Document:

ttii8k10_1.htm

 

December 27, 2009

 

 

              Dear David

 

 

               I herby tender my resignation from the Board of  Directors of  Tree Top Industries effective immediately.

 

 

              Sincerely

 

 

              Michael ValleEXECUTION
COPY

    

    VITACOST.COM,
INC.

     

    and

     

    MELLON
INVESTOR SERVICES LLC

     

    as Rights
Agent

     

    RIGHTS
AGREEMENT

     

    Dated
March 24, 2010

    
      
        
          	
                   

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      	 
      	 
      	 
      	
                                                                                                              Page

                                                                                                            
	 	 	 	 
	
                                                                                                              Section
      1.

                                                                                                            	 
      	
                                                                                                              Certain
      Definitions

                                                                                                            	
                                                                                                              1

                                                                                                            
	
                                                                                                              Section
      2.

                                                                                                            	 
      	
                                                                                                              Appointment
      of Rights Agent

                                                                                                            	
                                                                                                              7

                                                                                                            
	
                                                                                                              Section
      3.

                                                                                                            	 
      	
                                                                                                              Issuance
      of Rights Certificates

                                                                                                            	
                                                                                                              7

                                                                                                            
	
                                                                                                              Section
      4.

                                                                                                            	 
      	
                                                                                                              Form
      of Rights Certificates

                                                                                                            	
                                                                                                              9

                                                                                                            
	
                                                                                                              Section
      5.

                                                                                                            	 
      	
                                                                                                              Countersignature
      and Registration

                                                                                                            	
                                                                                                              10

                                                                                                            
	
                                                                                                              Section
      6.

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

                                                                                                            	
                                                                                                              10

                                                                                                            
	
                                                                                                              Section
      7.

                                                                                                            	 
      	
                                                                                                              Exercise
      of Rights; Purchase Price; Expiration Date of Rights

                                                                                                            	
                                                                                                              11

                                                                                                            
	
                                                                                                              Section
      8.

                                                                                                            	 
      	
                                                                                                              Cancellation
      and Destruction of Rights Certificates

                                                                                                            	
                                                                                                              13

                                                                                                            
	
                                                                                                              Section
      9.

                                                                                                            	 
      	
                                                                                                              Reservation
      and Availability of Capital Stock

                                                                                                            	
                                                                                                              13

                                                                                                            
	
                                                                                                              Section
      10.

                                                                                                            	 
      	
                                                                                                              Preferred
      Stock Record Date

                                                                                                            	
                                                                                                              15

                                                                                                            
	
                                                                                                              Section
      11.

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

                                                                                                            	
                                                                                                              15

                                                                                                            
	
                                                                                                              Section
      12.

                                                                                                            	 
      	
                                                                                                              Certificate
      of Adjusted Purchase Price or Number of Shares

                                                                                                            	
                                                                                                              24

                                                                                                            
	
                                                                                                              Section
      13.

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

                                                                                                            	
                                                                                                              25

                                                                                                            
	
                                                                                                              Section
      14.

                                                                                                            	 
      	
                                                                                                              Fractional
      Rights and Fractional Shares

                                                                                                            	
                                                                                                              28

                                                                                                            
	
                                                                                                              Section
      15.

                                                                                                            	 
      	
                                                                                                              Rights
      of Action

                                                                                                            	
                                                                                                              30

                                                                                                            
	
                                                                                                              Section
      16.

                                                                                                            	 
      	
                                                                                                              Agreement
      of Rights Holders

                                                                                                            	
                                                                                                              30

                                                                                                            
	
                                                                                                              Section
      17.

                                                                                                            	 
      	
                                                                                                              Rights
      Certificate Holder Not Deemed a Stockholder

                                                                                                            	
                                                                                                              30

                                                                                                            
	
                                                                                                              Section
      18.

                                                                                                            	 
      	
                                                                                                              Concerning
      the Rights Agent

                                                                                                            	
                                                                                                              31

                                                                                                            
	
                                                                                                              Section
      19.

                                                                                                            	 
      	
                                                                                                              Merger
      or Consolidation or Change of Name of Rights Agent

                                                                                                            	
                                                                                                              31

                                                                                                            
	
                                                                                                              Section
      20.

                                                                                                            	 
      	
                                                                                                              Rights
      and Duties of Rights Agent

                                                                                                            	
                                                                                                              32

                                                                                                            
	
                                                                                                              Section
      21.

