          receive any fractional Rights or any fractional shares upon exercise of
          a
          Right.

        


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

        


        Section
          16. AGREEMENT
          OF RIGHT 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 Common Stock; 

        


        (b) on
          and
          after the Distribution Date, the Right Certificates will be transferable
          only on
          the registry books of the Rights Agent and then if surrendered at the stock
          transfer office of the Rights Agent, duly endorsed or accompanied by a
          proper
          instrument of transfer; and

        


        (c) the
          Company and the Rights Agent may deem and treat the person in whose name
          the
          Right Certificate (or, prior to the Distribution Date, the associated 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
          Right Certificates or the associated Common Stock certificate made by anyone
          other than the Company or the Rights Agent) for all purposes whatsoever.
          Neither
          the Company nor the Rights Agent shall be affected by any notice to the
          contrary.

        


        Section
          17. RIGHT
          CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
          No
          holder, as such, of any Right Certificate shall be entitled to vote, receive
          dividends or be deemed for any purpose the holder of Common Stock or any
          other
          securities of the Company which may at any time be issuable on the exercise
          of
          the Rights represented thereby. No provision of this Agreement or of any
          Right
          Certificate shall be construed to confer upon the holder of any Right
          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 to receive notice of meetings or other actions affecting
          stockholders (except as provided in Section 24), or to receive dividends
          or
          subscription rights, or otherwise, until the Rights evidenced by such Right
          Certificate have been exercised.


        
          
            
            

          

          
            21

            
              

            

          

          
            
            

          

        


        


        Section
          18. CONCERNING
          THE RIGHTS AGENT.

        


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

        


        (b) The
          Rights Agent shall be protected and shall incur no liability for or in
          respect
          of any action taken, suffered or omitted by it in connection with its
          administration of this Agreement in reliance upon any Right Certificate
          or
          certificate for Common Stock or for other securities of the Company, instrument
          of assignment or transfer, power of attorney, endorsement, affidavit, letter,
          notice, direction, consent, certificate, statement, or other paper or document
          believed by it, acting with reasonable care, to be genuine and to be 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 stock transfer
          business of the Rights Agent or any successor Rights Agent, shall be the
          successor to the Rights Agent under this Agreement without the execution
          or
          filing of any paper or any further act on the part of any of the parties
          hereto,
          provided that such corporation would be eligible for appointment as a successor
          Rights Agent under the provisions of Section 21. In case at the time such
          successor Rights Agent shall succeed to the agency created by this Agreement
          any
          of the Right Certificates shall have been countersigned but not delivered,
          any
          such successor Rights Agent may adopt the countersignature of the predecessor
          Rights Agent and deliver such Right Certificates so countersigned. In case
          at
          that time any of the Right Certificates shall not have been countersigned,
          any
          successor Rights Agent may countersign such Right Certificates either in
          the
          name of the predecessor Rights Agent or in the name of the successor Rights
          Agent and in all such cases such Right Certificates shall have the full
          force
          provided in the Right 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 Right Certificates shall have been countersigned but not delivered,
          the
          Rights Agent may adopt the countersignature under its prior name and deliver
          Right Certificates so countersigned, and in case at that time any of the
          Right
          Certificates shall not have been countersigned, the Rights Agent may countersign
          such Right Certificates either in its prior name or in its changed name,
          and in
          all such cases such Right Certificates shall have the full force provided
          in the
          Right Certificates and in this Agreement.

        


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

        



        
          
            
            

          

          
            22

            
              

            

          

          
            
            

          

        


        (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. 

        


        (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 be proved or established
          by the Company prior to taking or suffering any action hereunder, such
          fact or
          matter (unless other evidence in respect thereof be herein specifically
          prescribed) may be deemed to be conclusively proved and established by
          a
          certificate signed by the Chairman of the Board, the President, any Vice
          President, or the Secretary of the Company and delivered to the Rights
          Agent,
          and such certificate shall be full authorization to the Rights Agent for
          any
          action taken or suffered in good faith by it under the provisions of this
          Agreement in reliance upon such certificate.

        


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

        


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

        


        (e) The
          Rights Agent shall not be under any responsibility in respect of the validity
          of
          this Agreement or the execution and delivery hereof (except the due execution
          hereof by the Rights Agent) or in respect of the validity or execution
          of any
          Right Certificate (except its countersignature thereof), nor shall it be
          responsible for any breach by the Company of any covenant or condition
          contained
          in this Agreement or in any Right Certificate, nor shall it be responsible
          for
          any adjustment required under the provisions of Section 11 or 13 or responsible
          for the manner, method or amount of any such adjustment or the ascertaining
          of
          the existence of facts that would require any such adjustment (except with
          respect to the exercise of Rights evidenced by Right 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 stock to be issued pursuant to this Agreement or any Right
          Certificate or as to whether any shares of stock will, when issued, be
          validly
          authorized and issued, fully paid and nonassessable.

        


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

        


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

        


        (h) Nothing
          herein shall preclude the Rights Agent from acting in any other capacity
          for the
          Company or for any other legal entity.

        


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


        
          
            
            

          

          
            23

            
              

            

          

          
            
            

          

        


        shall
          not
          be answerable or accountable for any act, default, neglect or misconduct
          of any
          such attorneys or agents or for any loss to the Company resulting from
          any such
          act, default, neglect or misconduct, provided reasonable care was exercised
          in
          the selection and continued employment thereof.

