Document:

Nutrition
21, Inc.

     

    and

     

    American
Stock Transfer & Trust Co., as Rights Agent

     

    dated as
of September 12, 2002, amended and restatted as of August 15, 2010

     

    
      

    

     

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    TABLE OF
CONTENTS

     

    
      
        
          
            
              
                	
                        Section
      1

                      	
                        Definitions

                      	
                        1

                      
	
                        Section
      2

                      	
                        Appointment
      of Rights Agent

                      	
                        5

                      
	
                        Section
      3

                      	
                        Issue
      of Rights Certificate

                      	
                        5

                      
	
                        Section
      4

                      	
                        Form
      of Rights Certificates

                      	
                        7

                      
	
                        Section
      5

                      	
                        Countersignature
      and Registration

                      	
                        7

                      
	
                        Section
      6

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

                      	
                        8

                      
	
                        Section
      7

                      	
                        Exercise
      of Rights; Purchase Price; Expiration Date of Rights

                      	
                        8

                      
	
                        Section
      8

                      	
                        Cancellation
      and Destruction of Rights Certificates

                      	
                        9

                      
	
                        Section
      9

                      	
                        Status
      and Availability of Preferred Stock

                      	
                        10

                      
	
                        Section
      10

                      	
                        Preferred
      Shares Record Date

                      	
                        11

                      
	
                        Section
      11

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

                      	
                        11

                      
	
                        Section
      12

                      	
                        Certificate
      of Adjustment

                      	
                        18

                      
	
                        Section
      13

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

                      	
                        19

                      
	
                        Section
      14

                      	
                        Fractional
      Rights and Fractional Shares

                      	
                        20

                      
	
                        Section
      15

                      	
                        Rights
      of Action

                      	
                        21

                      
	
                        Section
      16

                      	
                        Agreements
      of Rights Holders

                      	
                        21

                      
	
                        Section
      17

                      	
                        Rights
      Certificate Holder Not Deemed a Stockholder

                      	
                        21

                      
	
                        Section
      18

                      	
                        Concerning
      the Rights Agent

                      	
                        22

                      
	
                        Section
      19

                      	
                        Merger
      or Consolidation or Change of Name of Rights Agent

                      	
                        22

                      
	
                        Section
      20

                      	
                        Duties
      of Rights Agent

                      	
                        23

                      
	
                        Section
      21

                      	
                        Change
      of Rights Agent

                      	
                        24

                      
	
                        Section
      22

                      	
                        Issuance
      of New Rights Certificates

                      	
                        25

                      
	
                        Section
      23

                      	
                        Redemption

                      	
                        25

                      
	
                        Section
      24

                      	
                        Notice
      of Certain Events

                      	
                        26

                      
	
                        Section
      25

                      	
                        Notices

                      	
                        27

                      
	
                        Section
      26

                      	
                        Supplements
      and Amendments

                      	
                        28

                      
	
                        Section
      27

                      	
                        Successors

                      	
                        28

                      
	
                        Section
      28

                      	
                        Benefits
      of This Agreement

                      	
                        28

                      
	
                        Section
      29

                      	
                        Severability

                      	
                        28

                      
	
                        Section
      30

                      	
                        Governing
      Law

                      	
                        28

                      

              

            

          

        

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Section
      31

              	
                Counterparts

              	
                29

              
	
                Section
      32

              	
                Descriptive
      Headings

              	
                29

              
	
                Section
      33

              	
                Administration

              	
                29

              
	
                Signatures

              	 
      	
                29

              
	
                Exhibit
      A

              	
                -   Form
      of Certificate of Designation

              	
                A-1

              
	
                Exhibit
      B

              	
                -   Form
      of Right Certificate

              	
                B-1

              
	
                Exhibit
      C

              	
                -   Summary
      of Rights to Purchase Preferred Stock

              	
                C-1

              

      

    

    

    
      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

    

    

    RIGHTS
AGREEMENT dated as of September 12, 2002, as amended and restated as of August
15, 2010, between NUTRITION 21, INC., a New York corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
"Rights Agent").

     

    Preamble

     

    On
September 12, 2002 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company (the "Board") authorized and declared a dividend
distribution of one preferred share purchase right (a "Right") for each share of
common stock, par value $0.005 per share, of the Company (the "Common Stock")
outstanding at the close of business on September 25, 2002 (the "Record Date"),
and has authorized the issuance of one Right (as such number may be hereinafter
adjusted pursuant to the terms hereof) with respect to each additional share of
Common Stock that shall become outstanding between the Record Date and the
earliest of Close of Business on the Distribution Date, the Redemption Date and
Close of Business on the Final Expiration Date, each Right representing the
right to purchase one one-thousandth of a Preferred Share (as hereinafter
defined), or such different amount and/or kind of securities as shall be
hereinafter provided.

     

    The
parties wish to enter into this Agreement in order to set forth the terms of the
Rights.

     

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

     

     

    Section
1.  Definitions.

     

    For
purposes of this Agreement, the following terms have the following
meanings:

     

    (a)
"Acquiring Person" shall mean any Person (other than a Person who is approved in
advance by the Board) who or which, together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 30% or more of the shares of
Common Stock then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan; provided, however, that the
foregoing definition shall be subject to the following
qualifications:

     

    (i)
 an Exempted Person shall not be become an Acquiring Person unless such
Exempted Person, together with all Affiliates and Associates of such Exempted
Person, shall be the Beneficial Owner of 30% or more of the shares of Common
Stock then outstanding;

     

    (ii)
 no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 30% (30% in the case of an Exempted Person) or more of
the shares of Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 30% (30% in the case of an Exempted
Person) or more of the Common Stock of the Company then outstanding by reason of
share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Stock of the
Company constituting 1% or more of the Common Stock outstanding as of the Close
of business on the date that such Person first becomes the Beneficial Owner of
30% (30% in the case of an Exempted Person) or more of the Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring Person";
and

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (iii) if
the Board determines in good faith that a Person who would otherwise be an
Acquiring Person became such inadvertently (including, without limitation,
because (x) such Person was unaware that it beneficially owned a percentage
of Common Stock that would otherwise cause such Person to be an Acquiring Person
or (y) such Person was aware of the extent of its Beneficial ownership of
Common Stock but had no actual knowledge of the consequences of such Beneficial
ownership under this Agreement) and without any intention of changing or
influencing control of the company, and if such person as promptly as
practicable divested or divests itself of Beneficial Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," then such Person shall not be deemed to be or to have become
an Acquiring Person for any purposes of this Agreement.

     

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

     

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

     

    (i)
 which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has 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 conversion rights, exchange rights, other rights, warrants or
options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities issuable
upon exercise of Rights;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (ii)
 which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has "beneficial ownership" of or has the right to vote
or dispose of (in each case as determined pursuant to Rule 13d-3 of the Exchange
Act Regulations), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act Regulations, and
(B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

     

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

     

    provided, however, that nothing
in this paragraph (c) shall cause a Person engaged in business as an underwriter
of securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities that such Person acquires, or has the right to acquire, pursuant to
customary agreements with the Company and/or between underwriters and selling
group members with respect to a bona fide public offering of securities. 
Notwithstanding anything in the definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.

     

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

     

    (e)
"Close of business" on any given date shall mean 5:00 P.M., New York City time,
on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.

     

    (f)
"Common Stock" when used with reference to the Company shall mean the shares of
common stock, par value $0.005 per share, of the Company.

     

    (g)
"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another
 Person,  the Person or Persons which  ultimately  control
such first-mentioned Person.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (h)
"Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.

     

    (i)
"Company" shall have the meaning set forth in the introductory paragraph to this
Agreement.

     

    (j)
"current per share market price" shall have the meaning set forth in Section
11(d)(i) hereof.