                                                                                                            	 
      	
                                                                                                              Change
      of Rights Agent

                                                                                                            	
                                                                                                              35

                                                                                                            
	
                                                                                                              Section
      22.

                                                                                                            	 
      	
                                                                                                              Issuance
      of New Rights Certificates

                                                                                                            	
                                                                                                              35

                                                                                                            
	
                                                                                                              Section
      23.

                                                                                                            	 
      	
                                                                                                              Redemption

                                                                                                            	
                                                                                                              35

                                                                                                            
	
                                                                                                              Section
      24.

                                                                                                            	 
      	
                                                                                                              Exchange

                                                                                                            	
                                                                                                              36

                                                                                                            
	
                                                                                                              Section
      25.

                                                                                                            	 
      	
                                                                                                              Notice
      of Certain Events

                                                                                                            	
                                                                                                              37

                                                                                                            
	
                                                                                                              Section
      26.

                                                                                                            	 
      	
                                                                                                              Notices

                                                                                                            	
                                                                                                              38

                                                                                                            
	
                                                                                                              Section
      27.

                                                                                                            	 
      	
                                                                                                              Supplements
      and Amendments

                                                                                                            	
                                                                                                              39

                                                                                                            
	
                                                                                                              Section
      28.

                                                                                                            	 
      	
                                                                                                              Successors

                                                                                                            	
                                                                                                              39

                                                                                                            
	
                                                                                                              Section
      29.

                                                                                                            	 
      	
                                                                                                              Determinations
      and Actions by the Board of Directors, etc

                                                                                                            	
                                                                                                              40

                                                                                                            
	
                                                                                                              Section
      30.

                                                                                                            	 
      	
                                                                                                              Benefits
      of this Agreement

                                                                                                            	
                                                                                                              40

                                                                                                            
	
                                                                                                              Section
      31.

                                                                                                            	 
      	
                                                                                                              Severability

                                                                                                            	
                                                                                                              40

                                                                                                            
	
                                                                                                              Section
      32.

                                                                                                            	 
      	
                                                                                                              Governing
      Law

                                                                                                            	
                                                                                                              40

                                                                                                            
	
                                                                                                              Section
      33.

                                                                                                            	 
      	
                                                                                                              Counterparts

                                                                                                            	
                                                                                                              40

                                                                                                            
	
                                                                                                              Section
      34.

                                                                                                            	 
      	
                                                                                                              Descriptive
      Headings

                                                                                                            	
                                                                                                              41

                                                                                                            

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

    

    EXHIBITS

     

    
      
        	
                Exhibit
      A

              	 	
                Form
      of Certificate of Designation

              
	
                Exhibit
      B

              	 	
                Form
      of Rights Certificate

              
	
                Exhibit
      C

              	 	
                Summary
      of Rights

              

      

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    RIGHTS
AGREEMENT

     

    This
Rights Agreement dated March 24, 2010 (the “Agreement”), is made
and entered into by and between Vitacost.com, Inc., a Delaware corporation (the
“Company”), and
Mellon Investor Services LLC (operating with the service name BNY Mellon
Shareowner Services), a New Jersey limited liability company, as Rights Agent
(the “Rights
Agent”).

     

    WITNESSETH:

     

    WHEREAS,
the Board of Directors of the Company (the “Board”) has
authorized and declared a dividend distribution, effective as of March 24, 2010
(the “Rights Dividend
Declaration Date”), of one Preferred Stock purchase right (a “Right”) for each
share of Common Stock of the Company outstanding at the Close of Business on
March 24, 2010 (the “Record Date”), and
has further authorized and directed the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof)
for each share of Common Stock of the Company issued (whether originally issued
or delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, each Right initially
representing the right to purchase one one-thousandth of a share of Preferred
Stock, upon the terms and subject to the conditions hereinafter set
forth;

     

    NOW,
THEREFORE, in consideration of the foregoing premises and the agreements
contained herein, the parties, intending to be legally bound, hereby agree as
follows:

     

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

     