        


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

        


        Section
          21. CHANGE
          OF RIGHTS AGENT.
          Unless
          the Company and the Rights Agent agree to a shorter time period, the Rights
          Agent or any successor Rights Agent may resign and be discharged from its
          duties
          under this Agreement upon 15 days' notice in writing mailed to the Company
          (and,
          if different, to each transfer agent of Common Stock) by registered or
          certified
          mail, and to the holders of the Right Certificates by first-class mail.
          Unless
          the Company and the Rights Agent agree to a shorter time period, the Company
          may
          remove the Rights Agent or any successor Rights Agent upon 15 days' notice
          in
          writing, mailed to the Rights Agent or successor Rights Agent, as the case
          may
          be, and to each transfer agent of Common Stock by registered or certified
          mail,
          and to the holders of the Right 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 15 days after such removal
          or
          after it has been notified in writing of such resignation or incapacity
          by the
          resigning or incapacitated Rights Agent or by the holder of a Right Certificate
          (who shall, with such notice, submit his Right Certificate for inspection
          by the
          Company), then the registered holder of any Right 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 corporation organized and doing business under the laws of the
          United
          States having a stock transfer office in the State of Colorado which is
          subject
          to supervision or examination by federal authority. 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 if different, each transfer agent of Common Stock) and mail a notice
          thereof in writing to the registered holders of the Right Certificates.
          Failure
          to give any notice provided for in this Section 21, however, or any defect
          therein, shall not affect the legality or validity of the resignation or
          removal
          of the Rights Agent or the appointment of the successor Rights Agent, as
          the
          case may be.

        


        Section
          22. ISSUANCE
          OF NEW RIGHT CERTIFICATES.
          Notwithstanding any of the provisions of this Agreement or of the Rights
          to the
          contrary, the Company may, at its option, issue new Right Certificates
          evidencing Rights in such form as may be approved by its board of directors
          to
          reflect any adjustment or change in the Expiration Date, the Purchase Price
          per
          share or the number or kind or class of shares of stock or other securities
          or
          property purchasable under the Right Certificates made in accordance with
          the
          provisions of this Agreement.

        


        Section
          23. Redemption
          Right and Termination of Redemption Right.
          The
          Board of Directors of the Company has the right (the “Redemption Right”), but
          not the obligation, at any time prior to the earlier of (i) the Close of
          Business on the tenth day following the Stock Acquisition Date, or (ii)
          the
          final Expiration Date, redeem all but not less than all of the then outstanding
          Rights (which shall not include Rights 


        
          
            
            

          

          
            24

            
              

            

          

          
            
            

          

        


        that
          have
          become subject to Section 7(f))at a redemption price of $0.01 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 hereinafter referred to as the “Redemption Price”). Notwithstanding
          anything contained in this Agreement to the contrary, the Rights shall
          not be
          exercisable after the first occurrence of a Section 11(a)(ii) Event until
          such
          time as the Company’s Redemption Right has expired. The Company may, at its
          option, pay the Redemption Price in cash, shares of Common Stock (based
          on the
“current market price,” as defined in Section 11(d), of the Common Stock at the
          time of redemption) or any other form of consideration deemed appropriate
          by the
          Board of Directors. The redemption 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.

        


        Immediately
          upon the action of the Board of Directors of the Company ordering the redemption
          of the Rights, evidence of which shall have been filed with the Rights
          Agent and
          without any further action and without any notice, the right to exercise
          the
          Rights will terminate and the only right thereafter of the holders of Rights
          shall be to receive the Redemption Price for each Right so held. Promptly
          after
          the action of the Board of Directors ordering the redemption of the Rights,
          the
          Company shall give notice of such redemption to the Rights Agent and the
          holders
          of the then outstanding Rights by mailing such notice to the Rights Agent
          and 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 Common Stock. Any notice which is mailed
          in
          the manner herein provided shall be deemed given, whether or not the holder
          receives the notice. Each such notice of redemption will state the method
          by
          which the payment of the Redemption Price will be made.

         

        Section
          24. NOTICE
          OF PROPOSED ACTIONS.
          In case
          the Company, after the Rights become exercisable, shall propose
          (i)
          to pay
          any dividend payable in stock of any class to the holders of its Common
          Stock or
          the Subject Shares or to make any other distribution to the holders of
          its
          Common Stock or Subject Shares (other than a regular periodic cash dividend),
          or
          (ii)
          to offer
          to the holders of its Common Stock or Subject Shares rights or warrants
          to
          subscribe for or to purchase any additional shares of Common Stock or shares
          of
          stock of any class or any other securities, rights or options, or
          (iii)
          to
          effect any reclassification of its Common Stock or Subject Shares (other
          than a
          reclassification involving only the subdivision of outstanding shares of
          Common
          Stock) or any recapitalization or reorganization of the Company, or
          (iv) to
          effect
          any consolidation or merger into or with, 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 percent of
          the
          assets or earning power of the Company and its Subsidiaries (taken as a
          whole)
          to, any other Person, 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 Right, in accordance
          with
          Section 25, a notice. The notice of such proposed action shall specify
          the
          record date or the date on which such reclassification, recapitalization,
          reorganization, consolidation, merger, sale, transfer, liquidation, dissolution
          or winding up is to take place and the date of participation therein by
          the
          holders of Common Stock and/or Subject Shares, if any such date is to be
          fixed.
          The notice shall be given in case of any action covered by clause (i) or
          (ii)
          above at least 20 days prior to the record date for determining holders
          of the
          Common Stock and/or Subject Shares for purposes of such action; in the
          case of
          any other action, at least 20 days prior to the date of the taking of such
          proposed action or the date of participation therein by the holders of
          Common
          Stock and/or Subject Shares, whichever shall be the earlier. The failure
          to give
          notice required by this Section 24 or any defect thereon shall not affect
          the
          legality or validity of the action taken by the Company or the vote upon
          any
          such action.

        



        
          
            
            

          

          
            25

            
              

            

          

          
            
            

          

        


        


          Section
            25. NOTICES
            IN GENERAL.
            Notices
            or demands authorized by this Agreement to be given or made by the Rights
            Agent
            or by the holder of any Right Certificate to or on the Company shall
            be given if
            sent by courier, facsimile, or first-class mail, postage prepaid, addressed
            to:

          


          U.S.
            Energy Corp. 

          877
            N.
            8th
            W.

          Riverton,
            Wyoming 82501

          Fax
            307.857.3050

          


          Any
            notice or demand authorized by this Agreement to be given or made by
            the Company
            or by the holder of any Right Certificate to or on the Rights Agent shall
            be
            sufficiently given or made if sent by courier, facsimile or first-class
            mail,
            postage prepaid, addressed (until another address is filed in writing
            with the
            Company) as follows:

          


          Computershare
            Trust Company, Inc. 