     

    (k)
"Current  Value"  shall  have the  meaning  set
 forth in  Section 11(a)(iii) hereof.

     

    (l)
"Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.

     

    (m)
"Equivalent Preferred Shares" shall have the meaning set forth in Section 11(b)
hereof.

     

    (n)
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

     

    (o)
"Exchange Act Regulations" shall mean the General Rules and Regulations under
the Exchange Act.

     

    (p)
"Exempted Person" shall mean any Person who is the Beneficial Owner, on
September 12, 2002, of securities representing 15% or more of the shares of
Common Stock outstanding on September 12, 2002 (excluding any such Person who
has failed to disclose such Beneficial Ownership in violation of any provision
of the Exchange Act).

     

    (q)
"Final Expiration Date" shall mean September 11, 2012

     

    (r)
"Person" shall mean any individual, firm, corporation, partnership, limited
partnership, limited liability partnership, business trust, limited liability
company, unincorporated association or other entity, and shall include any
successor (by merger or otherwise) of such entity.

     

    (s)
"Preferred Shares" shall mean shares of Series H Participating Preferred Stock,
par value $0.01 per share, of the Company having such rights and preferences
upon adoption as are set forth in the form of Certificate of Amendment set forth
as Exhibit A hereto.

     

    (t)
"Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.

     

    (u)
"Record Date" shall have the meaning set forth in the Preamble to this
Agreement.

     

    (v)
"Redemption Date" shall have the meaning set forth in Section 23(b)
hereof.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (w)
"Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.

     

    (x)
"Right" shall have the meaning set forth in the Preamble to this
Agreement.

     

    (y)
"Right Certificate" shall mean a certificate evidencing a Right in substantially
the form of Exhibit B hereto.

     

    (z)
"Rights Agent" shall have the meaning set forth in the introductory paragraph to
this Agreement.

     

    (aa)
"Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section
11(a)(iii) hereof.

     

    (bb)
"Shares Acquisition Date" shall mean the earlier of the date of (i) the public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or (ii) the public disclosure of facts by the Company or an
Acquiring Person indicating that an Acquiring Person has become
such.

     

    (cc)
"Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.

     

    (dd)
"Subsidiary" of any Person shall mean any Person of which a majority of the
voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

     

    (ee)
"Substitution  Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

     

    (ff)
"Summary of Rights" shall mean the Summary of Rights to Purchase Preferred
Shares in substantially the form of Exhibit C hereto.

     

    (gg)
"Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.

     

    (hh)
"Voting Stock," as of the date of any determination, shall mean the shares of
Common Stock then outstanding and any other shares of capital stock of the
Company then outstanding which are entitled to vote upon matters submitted to
the shareholders of the Company for a vote.

    
       

      Section
2.  Appointment
of Rights Agent.

       

      The
Company hereby appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof, shall prior to
the Distribution Date also be the holders of the Common Stock) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      Section
3.  Issue of
Right Certificates.

       

      (a) Until
the earlier of (i) the Close of Business on the tenth calendar day after the
Shares Acquisition Date or (ii) the tenth Business Day (or such later date as
may be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) of, or of the first public announcement of the intention of
any Person (other than any of the Persons referred to in the preceding
 parenthetical)  to commence,  a tender or exchange offer the
consummation of which would result in any Person becoming an Acquiring Person
(such date being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Stock registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the Rights will be transferable only in
connection with the transfer of Common Stock.  As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one Right for each share of Common Stock
so held.  From and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.

       

      (b) On
the Record Date, or as soon as practicable thereafter, the Company will send a
copy of the Summary of Rights by first-class, postage-prepaid mail, to each
record holder of Common Stock as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company.  With
respect to certificates for Common Stock outstanding as of the Record Date,
until the Close of Business on the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights.  Until the Close of Business
on the Distribution Date (or, if earlier the Redemption Date or the Close of
Business on the Final Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock evidenced
thereby.

       

      (c)
Certificates for Common Stock which become outstanding (including, without
limitation, reacquired Common Stock referred to in the last sentence of this
paragraph (c)) after the Record Date but prior to the earliest of the Close of
Business on the Distribution Date, the Redemption Date or the Close of Business
on the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:

       

      This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Rights Agreement between Nutrition 21, Inc.  and American
Stock Transfer & Trust Company, dated as of September 12, 2002 (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 Nutrition 21,
Inc.   Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate.  Nutrition 21, Inc.  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, as set forth in the Rights Agreement, Rights that are or were
acquired or beneficially owned by Acquiring Persons (as defined in the Rights
Agreement) may become null and void.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      With
respect to such certificates containing the foregoing legend, until the Close of
Business on the Distribution Date, the Rights associated with the Common Stock
represented by certificates shall be evidenced by such certificates alone, and
the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock represented
thereby.

       

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

       

      Section
4.  Form of Right
Certificates.

       

       The
Right Certificates (and the forms of election to purchase Preferred Shares and
of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange or transaction reporting system on which the Rights may from
time to time be listed, or to conform to usage.  Subject to the other
provisions of this Agreement, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a Preferred Share as
shall be set forth therein at the Purchase Price, but the number of one
one-thousandths of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

       

      Section
5.  Countersignature and
Registration.

       

      (a) The
Right Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its Chief Executive Officer, its President, any of its Vice
Presidents, or its Chief Financial Officer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or any Assistant Secretary of the
Company, either manually or by facsimile signature.  The Right Certificates
shall be countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned, either manually or by facsimile.  In case
any officer of the Company who shall have signed any of the Right Certificates
 shall  cease to be such  officer of the  Company
 before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company 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 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.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (b)
Following the Distribution Date, the Rights Agent will keep or cause to be kept,
at its principal office, books for registration of the 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 by each of the Right Certificates and the date of each of the
Right Certificates.

       

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

       

      (a)
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and prior to the earlier of the Redemption
Date or the Close of Business on the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase.  Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent.  Thereupon the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested.  The Company may require
payment of a sum sufficient for any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

       

      (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, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.

       

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

       

      (a) The
registered holder of any Right Certificate (other than a holder whose Rights
have become void pursuant to Section 11(a)(ii) hereof or have been redeemed
pursuant to Section 23 hereof) may exercise the Rights evidenced thereby in
whole or in part at any time after the Distribution Date and prior to the Final
Expiration Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at its principal office, together with payment of the Purchase Price for
each one one-thousandth of a Preferred Share as to which the Rights are
exercised, prior to the Close of Business on the Final Expiration
Date.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (b) The
purchase price for each one one-thousandth of a Preferred Share to be purchased
upon the exercise of a Right shall initially be Three Dollars ($3.00) (the
"Purchase Price"), shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

       

      (c) Upon
receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase and certificate duly executed, accompanied by payment of
the Purchase Price for the number of one one-thousandths of a Preferred Share to
be purchased, and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof, in cash or by certified check, cashier's check or money order payable to
the order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Preferred Shares certificates for the
number of one one-thousandths of a Preferred Share to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional Preferred Shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates, cause the same to
be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.

       

      (d) In
case the registered holder of any Right Certificate shall exercise less than all
the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to such registered
holder's duly authorized assigns, subject to the provisions of Section 14
hereof.

       

      (e)
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
(and/or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Section
8.  Cancellation
and Destruction of Right Certificates.

       

       All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination 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 canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights 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 canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the
Company.

       

      Section
9.  Status and
Availability of Preferred Shares.

       

      (a) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares.

       

      (b) The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights.  The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates for Preferred Shares 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 reasonable satisfaction that
no such tax is due.