          12039
            West Alameda Parkway, Suite Z 2

          Lakewood,
            Colorado [Fax 303.986.2444]

            

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

          


          Section
            26. SUPPLEMENTS
            AND AMENDMENTS.
            Prior
            to the Distribution Date and subject to the penultimate sentence of this
            Section, the Company and the Rights Agent shall, if the Company so directs,
            supplement or amend any provision of this Agreement without the approval
            of any
            holders of certificates representing shares of Common Stock. From and
            after the
            Distribution Date and subject to the penultimate sentence of this Section,
            the
            Company and the Rights Agent shall, if the Company so directs, supplement
            or
            amend this Agreement without the approval of any holders of Right Certificates
            in order (i)
            to
            cure
            any ambiguity,
            (ii)
            to
            correct or supplement any provision contained herein which may be defective
            or
            inconsistent with any other provisions herein, (iii)
            to
            shorten or lengthen any time period, or
            (iv)
            to
            change or supplement the provisions hereof in any manner which the Company
            may
            deem necessary or desirable and which shall not adversely affect the
            interests
            of the holders of Right Certificates; provided,
            however,
            this
            Agreement may not be supplemented or amended to lengthen
            (A)
            a time
            period relating to when the Rights may be redeemed at such time as the
            Rights
            are not then redeemable, or
            (B)
            any
            other time period, unless such lengthening is for the purpose of protecting,
            enhancing or clarifying the rights of, and/or the benefits to, the holders
            of
            Rights. 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, the Rights Agent shall execute such supplement
            or amendment. Notwithstanding anything contained in this Agreement to
            the
            contrary: (1)
            no
            supplement or amendment shall be made which changes the Redemption Price,
            the
            Purchase Price or the number of shares or Units for which a Right is
            exercisable; and
            (2)
            the
            duration of the Rights may not be shortened without the written consent
            of the
            registered holders thereof (other than by a redemption of the Rights).
            Prior to
            the Distribution Date, the interests of the holders of Rights shall be
            deemed
            coincident with the interests of the holders of Common Stock.


          
            
              
              

            

            
              26

              
                

              

            

            
              
              

            

          


          


          Section
            27.  EXCHANGE OF
            RIGHTS FOR SHARES OF COMMON STOCK WITHOUT
            CASH PAYMENT.

          


          (a) The
            board
            of directors of the Company may, at its option, at any time after any
            Person
            becomes an Acquiring Person, exchange all or part of the then outstanding
            and
            exercisable Rights (which shall not include Rights that have become subject
            to
            Section 7(f)) for Common Stock at an exchange ratio of one share of Common
            Stock
            per Right, appropriately adjusted to reflect any stock split, stock dividend
            or
            similar transaction occurring after the date hereof (such exchange ratio
            being
            hereinafter referred to as the "Exchange Ratio").

          


          (b) Immediately
            upon the action of the board of directors of the Company ordering the
            exchange
            of any Rights pursuant to subsection (a) of this Section 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 shares of Common Stock equal to the number of such Rights
            held by
            such holder multiplied by the Exchange Ratio. The Company shall promptly
            give
            public notice of any such exchange; provided, however, that the failure
            to give,
            or any defect in, such notice shall not affect the validity of such exchange.
            The Company promptly shall mail a notice of any such exchange to all
            of the
            holders of such Rights at their last addresses as they appear upon the
            registry
            books of the Rights Agent. Any notice which is mailed in the manner herein
            provided shall be deemed given, whether or not the holder receives the
            notice.
            Each notice of exchange will state the method by which the exchange of
            the
            Common Stock for Rights will be effected and, in the event of any partial
            exchange, the number of Rights which will be exchanged. Any partial exchange
            shall be effected pro rata based on the number of Rights (other than
            Rights
            which have become subject to the provisions of Section 7(f)) held by
            each holder
            of Rights.

          


          (c) If
            there
            is not enough authorized Common Stock to permit an exchange of Rights
            as
            contemplated in accordance with this Section, the Company shall take
            all such
            action as may be necessary to authorize additional Common Stock or Equivalent
            Stock for issuance upon exchange of the Rights.

          


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

          


          Section
            29. DETERMINATION
            AND ACTIONS TAKEN BY THE BOARD OF DIRECTORS.
            For all
            purposes of this Agreement, any calculation of the number of shares of
            Common
            Stock (or other applicable securities hereunder) outstanding at any particular
            time, including for purposes of determining the particular percentage
            of such
            outstanding shares of Common Stock (or other securities) of which any
            Person is
            the Beneficial Owner, shall be made in accordance with the last sentence
            of rule
            13d-3(d)(1)(i) (as in effect on the date of this Agreement) of the General
            Rules
            and Regulations under the Exchange Act. The board of directors of the
            Company
            shall have the exclusive power and authority to administer this Agreement
            and to
            exercise all rights and powers specifically granted to such board or
            to the
            Company, or as may be necessary or advisable in the administration of
            this
            Agreement, including without limitation the right and power to
            (i)
            interpret the provisions of this Agreement,
            and (ii)
            make all
            Determinations deemed necessary or advisable for the administration of
            this
            Agreement (including a determination to redeem or not redeem the Rights
            or to
            amend the Agreement). All such actions, calculations, interpretations
            and
            Determinations (including, for purposes of clause (B) below, all omissions
            with
            respect to the foregoing) which are done or made by the Board in good
            faith,
            shall (A)
            be
            final, conclusive and binding on the Company, the Rights Agent,



          
            
              
              

            

            
              27

              
                

              

            

            
              
              

            

             

             

            the
              holders of the Rights and all other parties, and
              (B)
              not
              subject the board to any liability to the holders of the
              Rights.

          

          


          Section
            30. BENEFITS
            OF THIS AGREEMENT.
            Nothing
            in this Agreement shall be construed to give to any Person other than
            the
            Company, the Rights Agent and the registered holders of the Right Certificates
            (and, prior to the Distribution Date, the holders of Common Stock) any
            legal or
            equitable right, remedy or claim under this Agreement. This Agreement
            shall be
            for the sole and exclusive benefit of the Company, the Rights Agent and
            the
            registered holders of the Right Certificates (and, prior to the Distribution
            Date, the holders of Common Stock).

          


          Section
            31. GOVERNING
            LAW; CHOICE OF VENUE.
            This
            Agreement and each Right Certificate issued hereunder shall be deemed
            to be a
            contract made under the laws of the State of Wyoming and for all purposes
            shall
            be governed by and construed in accordance with the laws of such State
            applicable to contracts to be made and performed entirely within such
            State. The
            rights and obligations of the Rights Agent under this Agreement shall
            be
            governed by and construed in accordance with the laws in effect in the
            State of
            Colorado. The parties to this Agreement, and all of the holders of record
            of the
            Rights, irrevocably agree and acknowledge that all disputes involving
            the
            subject matter of this Agreement are to be resolved in the District Courts,
            Fremont County, Wyoming. 

          


          Notwithstanding
            any provision of this Agreement, in the event of any conflict between
            any
            provision of this Agreement, on the one hand, and the express provisions
            of the
            Wyoming Management Stability Act (the ?WMSA,?
            secs.
            17-18-101 et
            seq.,
            as now
            in effect and hereafter amended), on the other hand, then the express
            provisions
            of the WMSA shall control, and the necessary provisions of this Agreement
            shall
            be deemed modified and changed to the extent necessary so that this Agreement
            shall not conflict with the WMSA, and all the other provisions of this
            Agreement
            shall remain intact and unchanged. 

          


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

          


          Section
            33. SECTION
            HEADINGS.
            Descriptive headings of the Sections of this Agreement are inserted only
            for
            convenience and shall not control or affect its meaning or
            construction.

          


          Section
            34. 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, illegal, or
            unenforceable, (i)
            such
            invalid, illegal or unenforceable term, provision, covenant or restriction
            shall
            nevertheless be valid, legal and enforceable to the extent, if any, provided
            by
            such court or authority, and
            (ii)
            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.

          


          


          


          (Remainder
            of the page intentionally left blank).


          
            
              
              

            

            
              28

              
                

              

            

            
              
              

            

          


          IN
            WITNESS WHEREOF,
            the
            parties hereto have caused this Agreement to be duly executed, with the
            amendments contained herein, as of September 30, 2005, but to be effective
            for
            all purposes as of the day and year first above written. 

          


          


          U.S.
            ENERGY CORP.

          


          


          /s/
            Keith G. Larsen            

          By:
            Keith
            G. Larsen, Chairman & CEO 

           

          


          COMPUTERSHARE
            TRUST COMPANY, INC.

          


          


          /s/
            Kellie Gwinn              

          By: Kellie
            Gwinn, Vice President 

          


          


          /s/
            Ian Yewer               

          By:
            Ian
            Yewer, President


          
            
              
              

            

            
              29

              
                

              

            

            
              
              

            

          


          EXHIBIT
            A

          


          [Form
            of
            Right Certificate]

          


          Certificate
            No. R-  Rights

          


          THESE
            RIGHTS ARE NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF REDEMPTION IS
            MADE. THE
            RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01
            PER
            RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IF THE RIGHTS REPRESENTED
            BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON
            OR AN
            ASSOCIATE OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
            AGREEMENT) OR CERTAIN TRANSFEREES THEREOF, THIS RIGHT CERTIFICATE AND
            THE RIGHTS
            REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN LIMITATIONS IN THE CIRCUMSTANCES
            SPECIFIED IN SECTION 7 OF THE RIGHTS AGREEMENT.

          


          RIGHT
            CERTIFICATE

          


          This
            certifies that      or
            registered assigns, is the registered owner of the number of Rights set
            forth
            above, each of which entitles the owner thereof, subject to the terms,
            provisions and conditions of the Rights Agreement, dated as of September
            19,
            2001 (the "Rights Agreement") between U.S. Energy Corp. a Wyoming corporation
            (the "Company"), and Computershare Trust Company, Inc. (the "Rights Agent"),
            to
            purchase from the Company, unless the Rights have been previously redeemed,
            at
            any time after the Distribution Date (defined in the Rights Agreement)
            and prior
            to the Expiration Date (defined in the Rights Agreement), or the date,
            if any,
            on which the Rights evidenced by this Certificate may be redeemed, at
            the stock
            transfer office of the Rights Agent, or its successors as Rights Agent,
            one
            one-thousandth (1/1,000th) of one (1) fully paid and nonassessable share
            of
            Series P Preferred Stock, at a purchase price of $200.00 (the "Purchase
            Price"),
            upon
            presentation and surrender of this Right Certificate with the Form of
            Election
            to Purchase duly completed and executed. The number of Rights evidenced
            by this
            Right Certificate as set forth above (and the number of shares which
            may be
            purchased upon exercise thereof), and the Purchase Price set forth above,
            are
            the number and Purchase Price as of the date of the Rights Agreement
            based on
            the shares of Common Stock of the Company as constituted at such
            date.

          


          Upon
            the
            occurrence of an event described in clause (A), (B), (C) or (D) of Section
            11(a)(ii), or in Section 13(a)(i), 13(a)(ii), or 13(a)(iii), of the Rights
            Agreement, the holder of any Rights that are, or were, beneficially owned
            by an
            Acquiring Person or an Associate or Affiliate thereof (as such terms
            are defined
            in the Rights Agreement) or certain transferees thereof which engaged
            in, or
            realized the benefit of, an event or transaction or transactions described
            in
            clause (A), (B), (C) or (D) of such Section 11(a)(ii), shall not be entitled
            to
            the benefit of the adjustment described in such Section 11(a)(ii), nor
            shall
            such holder or certain transferees be entitled to participate in the
            exchange
            provisions under Section 27 or the redemption provisions of Section
            23..

          


          As
            provided in the Rights Agreement, the Purchase Price and the number and
            class of
            shares which may be purchased upon the exercise of the Rights evidenced
            by this
            Right Certificate are subject to modification and adjustment upon the
            happening
            of certain events. 

          


          This
            Right Certificate is subject to all of the terms, provisions and conditions
            of
            the Rights Agreement, and all of those terms, provisions and conditions
            are
            hereby incorporated herein by reference and made a part 


          
            
              
              

            

            
              30

              
                

              

            

            
              
              

            

          


          hereof.
            Reference is made to the Rights Agreement 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 Right Certificates,
            which
            limitations of rights include the temporary suspension of the exercisability
            of
            such Rights under specific circumstances set forth in the Rights Agreement.
            Copies of the Rights Agreement are on file at the office of the Rights
            Agent and
            at the principal office of the Company.