       

      (c) The
Company shall use its best efforts to (i) file, as soon as practicable following
the first occurrence of a Section 11(a)(ii) Trigger Date, or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable, and (B) the Final
Expiration Date.  The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the
Rights.  The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date on which it first becomes obligated to
file a registration statement as described above, the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective.  Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.  Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained or the exercise thereof shall not be permitted under applicable
law or a registration statement shall not have been declared
effective.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (d) The
Company covenants and agrees that it will use its best efforts to cause to be
reserved and kept available, out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7 hereof.  Upon the occurrence of any events
resulting in an increase in the aggregate number of shares of Preferred Stock
(or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make
appropriate increases in the number of shares so reserved.

       

      Section
10.  Preferred
Shares Record Date.

       

      Each
person in whose name any certificate for Preferred Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made.  Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided
herein.

       

      Section
11.  Adjustment
of Purchase Price, Number of Shares or Number of Rights.

       

      The
Purchase Price, the number of Preferred Shares 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)
In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of 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, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.  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).

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (ii)
Subject to the following paragraph of this subparagraph (ii), in the event any
Person shall become an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of shares
of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price of the Company's
Common Stock (determined pursuant to Section 11(d) hereof) on the date such
Person became an Acquiring Person.  In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action that would eliminate or diminish the benefits intended
to be afforded by the Rights.

       

      From and
after the occurrence of such an event, any Rights that are or were beneficially
owned or acquired by such Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) on or after the earlier of (x) the date of such event and
(y) the Distribution Date shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement.  No Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof shall be canceled.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (iii) In
the event that the number of shares of Common Stock which are authorized by the
Company's certificate of incorporation and not outstanding or subscribed for, or
reserved or otherwise committed for issuance for purposes other than upon
exercise of the Rights, are not sufficient to permit the holder of each Right to
purchase the number of shares of Common Stock to which he would be entitled upon
the exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) of paragraph (a) of this Section 11, or should the Board of Directors so
elect, the Company shall: (A) determine the excess of (1) the value of the
Common Stock issuable upon the exercise of a Right (calculated as provided in
the last sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii)
hereof (the "Current Value") over (2) the aggregate Purchase Price that would be
payable upon full exercise of a Right (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for such Common
Stock, upon payment of the applicable Purchase Price, any one or more of the
following having an aggregate value determined by the Board of Directors to be
equal to the Current Value: (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has determined to have the same value as shares of
Common Stock (such shares of preferred stock, "Common Stock Equivalents")), (4)
debt securities of the Company, (5) other assets , or any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of an investment banking firm selected by the Board of
Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the first occurrence of an
event triggering the rights to purchase Common Stock described in Section
11(a)(ii) (the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and cash have an aggregate
value equal to the Spread.  If the Board of Directors of the Company shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be extended, the
"Substitution Period").  To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to the last paragraph
of Section 11(a)(ii) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. 
In the event of any such suspension, the Company shall make a public
announcement, and shall deliver to the Rights Agent a statement, stating that
the exercisability of the Rights has been temporarily suspended.  At such
time as the suspension is no longer in effect, the Company shall make another
public announcement, and deliver to the Rights Agent a statement so
stating.  For purposes of this Section 11(a)(iii), the value of the Common
Stock shall be the current per share market price (as determined pursuant to
Section 11(d)(i) hereof) of the Common Stock on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Stock on such date.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

     

    (b) In
the event that the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("Equivalent Preferred Shares")) or
securities convertible into Preferred Shares or Equivalent Preferred Shares at a
price per Preferred Share or Equivalent Preferred Share (or having a conversion
price per share, if a security convertible into Preferred Shares or Equivalent
Preferred Shares) less than the then current per share market price of the
Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be adjusted by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
Equivalent Preferred 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 of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred 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 in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

     

    (c) In
case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been
fixed.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (d) (i)
For the purpose of any computation hereunder, the "current per share market
price" of any security (a "Security" for the purpose of this Section 11(d)(i))
on any date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted by
the Board of Directors to take into account ex-dividend trading. The closing
price for each 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 Security is 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 Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last sale price or, if such last sale
price is not reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company. If on any such date no market maker is making a market in the
Security, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

     

    (ii) For
the purpose of any computation hereunder, the "current per share market price"
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Stock as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by 1,000. If neither the shares of Common Stock nor the
Preferred Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

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

     

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

     

    (g) all
Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a Preferred Share
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 as provided in Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a Preferred Share (calculated to the nearest one ten-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-thousandths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (i) The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights in substitution for any adjustment in the number
of one one-thousandths of a Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a Preferred
Share 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 hundred-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 distributed, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been distributed, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.

     

    (j)
Irrespective of any adjustment or change in the Purchase Price or the number of
one one-thousandths of a Preferred Share issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one one-thousandths of a Preferred
Share which were expressed in the initial Right Certificates issued
hereunder.

     

    (k)
Before taking any action that would cause an adjustment reducing the Purchase
Price below one one-thousandth of the then par value of the Preferred Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable Preferred
Shares at such adjusted Purchase Price.

     

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

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (m)
Anything in this Section 11 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order that any (i)
combination or subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, (iv) dividends on
Preferred Shares payable in Preferred Shares or (v) issuance of any rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.

     

    (n) In
the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Stock payable in Common Stock shares, (B)
subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock
(by reverse stock split or otherwise) into a smaller number of Common Stock
shares, or (D) issue any shares of its capital stock in a reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event: (1) each share of Common Stock (or
shares of capital stock issued in such reclassification of the Common Stock)
outstanding immediately following such time shall have associated with it the
number of Rights as were associated with one share of Common Stock immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Purchase Price thereafter shall equal the result obtained
by multiplying the Purchase Price in effect immediately prior to such time by a
fraction, the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the event described in clauses (A)-(D)
above, and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately after such event; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (3) the number of one one-thousandth
of a Preferred Share (or shares of such other capital stock) issuable upon the
exercise of each Right outstanding after such event shall equal the number of
one one-thousandth of a Preferred Share (or shares of such other capital stock)
as were issuable with respect to one Right immediately prior to such event. Each
share of Common Stock that shall become outstanding after an adjustment has been
made pursuant to this Section 11(n) shall have associated with it the number of
Rights, exercisable at the Purchase Price and for the number of one
one-thousandth of a Preferred Share (or shares of such other capital stock) as
one share of Common Stock has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.

    
      
         

      

      
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    Section
12. Certificate of
Adjustment.

     

    Whenever
an adjustment is made as provided in Section 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Common Stock or the Preferred Shares
a copy of such certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 24 hereof. Notwithstanding the
foregoing sentence, the failure by the Company to make such certification or
give such notice shall not affect the validity of or the force or effect of the
requirement for such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein
contained.

     

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

     

    In the
event that, at any time after a Person becomes an Acquiring Person, directly or
indirectly, (i) the Company shall consolidate with, or merge with and into, any
other Person, (ii) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) 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 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly-owned Subsidiaries, then, and in
each such case, proper provision shall be made so that (A) each holder of a
Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of shares of Common Stock
of such other Person (including the Company as successor thereto or as the
surviving corporation) as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable and dividing that product by (y) 50%
of the then current per share market price of the Common Stock of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (B) the issuer of such Common
Stock 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; (C) the term "Company" shall thereafter be
deemed to refer to such issuer; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
shares of Common Stock in accordance with Section 9 hereof) 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
Common Stock thereafter deliverable upon the exercise of the Rights. The Company
covenants and agrees that it shall not consummate any such consolidation merger,
sale or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. For purposes hereof, the
"earning power" of the Company and its Subsidiaries shall be determined in good
faith by the Company's Board of Directors on the basis of the operating earnings
of each business operated by the Company and its Subsidiaries during the three
fiscal years preceding the date of such determination (or, in the case of any
business not operated by the Company or any Subsidiary during three full fiscal
years preceding such date, during the period such business was operated by the
Company or any Subsidiary).

    
      
         

      

      
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    Section
14. Fractional Rights
and Fractional Shares.