          


          This
            Right Certificate, with or without other Right Certificates, upon surrender
            at
            the stock transfer office of the Rights Agent set forth above, may be
            exchanged
            for another Right Certificate or Right Certificates of like tenor and
            date
            evidencing Rights entitling the holder to purchase such number of shares
            as the
            Rights evidenced by the Right Certificate or Right Certificates surrendered
            shall have entitled such holder to purchase. If this Right Certificate
            shall be
            exercised in part, the holder shall be entitled to receive upon surrender
            hereof
            another Right Certificate or Right Certificates for the number of whole
            Rights
            not exercised.

          


          Subject
            to the Rights Agreement, the Rights evidenced by this Certificate may
            be
            redeemed by the Company at its option at a redemption price of $.01 per
            Right.

          


          No
            fractional shares will be issued upon the exercise of any Rights evidenced
            hereby, but in lieu thereof a cash payment may be made, as provided in
            the
            Rights Agreement.

          


          No
            holder
            of this Right Certificate shall be entitled to vote or receive dividends
            or be
            deemed for any purpose the holder of shares or of any other securities
            of the
            Company which may at any time be issuable on the exercise hereof. Nothing
            in
            this Right Certificate and nothing contained in the Rights Agreement
            shall 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 or subscription rights, or otherwise,
            until
            the Right or Rights evidenced by this Right Certificate shall have been
            exercised as provided in the Rights Agreement.

          


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

          


          WITNESS
            the
            facsimile signatures of the proper officers of the Company. 

          


          


          Dated
            as
            of September 30, 2005, but effective September 2001.

          


          Attest:

           

           

                                                                 
            By                                        

          Secretary                                                Keith
            G. Larsen,
            Chairman & CEO

          


          Countersigned:

          


          


          By:                                              

          Authorized
            Signature

          



          
            
              
              

            

            
              31

              
                

              

            

            
              
              

            

          


          [Form
            of
            Reverse Side of Right Certificate]

          


          FORM
            OF
            ASSIGNMENT

          


          (To
            be
            executed by the registered holder if such holder desires to transfer
            the Right
            Certificate.)

          


          FOR
            VALUE
            RECEIVED        hereby
            sells, assigns and transfers unto                                                                 

                                                                      (Please
            print name
            and address of transferee)

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

          


          Dated:                                                                     

                                           Signature

          


          


          Signature
            Guaranteed:

          


          CERTIFICATE

          


          The
            undersigned hereby certifies (after due inquiry and to the best knowledge
            of the
            undersigned) by checking the appropriate boxes that: 

          


          (1) this
            Right 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 an Acquiring Person (as such terms are defined in the Rights
            Agreement);

          


          (2) the
            undersigned [ ] did [ ] did not acquire the Rights evidenced by this
            Right
            Certificate from any Person who is, was or subsequently became an Acquiring
            Person or an Affiliate or Associate of an Acquiring Person.

          


          


          Dated:                                                 

          Signature

          


          
            Dated:                                                 

            Signature

          

           

          
            Dated:                                                 

            Signature

          

           

          Signature
            Guaranteed:

          


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

          



          
            
              
              

            

            
              32

              
                

              

            

            
              
              

            

          


          FORM
            OF
            ELECTION TO PURCHASE

          


          (To
            be
            executed if holder desires to exercise the Right Certificate.)

          


          To
            the
            Company and the Rights Agent:

          


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

          


          Please
            insert social security or other identifying number:                                                                                                       


                                                                                  (Please
            print name
            and address)

          


          


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

          


          Please
            insert social security or other identifying number:                                                                                             

                                                                           (Please
            print
            name and address)

          


          


          


          


          Dated:                                                                                                 

                                              Signature

          


          (Signature
            must conform in all respects to name of holder as specified on the face
            of this
            Right Certificate)

          


          Signature
            Guaranteed:

          


          


          


          


          


          


          


          


          



          
            
              
              

            

            
              33

              
                

              

            

            
              
              

            

          


          CERTIFICATE

          


          The
            undersigned hereby certifies (after due inquiry and to the best knowledge
            of the
            undersigned) by checking the appropriate boxes that:

          


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

          


          (2)
            the
            undersigned [ ] did [ ] did not acquire the Rights evidenced by this
            Right
            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:

          


          NOTICE

          


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

          



          
            
              
              

            

            
              34

              
                

              

            

            
              
              

            

          


          EXHIBIT
            B

          


          SUMMARY
            OF RIGHTS

          


          This
            summary is qualified by reference to the detailed provisions of the Rights
            Agreement, a copy of which is filed herewith. A copy of the Rights Agreement
            is
            available free of charge from the Company.

          


          As
            of
            September 19, 2001, the board of directors of U.S. Energy Corp. (the
            "Company")
            declared a distribution of one Right for each outstanding one share of
            common
            stock (the "Common
            Shares")
            of the
            Company. The distribution is to be made as of September 19, 2001 (the
            "Rights
            Record Date")
            to the
            stockholders of record on that date. All Common Shares issued after the
            Rights
            Record Date also will carry one Right for each share. The Rights are
            designed to
            discourage unfair takeovers of the Company, by encouraging a potential
            acquiror
            of the Company to negotiate with the board of directors a fair price
            for the
            Company. The Rights defined as part of the Rights Agreement between the
            Company
            and Computershare Trust Company, Inc. as the Rights Agent. Arrangements
            adopted
            by United States corporations which are similar to the Rights Agreement
            are
            often called poison pills. As summarized below, if a Qualified Offer
            is made to
            acquire all the stock of the Company, the Rights would be redeemed by
            the board
            of directors, thus causing the poison pill to disappear. 

          


          Each
            Right entitles the registered holder to purchase from the Company, initially,
            one one-thousandth (1/1,000th) of one (1) share of Series P Preferred
            Stock
            ("Preferred
            Shares")
            at a
            price of $200.00 (the "Purchase
            Price")
            for
            each 1/1,000th of 1 share, subject to adjustment. Fractional shares may
            not be
            issued, at the discretion of the Company, in which event fractions would
            be
            cashed out. The terms and conditions of the Rights are set forth in the
            Rights
            Agreement between the Company and the Rights Agent. 

          


          A
            Preferred Share purchasable upon exercise of the Rights will be entitled
            to
            dividends equal to 1,000 times the dividends, per share, declared on
            the Common
            Shares. In the event of liquidation, a Preferred Share will be entitled
            to a
            minimum preferential liquidating distribution of $1,000 per share and
            an
            aggregate liquidating distribution, per share, equal to 1,000 times the
            distribution made per Common Share. The Preferred Shares will vote together
            with
            the Common Shares and in the event of any merger, consolidation or other
            transaction in which Common Shares are exchanged, each Preferred Share
            will be
            entitled to receive 1,000 times the amount received per Common
            Share.

          


          Because
            of the Preferred Shares' dividend and liquidation rights, the value when
            issued
            of the 1/1,000th of a Preferred Share purchasable upon exercise of each
            Right
            should approximate the underlying value (but not necessarily the market
            value)
            of one Common Share.

          


          Until
            the
            earlier to occur of (i) 10 business days following a public announcement
            that a
            person or group of affiliated or associated persons (an "Acquiring
            Person")
            has
            acquired beneficial ownership of 15% or more of the Company's general
            voting
            power other than pursuant to a Qualified Offer (as defined below), the
            date of
            such public announcement being called the "Stock
            Acquisition Date,"
            or
            (ii) 10 business days (or such later date as may be determined by action
            of the
            board of directors) following the commencement of, or announcement of
            an
            intention to make, a tender offer or exchange offer the consummation
            of which
            would result in the beneficial ownership by a person or group of 15%
            or more of
            the Company's general voting power (the date of such earlier occurrence
            being
            called the "Distribution
            Date"),
            the
            Rights will be evidenced by the certificates representing the Common
            Shares and
            will be transferred with and only with the Common Shares. New Common
            Share
            certificates issued after the Rights Record Date upon transfer or new
            issuance
            of Common Shares will contain a notation incorporating the Rights Agreement
            by
            reference, and the surrender for 


          
            
              
              

            

            
              35

              
                

              

            

            
              
              

            

             

             

            transfer
              of any certificate for Common Shares, even without such notation or
              a copy of
              this Summary of Rights being attached thereto, will also constitute
              the transfer
              of the Rights associated with the Common Shares represented by such
              certificate.


          

          


          If
            there
            ever is a Distribution Date, then immediately the Company will mail to
            holders
            of record of the Common Shares (as of the close of business on the Distribution
            Date) separate certificates evidencing the Rights ("Right
            Certificates"),
            and
            such separate Right Certificates alone will evidence the Rights.

          


          The
            Rights are not exercisable until the Distribution Date. The Rights will
            expire
            on the tenth anniversary of the Rights Record Date (the "Final
            Expiration Date"),
            unless the Final Expiration Date is extended or unless the Rights are
            earlier
            redeemed or exchanged by the Company, as described below.

          


          The
            Purchase Price payable, the number of shares or other securities or property
            issuable upon exercise of the Rights, and the number of outstanding Rights,
            are
            subject to adjustment from time to time to prevent dilution.

          


          A
            Qualified
            Offer
            is a
            tender offer or exchange offer for all outstanding Common Shares which
            is
            determined by the directors not affiliated with an Acquiring Person to
            be fair
            to and otherwise in the best interests of the Company and its shareholders.
            

          


          If
            any
            person becomes an Acquiring Person other than by a purchase pursuant
            to a
            Qualified Offer, proper provision shall be made so that each holder of
            a Right,
            other than Rights beneficially owned by the Acquiring Person (which will
            not be
            entitled to the benefit of such adjustment) will thereafter have the
            right to
            receive upon exercise that number of Common Shares or Common Share equivalents
            having a market value of two times the exercise price of the Right (i.e.,
            Common
            Shares will be issued at one-half or 50% of market value at the
            time).

          


          If,
            at
            any time after an Acquiring Person has become such, the Company is acquired
            in a
            merger or other business combination transaction (other than a merger
            which
            follows a Qualified Offer at the same or a higher price) or 50% or more
            of its
            consolidated assets or earning power are sold, proper provision will
            be made so
            that each holder of a Right will thereafter have the right to receive,
            upon the
            exercise thereof at the then current exercise price of the Right, that
            number of
            shares of common stock of the acquiring company which at the time of
            such
            transaction will have a market value of two times the exercise price
            of the
            Right.

          


          At
            any
            time after an Acquiring Person has become such, the board of directors
            of the
            Company may exchange the Rights (other than Rights owned by such person
            or
            group), in whole or in part, at an exchange ratio of one Common Share
            per one
            Right (subject to adjustment), termed an Exchange.
            Unlike
            exercise of a Right with cash (see the preceding paragraph), such an
            Exchange
            would not require payment of cash or other consideration by the holder
            of the
            Right. 

          


          At
            any
            time up to close of business on a Stock Acquisition Date, the board of
            directors
            of the Company may redeem the Rights in whole, but not in part, at a
            price of
            $.01 per Right (the "Redemption
            Price").
            Immediately upon any redemption of the Rights, the right to exercise
            them will
            terminate and the only right of the holders will be to receive the Redemption
            Price. However, such redemption only can be made in conjunction with
            the board
            of directors’ determination that there is a Qualified Offer. 

          


          The
            terms
            of the Rights may be amended by the board of directors without the consent
            of
            the holders of the Rights at any time prior to the Distribution Date.
            Thereafter
            the Rights may be amended to make 


          
            
              
              

            

            
              36

              
                

              

            

            
              
              

            

          


          changes
            which do not adversely affect the interests of the holders of the Rights,
            or
            which shorten or lengthen time periods, subject to certain limitations
            set forth
            in the Rights Agreement.

          


          Holders
            of Rights will have no rights as stockholders of the Company, until Preferred
            Shares or Common Shares are acquired on exercise or exchange of the
            Rights.