     

    (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence 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, an
amount in 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 such Trading Day shall be determined
in accordance with the method set forth in Section 11(d)(i).

     

    (b) The
Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-thousandth of a Preferred Share may, at the
election of the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depository selected by it;
provided, that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company shall
pay to each registered holder of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share as the fraction of one Preferred
Share that such holder would otherwise receive upon the exercise of the
aggregate number of rights exercised by such holder. For the purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately prior to the date of such
exercise.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

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

     

    Section
15. Rights of
Action.

     

    All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered holder of
any Right Certificate (or, prior to the Distribution Date, of the Common Stock)
may, without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), 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 the Common Stock;

     

    (b) after
the Distribution Date, the Right Certificates are transferable only on the
registry books maintained by the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer with a completed form of certification; 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, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    Section
17. Right Certificate
Holder Not Deemed a Shareholder.

     

    No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.

     

    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 to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim or liability in connection
therewith.

     

    (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 Preferred Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to 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 corporate trust
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 hereof. 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;
and 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.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    (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 expressly set forth in this
Agreement and no implied duties or obligations shall be read into this Agreement
against the Rights Agent. The Rights Agent shall perform those duties and
obligations 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:

     

    (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 any one of the Chairman of the Board, the President,
a Vice President, the Treasurer 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 as to 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.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    (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 hereof 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 Preferred Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred Shares will,
when so 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 performing by the Rights Agent of the provisions
of this Agreement.

     

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

     

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

     

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

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    Section
21. Change of Rights
Agent.

     

    The
Rights Agent or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Stock and the Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Shares 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 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
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 or of any state of the United States, in good standing,
which is authorized under such laws to exercise corporate trust or stockholder
services powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Shares, 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 Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights made in accordance
with the provisions of this Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date and
prior to the Final Expiration Date, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee benefit plan or arrangement or upon the exercise,
conversion or exchange of securities of the Company currently outstanding or
issued at any time in the future by the Company and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued and this sentence shall be null and void
ab initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued or
would create a significant risk of or result in such options' or employee plans'
or arrangements' failing to qualify for otherwise available special tax
treatment and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    Section
23. Redemption.

     

    (a) The
Board of Directors of the Company may, at its option, at any time prior to the
earlier of (i) the Close of Business on the tenth calendar date following the
Shares Acquisition Date, or (ii) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.001 per
Right, 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"). The redemption of the Rights
by the Board of Directors may be made effective at such time, on such basis and
subject to such conditions as the Board of Directors in its sole discretion may
establish.

     

    (b)
Immediately upon the time of the effectiveness of the redemption of the Rights
pursuant to paragraph (a) of this Section 23 or such earlier time as may be
determined by the Board of Directors of the Company in the action ordering such
redemption (although not earlier than the time of such action) (such time the
"Redemption Date"), and without any further action and without any notice, the
right to exercise the Rights shall terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. If the payment of the Redemption Price is not included with such notice,
each such notice shall state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23, other than in
connection with the purchase of Common Stock.
 

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    Section
24. Notice of Certain
Events.

     

    (a) In
case the Company shall after the Distribution Date propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (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 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Stock payable in shares of Common Stock or to effect
a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock), then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Stock and/or Preferred Shares, whichever shall be the
earlier.

     

    (b) In
case any event set forth in Section 11(a)(ii) hereof shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof.

     

    Section
25. Notices.

     

    (a)
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 sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:

     

    Nutrition
21, Inc.

    4
Manhattanville Road

    Purchase,
New York 10577

    Attention:
Secretary

    

    Copy
to:

     

    Ehrenreich
Eilenberg & Krause LLP

    11 East
44th Street

    New York,
New York 10017

    Attention:
Joseph Ehrenreich, Esq.

     

    Subject
to the provisions of Section 21 hereof, 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 first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    American
Stock Transfer & Trust Company

    6201 15th
Avenue

    3rd
Floor

    Brooklyn,
NY 11219

    Attention:
Legal Department

     

    Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to 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 as shown on the registry books of the
Company.

     

    Section
26. Supplements and
Amendments.

     

    The
Company may from time to time, 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 to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any change to or delete any provision hereof
or to adopt any other provisions with respect to the Rights which the Company
may deem necessary or desirable; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended or supplemented in any manner which would adversely affect
the interests of the holders of Rights (other than an Acquiring Person and its
Affiliates and Associates). Any supplement or amendment authorized by this
Section 26 will be evidenced by a writing signed by the Company and the Rights
Agent.

     

    Section
27. Successors.

     

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

     

    Section
28. Benefits of this
Agreement.

     

    Nothing
in this Agreement shall be construed to give to any person or entity other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).

     

    Section
29. Severability.

     

    If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    Section
30. Governing
Law.

     

    This
Agreement and each Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York 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.

     

    Section
31. 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
32. Descriptive
Headings.

     

    Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

     

    Section
33. Administration.

     

    The Board
of Directors of the Company shall have the exclusive power and authority to
administer and interpret the provisions of this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors or the Company
or as may be necessary or advisable in the administration of this Agreement. All
such actions, calculations, determinations and interpretations which are done or
made by the Board of Directors in good faith shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and shall not subject the Board of Directors to any liability to
the holders of the Rights.

     

         IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be duly
executed as of the day and year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Nutrition
      21, Inc.

                                	 
	  	 	  
	
                                  By:

                                	 
      	 
	
                                  Name:

                                	 
	
                                  Title:

                                	 

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      	
                              American
      Stock Transfer & Trust Company

                            	 
	 	 	 
	
                              By:

                            	 
      	 
	
                              Name:

                            	 
	
                              Title:

                            	 

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    CERTIFICATE
OF AMENDMENT

    TO THE
CERTIFICATE OF INCORPORATION OF

    NUTRITION
21, INC.

    Under
Section 805 of the Business Corporation Law

     

    The
undersigned, being the President of Nutrition 21, Inc., does hereby
certify:

     

    A.  The
name of the Corporation is Nutrition 21, Inc. The Corporation was originally
formed under the name Applied Micro Biology, Inc.

     

    B.  The
Certificate of Incorporation of the Corporation was filed by the Department of
State on June 29, 1983 under the name Applied Micro Biology, Inc.

     

    C.  The
Restated Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") was filed by the Department of State on January 17,
1984.

     

    D.  The
Certificate of Incorporation as now in full force and effect is hereby amended
by the addition of a provision setting forth the number, designation, relative
rights, preferences and limitations of a series of Preferred Stock, having a par
value of $0.01 per share, as fixed by the Board of Directors before the issuance
of such series pursuant to the authority contained in Article Fourth of the
Certificate of Incorporation, and in accordance with the provisions of Section
502 of the Business Corporation Law of the State of New York.

     

    
      	
              1.

            	
              Designation and
      Amount.  There is hereby created a series of the
      Preferred Stock of the Corporation.  The shares of this series
      shall be designated as "Series H Participating Preferred Stock" (the
      "Series H Preferred Stock").  The number of shares constituting
      the Series H Preferred Stock shall be One Hundred Thousand (100,000). Such
      number of shares may be increased or decreased by resolution of the Board
      of Directors; provided, that no decrease shall reduce the number of shares
      of Series H 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 H Preferred Stock.

            

    

     

    
      	
              2.

            	
              Proportional
      Adjustment. In the event that the Corporation shall at any time
      after the issuance of any share or shares of Series H Preferred Stock (i)
      declare any dividend on Common Stock of the Corporation ("Common Stock")
      payable in shares of Common Stock, (ii) subdivide the outstanding Common
      Stock or (iii) combine the outstanding Common Stock into a smaller number
      of shares, then in each such case the Corporation shall simultaneously
      effect a proportional adjustment to the number of outstanding shares of
      Series H Preferred Stock.

            

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    
      	
              3.