          


          A
            copy of
            the Rights Agreement has been filed with the Securities and Exchange
            Commission
            as an Exhibit to a registration statement on Form 8-A. 


          
            
              
              

            

            
              37

              
                

              

            

            
              
              

            

          


          EXHIBIT
            C

          


          


          Articles
            of Amendment to the Restated

          Articles
            of Incorporation of U.S. Energy Corp.

          To
            Establish Series P Preferred Stock

          


          


          By
            authority of Article IV of the existing Restated Articles of Incorporation
            of
            U.S. Energy Corp. (the “Corporation

          ‘),
            and
            section 17-16-602(a) of the Wyoming Business Corporation Act (the “WBCA”), the
            board of directors of the Corporation has established a new series of
            shares of
            the Preferred Stock.

          


          These
            Articles of Amendment are filed with the Wyoming Secretary of State by
            the
            Corporation under section 17-16-1006 of the WBCA.

          


          A. The
            name
            of the Corporation is U.S. Energy Corp.

           

          B.
             The
            text
            of the amendment is:

          


          There
            is
            established the series P Preferred Stock. The number of shares in the
            series,
            its designation thereof, and the rights, preferences, privileges and
            restrictions of the shares of such series, all are fixed and established
            as
            follow:

          


          I. Designation
            and Amount

          


          The
            series is designated the "Series P Preferred Stock." The number of shares
            constituting the Series P Preferred Stock is fifty thousand (50,000).
            Such
            number of shares may be increased or decreased by resolution of the board
            of
            directors, but no decrease shall reduce the number of shares of Series
            P
            Preferred Stock to a number less than the number of shares then outstanding
            plus
            the number of shares reserved for issuance upon the exercise of outstanding
            options, rights or warrants or upon the conversion of any outstanding
            securities
            issued by the Corporation convertible into Series P Preferred
            Stock.

          


          II. Dividends
            and Distributions 

          


          (A) Subject
            to the rights of the holders of any shares of any series of Preferred
            Stock (or
            any similar stock) ranking prior and superior to the Series P Preferred
            Stock
            with respect to dividends, the holders of shares of Series P Preferred
            Stock, in
            preference to the holders of Common Stock of the Corporation, shall be
            entitled
            to receive, when, as and if declared by the board of directors out of
            funds
            legally available for the purpose, quarterly dividends payable in cash
            on the
            first day of March, June, September and December in each year (a "Quarterly
            Dividend Payment Date"), starting on the first Quarterly Dividend Payment
            Date
            after the first issuance of a share of Series P Preferred Stock, in an
            amount
            per share (rounded to the nearest cent) equal to the greater of (a) $1.00
            or (b)
            subject to the provision for 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 a dividend payable in shares of Common Stock
            or a
            subdivision of the outstanding shares of Common Stock (by reclassification
            or
            otherwise), declared on the Common Stock since the immediately preceding
            Quarterly Dividend Payment Date or, with respect to the first Quarterly
            Dividend
            Payment Date, since the first issuance of any share of Series P Preferred
            Stock.
            If the Corporation shall at any time declare or pay any dividend on the
            Common
            Stock 


          
            
              
              

            

            
              38

              
                

              

            

            
              
              

            

          


          payable
            in shares of Common Stock, or effect a subdivision or combination or
            consolidation of the outstanding shares of Common Stock (by reclassification
            or
            otherwise than by payment of a dividend in shares of Common Stock) into
            a
            greater or lesser number of shares of Common Stock, then in each such
            case the
            amount to which holders of shares of Series P Preferred Stock were entitled
            immediately prior to such event under clause (b) of the preceding sentence
            shall
            be adjusted by multiplying such amount by a fraction, the numerator of
            which is
            the number of shares of Common Stock outstanding immediately after such
            event
            and the denominator of which is the number of shares of Common Stock
            that were
            outstanding immediately prior to such event.

          


          (B) The
            Corporation shall declare a dividend or distribution on the Series P
            Preferred
            Stock as provided in paragraph (A) of this Section immediately after
            it declares
            a dividend or distribution on the Common Stock (other than a dividend
            payable in
            shares of Common Stock); PROVIDED that, if 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 of $1.00 per share on the Series P Preferred Stock shall nevertheless
            be payable on such subsequent Quarterly Dividend Payment Date.

          


          (C) Dividends
            shall begin to accrue and be cumulative on outstanding shares of Series
            P
            Preferred Stock from the Quarterly Dividend Payment Date next preceding
            the date
            of issue of such shares, unless the date of issue of such shares is prior
            to the
            record date for the first Quarterly Dividend Payment Date, in which case
            dividends on such shares shall begin to accrue from the date of issue
            of such
            shares, or unless the date of issue is a Quarterly Dividend Payment Date
            or is a
            date after the record date for the determination of holders of shares
            of Series
            P Preferred Stock entitled to receive a quarterly dividend and before
            such
            Quarterly Dividend Payment Date, in either of which events such dividends
            shall
            begin to accrue and be cumulative from such Quarterly Dividend Payment
            Date.
            Accrued but unpaid dividends shall not bear interest. Dividends paid
            on the
            shares of Series P Preferred Stock in an amount less than the total amount
            of
            such dividends at the time accrued and payable on such shares shall be
            allocated
            pro rata on a share-by-share basis among all such shares at the time
            outstanding. The board of directors may fix a record date for the determination
            of holders of shares of Series P Preferred Stock entitled to receive
            payment of
            a dividend or distribution declared thereon, which record date shall
            be not more
            than 60 days prior to the date fixed for the payment thereof.

          


          III. Voting
            Rights

          


          The
            holders of shares of Series P Preferred Stock shall have the following
            voting
            rights:

          


          (A) Subject
            to the provision for adjustment hereinafter set forth, each share of
            Series P
            Preferred Stock shall entitle the holder thereof to 1,000 votes on all
            matters
            submitted to a vote of the stockholders of the Corporation.

          


          (B) Except
            as
            otherwise provided herein, or in any other resolutions of the board of
            directors
            creating a series of Preferred Stock or any similar stock, or by law,
            the
            holders of shares of Series P Preferred Stock and the holders of shares
            of
            Common Stock and any other capital stock of the Corporation having general
            voting rights shall vote together as one class on all matters submitted
            to a
            vote of stockholders of the Corporation.