            	
              Dividends and
      Distributions.

            

    

    
      	
            	
              3.1.

            	
              Subject
      to the rights of the holders of any shares of any series of Preferred
      Stock (or any other stock) ranking prior and superior to the Series H
      Preferred Stock with respect to dividends, the holders of shares of Series
      H Preferred Stock shall be entitled to receive, when, as and if declared
      by the Board of Directors out of funds legally available for the purpose,
      quarterly dividends payable in cash on the last day of March, June,
      September and December in each year (each such date being referred to
      herein as a "Quarterly Dividend Payment Date"), commencing on the first
      Quarterly Dividend Payment Date after the first issuance of a share or
      fraction of a share of Series H Preferred Stock, in an amount (if any) per
      share (rounded to the nearest cent), equal to 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 or fraction of a share of Series H Preferred
  Stock.

            

    

     

    
      	
            	
              3.2.

            	
              The
      Corporation shall declare a dividend or distribution on the Series H
      Preferred Stock as provided in subsection 3.1 above immediately after it
      declares a dividend or distribution on the Common Stock (other than a
      dividend payable in shares of Common
Stock).

            

    

     

    
      	
            	
              3.3.

            	
              Dividends
      due pursuant to subsection 3.1 shall begin to accrue on outstanding shares
      of Series H Preferred Stock from the Quarterly Dividend Payment Date next
      preceding the date of issue of such shares of Series H Preferred Stock,
      unless the date of issue of such shares is prior to the record date for
      the first Quarterly Dividend Payment Date, in which case dividends on such
      shares shall begin to accrue from the date of the first issuance of any
      share or fraction of a share of Series H Preferred, 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 H 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 from such Quarterly Dividend Payment Date. Accrued but
      unpaid dividends shall not bear interest. Dividends paid on the shares of
      Series H 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 H Preferred Stock entitled to
      receive payment of a dividend or distribution declared thereon, which
      record date shall be no more than 30 days prior to the date fixed for the
      payment thereof.

            

    

     

    
      	
              4.

            	
              Voting Rights.
      The holders of shares of Series H Preferred Stock shall have the following
      voting rights:

            

    

     

    
      	
            	
              4.1.

            	
              Each
      share of Series H Preferred Stock shall entitle the holder thereof to
      1,000 votes on all matters submitted to a vote of the stockholders of the
      Corporation.

            

    

     

    
      	
            	
              4.2.

            	
              Except
      as otherwise provided herein or by law, the holders of shares of Series H
      Preferred Stock and the holders of shares of Common Stock shall vote
      together as one class on all matters submitted to a vote of stockholders
      of the Corporation.

            

    

     

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

     

    
      	
            	
              4.3.

            	
              Except
      as required by law, the holders of Series H Preferred Stock shall have no
      special voting rights and their consent shall not be required (except to
      the extent that they are entitled to vote with holders of Common Stock as
      set forth herein) for taking any corporate
  action.

            

    

     

    
      	
              5.

            	
              Certain
      Restrictions.

            

    

     

    
      	
            	
              5.1.

            	
              The
      Corporation shall not declare any dividend on, make any distribution on,
      or redeem or purchase or otherwise acquire for consideration any shares of
      Common Stock after the first issuance of a share or fraction of a share of
      Series H Preferred Stock unless concurrently therewith it shall declare a
      dividend on the Series H Preferred Stock as required by Section 3
      hereof.

            

    

     

    
      	
            	
              5.2.

            	
              Whenever
      quarterly dividends or other dividends or distributions payable on the
      Series H Preferred Stock as provided in Section 3 are in arrears,
      thereafter and until all accrued and unpaid dividends and distributions,
      whether or not declared, on shares of Series H Preferred Stock outstanding
      shall have been paid in full, the Corporation shall
  not:

            

    

     

    (i)     declare
or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series H
Preferred Stock;

     

    (ii)    declare
or pay dividends on, 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 H Preferred Stock, except dividends paid ratably on
the Series H 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)
with the Series H Preferred Stock;

     

    (iv)   purchase
or otherwise acquire for consideration any shares of Series H Preferred Stock,
or any shares of stock ranking on a parity with the Series H 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.

     

    
      	
            	
              5.3.

            	
              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 subsection 5.2, purchase
      or otherwise acquire such shares at such time and in such
      manner.

            

    

     

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

     

    
      	
              6.

            	
              Reacquired
      Shares. Any shares of Series H Preferred Stock purchased or
      otherwise acquired by the Corporation in any manner whatsoever shall be
      retired and canceled promptly after the acquisition thereof. All such
      shares shall upon their cancellation become authorized but unissued shares
      of Preferred Stock and may be reissued as part of a new series of
      Preferred Stock to be created by resolution or resolutions of the Board of
      Directors, subject to the conditions and restrictions on issuance set
      forth herein and in the Certificate of Incorporation, as then
      amended.

            

    

     

    
      	
              7.

            	
              Liquidation,
      Dissolution or Winding Up. Upon any liquidation, dissolution or
      winding up of the Corporation, the holders of shares of Series H Preferred
      Stock shall be entitled to receive an aggregate amount per share equal to
      1,000 times the aggregate amount to be distributed per share to holders of
      shares of Common Stock plus an amount equal to any accrued and unpaid
      dividends on such shares of Series Preferred
  Stock.

            

    

     

    
      	
              8.

            	
              Consolidation, Merger,
      etc. In case the Corporation shall enter into any consolidation,
      merger, combination or other transaction in which the shares of Common
      Stock are exchanged for or changed into other stock or securities, cash
      and/or any other property, then in any such case the shares of Series H
      Preferred Stock shall at the same time be similarly exchanged or changed
      in an amount per share 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.

            

    

     

    
      	
              9.

            	
              No Redemption.
      The shares of Series H Preferred Stock shall not be
      redeemable.

            

    

     

    
      	
              10.

            	
              Ranking. The
      Series H Preferred Stock shall rank junior to all other series of the
      Corporation's Preferred Stock as to the payment of dividends and the
      distribution of assets, unless the terms of any such series shall provide
      otherwise.

            

    

     

    
      	
              11.

            	
              Amendment. The
      Certificate of Incorporation of the Corporation shall not be further
      amended in any manner which would materially alter or change the powers,
      preference or special rights of the Series H Preferred Stock so as to
      affect them adversely without the affirmative vote of the holders of a
      majority of the outstanding shares of Series H Preferred Stock, voting
      separately as a series.

            

    

     

    
      	
              12.

            	
              Fractional
      Shares. Series H Preferred Stock may be issued in fractions of a
      share which shall entitle the holder, in proportion to such holder's
      fractional shares, to exercise voting rights, receive dividends,
      participate in distributions and to have the benefit of all other rights
      of holders of Series H Preferred
Stock.

            

    

     

    E.  The
foregoing amendment of the Certificate of Incorporation was authorized by vote
of the Board of Directors of the Corporation.

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, I have signed and verified this Certificate on September 12,
2002, and affirm under the penalties of perjury that the statements contained
herein are true.

     

    
      
        
          
            	 
      	
                    NUTRITION
      21, INC.

                  
	 
      	 
      
	 
      	
                    By:

                  	 
      	 
      
	 
      	
                    Gail
      Montgomery, President and Chief Executive
  Officer

                  

          

        

      

    

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

     EXHIBIT
B

     

    Form of
Right Certificate

    Certificate
No. R- _______ Rights

     

    NOT
EXERCISABLE AFTER SEPTEMBER 11, 2012 OR EARLIER IF REDEMPTION OCCURS. THE RIGHTS
ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR
WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR
AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

     

    Right
Certificate

    Nutrition
21, Inc.