          


          (C) Except
            as
            set forth herein, in the Corporation's articles of incorporation or as
            otherwise
            provided by law, holders of Series P Preferred Stock shall have no voting
            rights.


          
            
              
              

            

            
              39

              
                

              

            

            
              
              

            

          


          IV. Certain
            Restrictions

          


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

          


          (i) declare
            or pay dividends, or make any other distributions, on any shares of stock
            ranking junior (either as to dividends or upon liquidation, dissolution
            or
            winding up) to the Series P Preferred Stock;

          


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

          


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

          


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

          


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

          


          V. Reacquired
            Shares

          


          Any
            shares of Series P Stock purchased or otherwise acquired by the Corporation
            in
            any manner whatsoever shall be retired and cancelled promptly after the
            acquisition thereof. All such shares shall upon their cancellation become
            authorized but unissued shares of Preferred Stock and may be reissued
            as part of
            a new series of Preferred Stock subject to the conditions and restrictions
            on
            issuance set forth herein, in the articles of incorporation, any other
            Certificate of Designations creating a series of Preferred Stock or any
            similar
            stock or as otherwise required by law.

          


          VI. Liquidation,
            Dissolution, or Winding Up 

          


          Upon
            any
            liquidation, dissolution or winding up of the Corporation, no distribution
            shall
            be made (1) to the holders of shares of stock ranking junior (either
            as to
            dividends or upon liquidation, dissolution or winding up) to the Series
            P
            Preferred Stock unless, prior thereto, the holders of shares of Series
            P
            Preferred 


          
            
              
              

            

            
              40

              
                

              

            

            
              
              

            

          


          Stock
            shall have received $1,000 per share, plus an amount equal to accrued
            and unpaid
            dividends and distributions thereon, whether or not declared, to the
            date of
            such payment, provided that the holders of shares of Series P Preferred
            Stock
            shall be entitled to receive an aggregate amount per share, subject to
            the
            provision for adjustment hereinafter set forth, equal to 1,000 times
            the
            aggregate amount to be distributed per share to holders of shares of
            Common
            Stock, or (2) to the holders of shares of stock ranking on a parity (either
            as
            to dividends or upon liquidation, dissolution or winding up) with the
            Series P
            Preferred Stock, except distri-butions made ratably on the Series P Preferred
            Stock and all such parity stock in proportion to the total amounts to
            which the
            holders of all such shares are entitled upon such liquidation, dissolution
            or
            winding up. If the Corporation shall at any time declare or pay any dividend
            on
            the Common Stock payable in shares of Common Stock, or effect a subdivision
            or
            combination or consolidation of the outstanding shares of Common Stock
            (by
            reclassification or otherwise than by payment of a dividend in shares
            of Common
            Stock) into a greater or lesser number of shares of Common Stock, then
            in each
            such case the aggregate amount to which holders of shares of Series P
            Preferred
            Stock were entitled immediately prior to such event under the proviso
            in clause
            (1) of the preceding sentence shall be adjusted by multiplying such amount
            by a
            fraction the numerator of which is the number of shares of Common Stock
            outstanding immediately after such event and the denominator of which
            is the
            number of shares of Common Stock that were outstanding immediately prior
            to such
            event.

          


          VII. Consolidation,
            Merger, Etc.

          


          In
            case
            the Corporation shall enter into any consolidation, merger, combination
            or other
            transaction in which the shares of Common Stock are exchanged for or
            changed
            into other stock or securities, cash and/or any other property, then
            in any such
            case each share of Series P Preferred Stock shall at the same time be
            similarly
            exchanged or changed into 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. If the Corporation shall at any time declare or pay any dividend
            on
            the Common Stock payable in shares of Common Stock, or effect a subdivision
            or
            combination or consolidation of the outstanding shares of Common Stock
            (by
            reclassification or otherwise than by payment of a dividend in shares
            of Common
            Stock) into a greater or lesser number of shares of Common Stock, then
            in each
            such case the amount set forth in the preceding sentence with respect
            to the
            exchange or change of shares of Series P Preferred Stock shall be adjusted
            by
            multiplying such amount by a fraction, the numerator of which is the
            number of
            shares of Common Stock outstanding immediately after such event and the
            denominator of which is the number of shares of Common Stock that were
            outstanding immediately prior to such event.

          


          VIII. Redemption

          


          The
            shares of Series P Preferred Stock shall not be redeemable.

          


          IX. Rank

          


          The
            Series P Preferred Stock shall rank, with respect to the payment of dividends
            and the distribution of assets, junior to all series of any other class
            of the
            Corporation's Preferred Stock.

          


          X. Amendment
            

          


          The
            articles of incorporation of the Corporation shall not be amended in
            any manner
            which would alter or change the powers, preferences or special rights
            of the
            Series P Preferred Stock so as to affect 


          
            
              
              

            

            
              41

              
                

              

            

            
              
              

            

          


          them
            adversely without the affirmative vote of the holders of at least two-thirds
            of
            the outstanding shares of Series P Preferred Stock, voting together as
            a single
            class.

          


          C. This
            amendment was duly adopted and authorized by the board of directors of
            U.S.
            Energy Corp. on September 19, 2001 and amended again in September 30,
            2005.

          


           

          U.S.
            Energy Corp.

          


          


          /s/
            Keith G. Larsen                September
            30, 2005

          By:
            Keith
            G. Larsen, Chairman & CEO 

          


          Attest:

          


          


          /s/
            Daniel P. Svilar                September
            30, 2005

          Daniel
            P.
            Svilar, Secretary

          


          


          


          


          
            	
                    Fremont
                      

                  	
                    )

                  


          

          State
            of
            Wyoming       
            )

          


          On
            September 30, 2005 personally appeared before me, a Notary Public, Keith
            G.
            Larsen and Daniel P. Svilar, who acknowledged that they executed the
            above
            instrument.

          


          


                              _____________________________

                              Notary
            Public

          SEAL

                              My
            Commission
            Expires: _________

          


          


          


          
            
              
              

            

            
              42