     

         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 12, 2002 (the "Rights Agreement"), between
Nutrition 21, Inc., a New York corporation (the "Company"), and American Stock
Transfer & Trust Company (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York time, on September 11, 20012, at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series
H Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), of the Company, at a purchase price of $3.00 per one one-thousandth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the certification and the Form of Election to
Purchase duly executed.  The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of September 12, 2002,
based on the Preferred Shares as constituted at such date. As provided in the
Rights
Agreement, the Purchase Price and the number
of one one-thousandths of a Preferred Share 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.

     

    From and
after the occurrence of an event described in Section 11(a)(ii) of the Rights
Agreement, if the Rights evidenced by this Right Certificate are or were at any
time on or after the earlier of (x) the date of such event and (y) the
Distribution Date (as such term is defined in the Rights Agreement) beneficially
owned or acquired by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall become void, and any holder of such Rights shall thereafter have no
right to exercise such Rights.

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

     

    This
Right Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.  This Right Certificate,
with or without other Right Certificates, upon surrender at the principal office
of the Rights Agent, may be exchanged for another Right  Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preferred 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 provisions of the Rights Agreement, at the Company's option, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $0.001 per Right.

     

    No
fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a Preferred Share, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will 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 the Preferred Shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting  shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the 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.

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

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

     

    
      
        
          
            
              
                
                  
                    	 	
                            Dated:
      ____________ __, ____

                          
	 
      	
                            Nutrition
      21, Inc.

                          
	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	
                            Title:

                          
	 	 
	 
      	
                            Attest:

                          
	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	
                            Title:
      Secretary

                          
	 
      	 
      
	 
      	
                            Countersigned:

                          
	 
      	
                            AMERICAN
      STOCK TRANSFER & TRUST COMPANY

                          
	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 	 	      
                            Authorized Signature

                          	 

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

    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 Company, with full power of substitution.

     

    Dated:
_____________ __, ____

    

    
      
        	 
      	 
      
	 
      	
                Signature

              

      

    

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved
signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

     

    CERTIFICATION

     

    The
undersigned hereby certifies that the Rights evidenced by this Right Certificate
are not, and to the knowledge of the undersigned have never been, beneficially
owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).

    

    
      
        	 
      	 
      
	 
      	
                Signature

              

      

    

    

    Form of
Reverse Side of Right Certificate

     

    FORM OF
ELECTION TO PURCHASE

     

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

     

    To:  Nutrition
21, Inc.

     

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

     

    
      
        

      

    

    (Please
insert social security or other identifying number)

    
      
         

      

      
        B-4

        
          

        

      

      
         

      

    

     

    
      

    

    (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
Guaranteed:

     

    Signatures
must be guaranteed by an eligible guarantor institution (a bank, stockbroker,
savings and loan association or credit union with membership in an approved
signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

     

    CERTIFICATION

     

    The
undersigned hereby certifies that the Rights evidenced by this Right Certificate
are not, and to the knowledge of the undersigned have never been, beneficially
owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).

     

    NOTICE

     

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

     

    In the
event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement) and such Assignment or Election to Purchase
will not be honored.

    
      
         

      

      
        B-5

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    Summary
of Rights to Purchase Preferred Stock

     

    Introduction

     

    On
September 12, 2002, the Board of Directors of our Company, Nutrition 21, Inc., a
New York corporation, declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, par value $0.005 per
share.  The dividend is payable on September 25, 2002 to the
stockholders of record on September 25, 2002. The Rights are governed by a
Rights Agreement dated as of September 12, 2002 (the "Rights
Agreement"), that we entered into with American Stock Transfer & Trust
Co., as the Rights Agent.

     

    Our Board
has adopted this Rights Agreement to protect stockholders from coercive or
otherwise unfair takeover tactics.  In general terms, it works by
imposing a significant penalty upon any person or group that acquires 30% or
more of our outstanding common stock without the approval of our Board. However,
the percentage is 30% for any person or group that already was the beneficial
owner of 15% or more of our common stock at the time the Rights Agreement was
entered into (any such person or group being referred to as an "Exempted
Person").  The Rights Agreement should not interfere with any merger
or other business combination approved by our Board.

     

    We have
provided below a summary description of certain terms of the Rights
Agreement.  Please note this summary is not complete, and should be
read together with the entire Rights Agreement. A copy of the Rights Agreement
has been filed with the Securities and Exchange Commission as an exhibit to a
Report on Form 8-K dated September 12, 2002.  A copy of the agreement
is available free of charge from our Company. If there is a conflict between the
summary below and the Rights Agreement, the Rights Agreement will
govern.

     

    The
Rights

     

    Our Board
authorized the issuance of a Right with respect to each outstanding share of
common stock on September 25, 2002.  The Rights will initially trade
with, and will be inseparable from, the common stock.

     

    Until the
Distribution Date described below, the Rights will be evidenced only by
certificates that represent shares of common stock.  New Rights will
accompany any new shares of common stock we issue after September 25, 2002 until
the Distribution Date described below, and in certain circumstances, new shares
of common stock we issue after the Distribution Date.

     

    New
common stock certificates we issue after September 25, 2002 as a result of
transfers of stock by existing stockholders or of new issuances by us will
contain a notation referring to the Rights and the Rights
Agreement.

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

    Purchase
Price

    Each
Right will allow its holder to purchase from our Company one one-thousandth of a
share of Series H Participating Preferred Stock (“Preferred Stock”) for $3.00,
once the Rights become exercisable.  This portion of a share of
Preferred Stock will give the stockholder approximately the same dividend,
voting, and liquidation rights as would one share of common
stock.  Prior to exercise, the Right does not give its holder any
dividend, voting, or liquidation rights as a stockholder of our
Company.

     

    Exercisability

     

    The
Rights will not be exercisable until:

     

    
      	
               
      

            	
              $

            	
              10
      days after the public announcement that a person or group has become an
      "Acquiring Person" by obtaining beneficial ownership of 30% or more of our
      outstanding common stock (30% in the case of an Exempted Person), or, if
      earlier,

            

    

     

    
      	
               
      

            	
              $

            	
              10
      business days (or a later date determined by our Board before any person
      or group becomes an Acquiring Person) after a person or group begins a
      tender or exchange offer which, if completed, would result in that person
      or group becoming an Acquiring
Person.

            

    

     

    We refer
to the date when the Rights become exercisable as the "Distribution
Date."  Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of Rights.  After that date, the Rights will separate from
the common stock and be evidenced by Rights certificates that we will mail to
all eligible holders of common stock.

     

    Any
Rights held by an Acquiring Person are void and may not be
exercised.

     

    Consequences
of a person or group becoming an Acquiring Person

     

    If a
person or group becomes an Acquiring Person, all holders of Rights, except the
Acquiring Person, may, for a purchase price of $3.00, acquire shares of our
common stock having a market value of $6.00, based on the market price of the
common stock prior to such person or group becoming an Acquiring
Person.

     

    If our
Company is later acquired in a merger or similar transaction after the
Distribution Date, all holders of Rights, except the Acquiring Person, may, for
a purchase price of $3.00, purchase shares of the acquiring corporation having a
market value of $6.00 based on the market price of the acquiring corporation's
stock, prior to such merger.

     

    Preferred
Stock Provisions

     

    Each
share Preferred Stock, if issued:

     

    
      	
               
      

            	
              $

            	
              will
      not be redeemable;

            

    

     

    
      	
               
      

            	
              $

            	
              will
      be junior to any other series of preferred stock we may
    issue;

            

    

     

    
      	
               
      

            	
              $

            	
              will
      entitle the holder to quarterly dividend payments in an amount equal to
      1,000 times the dividend, if any, paid on one share of common stock (so
      that one one-thousandth of a share of Preferred Stock would entitle the
      holder to receive a quarterly dividend payment that is the same as any
      dividend paid on one share of common
stock);

            

    

     

    
      
         

      

      
        C-2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              $

            	
              will
      entitle the holder upon liquidation to receive 1,000 times the payment
      made on one share of common stock (so that one one-thousandth of a share
      of Preferred Stock would entitle the holder to receive the same payment as
      is made on one share of common stock);
and

            

    

     

    
      	
               
      

            	
              $

            	
              will
      have the same voting power as 1,000 shares of commons stock (so that one
      one-thousandth of a share of Preferred Stock would have the same voting
      rights as one share of common stock);
and

            

    

     

    The value
of one one-thousandth interest in a share of Preferred Stock should approximate
the value of one share of common stock.

     

    Expiration

     

    The
Rights will expire on September 11, 2012 or on an earlier date if we redeem
them, as discussed below.

     

    Redemption

     

    Our Board
may redeem the Rights for $0.001 per Right at any time before the close of
business on the tenth calendar date following the date on which any person or
group becomes an Acquiring Person.  If our Board redeems any Rights,
it must redeem all of the Rights.  Once the Rights are redeemed, the
only right of the holders of Rights will be to receive the redemption price of
$0.001 per Right, in cash, common stock or other securities, as determined by
our Board.

     

    Anti-dilution
provisions

     

    The  Rights  will  have
the benefit of  certain customary anti-dilution
provisions.

     

    Amendments

     

    The terms
of the Rights Agreement may be amended by our Board without the consent of the
holders of the Rights.  However, after a person or group becomes an
Acquiring Person, our Board may not amend the agreement in a way that adversely
affects holders of the Rights.

    
      
         

      

      
        C-3Exhibit
10.1

    

    THIS AGREEMENT (this “Agreement”), dated
August 13, 2010 is entered into by and between NEOMEDIA TECHNOLOGIES, INC.,
a Delaware corporation (the “Company”), and YA GLOBAL INVESTMENTS, L.P.
(the “Buyer”).

     

    WHEREAS:

     

    
      	
               
      

            	
              A.

            	
              Reference
      is made to certain financing arrangements entered into by and between the
      Company and certain of its former and/or current subsidiaries
      (collectively, the “Obligors”) and
      the Buyer, evidenced by, among other things, the documents, instruments,
      and agreements listed on Exhibit X
      attached hereto and incorporated herein by reference (collectively,
      together with all other documents, instruments, and agreements executed in
      connection therewith or related thereto, the “Existing Financing
      Documents”).

            

    

     

    
      	
               
      

            	
              B.

            	
              Reference
      is also made to the Securities Purchase Agreement (the “Securities Purchase
      Agreement”) dated as of May 27, 2010, between the Company and the
      Buyer pursuant to which the Company has issued and the Buyer has purchased
      the Convertible Debentures and Warrants.  All capitalized terms
      used but not defined herein shall have the meaning ascribed thereto in the
      Securities Purchase Agreement.

            

    

     

    
      	
               
      

            	
              C.

            	
              The
      parties desire that, upon the terms and subject to the conditions
      contained herein, the Company shall issue and sell to the Buyer, as
      provided herein, and the Buyer shall purchase (i) a $550,000 secured
      convertible debenture in the form attached hereto as “Exhibit A” (the
      “Second 2010
      Convertible Debenture”, which shall be deemed to be included in the
      term Convertible Debentures), which shall be convertible into Common Stock
      (as converted such shares of Common Stock, shall be Conversion Shares),
      and (ii) warrants substantially in the form attached hereto as “Exhibit B” (the
      “Second 2010
      Warrants”, which shall be deemed to be included in the term
      Warrants and together with this Agreement, the Second 2010 Convertible
      Debenture, the Existing Financing Documents and all other documents,
      instruments and agreements executed in connection therewith or related
      thereto, the “Financing
      Documents”), to acquire up to 1,000,000 additional shares of Common
      Stock (as exercised, such shares of Common Stock shall be Warrant Shares)
      which shall be funded on the date hereof (the “Second 2010
      Closing”) for a total purchase price of $550,000, (the “Second 2010 Purchase
      Price”).

            

    

     

    
      	
               
      

            	
              D.

            	
              In
      order to induce the Company to issue and the Buyer to purchase the Second
      2010 Convertible Debenture and the Second 2010 Warrants, the parties
      desire to enter into this
Agreement.

            

    

     

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer hereby agree as follows:

     

    Section
1.Purchase
and Sale of Second 2010 Convertible Debenture and Second 2010
Warrants.

     

    (a)       Subject
to the satisfaction (or waiver) of the terms and conditions of this Agreement,
the Buyer agrees to purchase at the Second 2010 Closing and the Company agrees
to sell and issue to the Buyer at the Second 2010 Closing the Second 2010
Convertible Debenture and Second 2010 Warrants.

     

    (b)       The
Second 2010 Closing shall take place at 10:00 a.m. Eastern Standard Time on the
same business day as the date hereof, subject to notification of satisfaction of
the conditions to the Second 2010 Closing set forth in this Agreement (or such
other date as is mutually agreed to by the Company and the
Buyer).  The Second 2010 Closing shall occur at the offices of
Yorkville Advisors, LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey
07302 (or such other place as is mutually agreed to by the Company and the
Buyer).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)       Subject
to the satisfaction (or waiver) of the terms and conditions of this Agreement,
on the Second 2010 Closing Date, (i) the Buyer shall deliver to the Company such
aggregate proceeds for the Second 2010 Convertible Debenture and Second 2010
Warrants to be issued and sold to such Buyer at the Second 2010 Closing, minus
the fees to be paid directly from the proceeds thereof as set forth herein, and
(ii) the Company shall deliver to the Buyer the Second 2010 Convertible
Debenture and Second 2010 Warrants duly executed on behalf of the
Company.

     

    Section
2.Representations
and Warranties of Buyer.

     

    (a)       The
representations and warranties of the Buyer set forth in Section 2 of the
Securities Purchase Agreement are hereby incorporated by reference with such
changes necessary to relate to this Agreement as if set forth in their entirety
herein (the “Buyer
Representations and Warranties”).  For the avoidance of doubt,
in the Buyer Representations and Warranties references to “Securities” shall be
deemed references to the Second 2010 Convertible Debenture, the Second 2010
Warrants and the shares of Common Stock issuable upon conversion or exercise
thereof, references to “Conversion Shares” shall be deemed to reference the
shares of Common Stock issuable upon conversion of the Second 2010 Convertible
Debenture, references to “Warrant Shares” shall be deemed to reference the
shares of Common Stock issuable upon exercise of the Second 2010 Warrants and
any reference to “Transaction Documents” shall be deemed to include a reference
to this Agreement, the Second 2010 Convertible Debenture and the Second 2010
Warrants.

     

    (b)       The
Buyer hereby represents and warrants that except as may otherwise be disclosed
on a disclosure schedule attached hereto, the Buyer Representations and
Warranties are true and correct on the date hereof (except for Buyer
Representations and Warranties that speak as of a specific date).

     

    Section
3.Representations
and Warranties of the Company.

     

    (a)       The
representations and warranties of the Company set forth in Section 3 of the
Securities Purchase Agreement are hereby incorporated by reference with such
changes necessary to relate to this Agreement as if set forth in their entirety
herein (the “Company
Representations and Warranties”).  For the avoidance of doubt,
in the Company Representations and Warranties references to “Securities” shall
be deemed references to the Second 2010 Convertible Debenture, the Second 2010
Warrants and the shares of Common Stock issuable upon conversion or exercise
thereof, references to “Conversion Shares” shall be deemed to reference the
shares of Common Stock issuable upon conversion of the Second 2010 Convertible
Debenture, references to “Warrant Shares” shall be deemed to reference the
shares of Common Stock issuable upon exercise of the Second 2010 Warrants and
any reference to “Transaction Documents” shall be deemed to include a reference
to this Agreement, the Second 2010 Convertible Debenture and the Second 2010
Warrants.

     

    (b)       The
Company hereby represents and warrants that except as may otherwise be disclosed
on a disclosure schedule attached hereto or as set forth in the SEC Documents,
such Company Representations and Warranties are true and correct on the date
hereof (except for Company Representations and Warranties that speak as of a
specific date).

     

    Section
4.Covenants.

     

    (a)       With
the exception of subsections 4(d), 4(g)(ii), 7(e) and 7(h), the covenants set
forth (or referenced) in Section 4 of the Securities Purchase Agreement are
hereby incorporated by reference with such changes necessary to relate to this
Agreement as if set forth in their entirety herein (the “Covenants”).  For
the avoidance of doubt, the Covenants’ references to “Securities” shall be
deemed references to the Second 2010 Convertible Debenture, the Second 2010
Warrants and the shares of Common Stock issuable upon conversion or exercise
thereof, references to “Conversion Shares” shall be deemed to reference the
shares of Common Stock issuable upon conversion of the Second 2010 Convertible
Debenture, references to “Warrant Shares” shall be deemed to reference the
shares of Common Stock issuable upon exercise of the Second 2010 Warrants and
any reference to “Transaction Documents” shall be deemed to include a reference
to this Agreement, the Second 2010 Convertible Debenture and the Second 2010
Warrants.

     

    (b)       The
Company will use the proceeds from the sale of the Second 2010 Convertible
Debenture for the general corporate and working capital purposes of the Company
and its subsidiaries.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)       The
Company shall cooperate fully with the Buyer to cause the Company’s wholly-owned
subsidiary, NeoMedia Europe AG (f/k/a Gavitec AG) (“AG”) (1) to execute
and deliver to the Buyer on or before August 20, 2010 the Agreement on the
Pledge of Intellectual Property Rights as Collateral (Vereinbarung uber die Verpfandung
von geistigen Eigentumsrechten) by and between AG and the Buyer in
substantially the form attached hereto as Exhibit C (the “IP Agreement”); (2)
to execute and deliver to the Buyer on or before August 27, 2010 the Security
Transfer of Moveable Assets (Sicherungsubereignungsvertrag)
by and between AG and the Buyer in substantially the form attached hereto as
Exhibit D (the
“Moveable Asset
Agreement”) and (3) to provide to the Buyer on or before August 20, 2010
a duly executed copy of a resolution of AG’s Supervisory Board approving the IP
Agreement and the Moveable Asset Agreement and authorizing the execution
thereof.

     

    Section
5.Ratification
of Financing Documents; Confirmation of Collateral; Cross-Default;
Cross-Collateralization; Further Assurances.

     

    (a)       The
Company hereby ratifies, confirms, and reaffirms all and singular the terms and
conditions of the Existing Financing Documents, and acknowledges and agrees
that, subject to the terms and conditions of this Agreement, all terms and
conditions of the Existing Financing Documents shall remain in full force and
effect and the Company remains liable to the Buyer for the payment and
performance of all amounts due under the Existing Documents, without offset,
defense or counterclaim of any kind, nature or description
whatsoever.

     

    (b)       The
Company hereby ratifies, confirms, and reaffirms that (i) the obligations
secured by the Financing Documents include, without limitation, all amounts
hereafter owed or due under the Second 2010 Convertible Debenture and/or the
Financing Documents (the “Obligations”), and
any future modifications, amendments, substitutions, or renewals thereof, (ii)
all collateral, whether now existing or hereafter acquired, granted to the Buyer
pursuant to the Financing Documents, or otherwise, shall secure all of the
Obligations until the full, final, and indefeasible payment of the Obligations,
and (iii) the occurrence of a default and/or event of default under any
Financing Document shall constitute a default and an event of default under all
of the Financing Documents, it being the express intent of the Company that all
of the Obligations be fully cross-collateralized, cross-guaranteed, and
cross-defaulted.

     

    (c)       The
Company has previously granted the Buyer security interests in all of its
assets, and to confirm the same the Company hereby grants the Buyer a security
interest in all of its assets, whether now existing or hereafter acquired,
including, without limitation, all accounts, inventory, goods, equipment,
software and computer programs, securities, investment property, financial
assets, deposit accounts, chattel paper, electronic chattel paper, instruments,
patents, patent applications, copyrights, trademarks, trademark applications,
trade names, domain names, documents, letter-of-credit rights,
health-care-insurance receivables, supporting obligations, notes secured by real
estate, commercial tort claims, and general intangibles including payment
intangibles, to secure the Obligations free and clear of all liens and
encumbrances, except those in favor of the Buyer.

     

    (d)       The
Company shall, from and after the execution of this Agreement, execute and
deliver to the Buyer whatever additional documents, instruments, and agreements
that the Buyer may require in order to correct any document deficiencies, or to
vest or perfect the Financing Documents and the collateral granted therein more
securely in the Investor and/or to otherwise give effect to the terms and
conditions of this Agreement and/or any documents, instruments and agreement
required in connection with, related to, or contemplated by this Agreement, and
hereby irrevocably authorizes the Buyer to file any financing statements
(including financing statements with a generic description of the collateral
such as “all assets”), and take any other normal and customary steps, the Buyer
deems necessary to perfect or evidence the Buyer’s security interests and liens
in any such collateral.

     

    (e)       The
Company acknowledges and agrees that this Agreement shall constitute an
authenticated record as such term is defined in the Uniform Commercial
Code.

     

    (f)       The
Company acknowledges and agrees that nothing contained in this Agreement, the
Second 2010 Convertible Debenture, the Second 2010 Warrants or in any document,
instrument or agreement required in connection with, related to or contemplated
thereby shall be deemed to constitute (1) a waiver of any defaults or events of
default now existing or hereafter arising, (2) an agreement to forbear by the
Buyer with respect to such defaults or events of default, or (3) an amendment,
modification, extension or waiver of any of the terms of the Financing Documents
or of any of the Buyer’s rights and remedies thereunder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
6.Conditions.  The
obligation of the Buyer hereunder to purchase the Second 2010 Convertible
Debenture is subject to the Buyer having received an opinion of counsel from
counsel to the Company in a form satisfactory to the Buyer; provided that this
condition is for the Buyer’s sole benefit and may be waived by the Buyer at any
time in its sole discretion.

     

    Section
7.Fees and
Expenses. The Company shall pay all of its costs and expenses incurred by
it connection with the negotiation, investigation, preparation, execution and
delivery of this Agreement, the Second 2010 Convertible Debenture, the Second
2010 Warrants or any document, instrument or agreement required in connection
with, related to or contemplated thereby.   The Company shall pay
a structuring and due diligence fee to Yorkville Advisors, LLC, the Buyer’s
investment manager, of $20,000 which shall be paid directly from the proceeds of
the Closing.  The Company acknowledges and agrees that the structuring
and due diligence fee paid shall be nonrefundable, fully earned as of the date
of the execution of this Agreement, and retained by the Lender as a fee and not
applied in reduction of any other Obligations.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      
        	 
      	
                COMPANY:

              
	 
      	
                NEOMEDIA
      TECHNOLOGIES, INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Michael W. Zima

              
	 
      	
                Name:  

              	
                Michael
      W. Zima

              
	 
      	
                Title:

              	
                Chief
      Financial Officer

              
	 
      	 
      
	 
      	
                BUYER:

              
	 
      	
                YA
      GLOBAL INVESTMENTS, L.P.

              
	 
      	
                By:

              	
                Yorkville
      Advisors, LLC

              
	 
      	 
      	
                its
      Investment Manager

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ David Gonzalez

              
	 
      	
                Name:

              	
                David
      Gonzalez

              
	 
      	
                Title:

              	
                Managing
      Member

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