    (a)           “Acquiring Person”
shall mean any Person who or which shall be the Beneficial Owner of 15% or more
of the shares of Common Stock of the Company then outstanding, but shall not
include (i) an Exempt Person or (ii) an Existing
Holder.  Notwithstanding the foregoing, no Person shall become an
“Acquiring Person” for any purposes of this Agreement either (y) as the result
of an acquisition of Common Stock by the Company which, by reducing the number
of shares of Common Stock of the Company outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding solely by reason of share purchases by the Company
and shall, following written notice from, or public disclosure by, the Company
of such share purchases by the Company, become the Beneficial Owner of one or
more additional shares of Common Stock of the Company without the prior written
consent of the Company (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock, in each
case payable and paid ratably to all holders of Common Stock) and shall then
Beneficially Own more than 15% of the Common Stock of the Company then
outstanding, then such Person shall be deemed to be an “Acquiring Person,” or
(z) if the Board determines in good faith that a Person who would otherwise be
an “Acquiring Person,” as defined pursuant to the first sentence of this Section
1(a), has become such inadvertently (including, without limitation, because (A)
such Person was unaware that it beneficially owned a percentage of Common Stock
of the Company that would otherwise cause such Person to be an “Acquiring
Person” or (B) such Person was aware of the extent of its Beneficial Ownership
of Common Stock of the Company but had no actual knowledge of the consequences
of such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing any control of the Company, and such Person promptly
enters into an irrevocable written commitment in favor of the Company to divest,
and thereafter divests (without retaining any power, including voting power with
respect to such shares of Common Stock), as promptly as practicable (as
determined in good faith by the Board), a sufficient number of shares of Common
Stock of the Company so that such Person no longer would be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this Section 1(a)
(or, in the case solely of Derivative Common Shares, such Person terminates the
subject derivative transaction or transactions or disposes of the subject
derivative security or securities, or establishes to the satisfaction of the
Board that such Derivative Common Shares are not held with any intention of
changing or influencing control of the Company), then such Person shall not be
deemed to be or have become an “Acquiring Person” at any time 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 General
Rules and Regulations under the Exchange Act, 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 beneficially owns,
directly or indirectly (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement);

     

    (ii)           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, compliance with regulatory
requirements, fulfillment of a condition or otherwise) pursuant to any
agreement, plan, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion, exchange rights or other rights, warrants or
options, or otherwise;

     

    (iii)           which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or acquire “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, or any comparable or successor rule),
including pursuant to any agreement, plan, 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 (iii) as a result of an agreement, plan,
arrangement or understanding to vote such security if such agreement, plan,
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 proxy solicitation rules and regulations
promulgated under the Exchange Act (including, without limitation, Regulation
14A, as applicable) or (B) is made in connection with, or provides for any
participation in, a proxy or consent solicitation made, or to be made, pursuant
to, and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act (including, without limitation,
Regulation 14A, as applicable), in either case described in clause (A) or (B)
above, to the extent such agreement, plan, arrangement or understanding also is
then not reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (iv)           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, plan, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or in connection with a proxy or consent
solicitation of the type described in clause (A) or (B) of the proviso to
subparagraph (iii) of this Section 1(c)) or disposing of any securities of the
Company (a joint filing of a Schedule 13D under the Exchange Act or any
comparable or successor report being deemed to be conclusive evidence of such an
agreement, plan, arrangement or understanding); or

     

    (v)           that
are the subject of a derivative transaction entered into by such Person (or any
of such Person’s Affiliates or Associates), or derivative security acquired by
such Person (or any of such Person’s Affiliates or Associates), which gives such
Person (or any of such Person’s Affiliates or Associates) the economic
equivalent of ownership of an amount of such securities due to the fact that the
value of the derivative is explicitly determined by reference to the price or
value of such securities, without regard to whether (A) such derivative conveys
any voting rights in such securities to such Person (or any of such Person’s
Affiliates or Associates), (B) the derivative is required to be, or is capable
of being, settled through delivery of such securities, or (C) such Person (or
any of such Person’s Affiliates or Associates) may have entered into other
transactions that hedge the economic effect of such derivative.  In
determining the amount of Common Stock deemed beneficially owned by virtue of
the operation of this subparagraph (v) of this Section 1(c), the subject Person
shall be deemed to beneficially own (without duplication) the amount of Common
Stock that is synthetically owned pursuant to such derivative transactions or
such derivative securities.  Such amount of Common Stock that is
deemed so beneficially owned pursuant to the operation of this subparagraph (v)
of this Section 1(c) shall be referred to herein as “Derivative Common
Shares”;

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    provided, however, that (A) a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,”
(1) 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, (2) securities which a Person
or any of such Person’s Affiliates or Associates may acquire, does or do acquire
or may be deemed to acquire or may be deemed to have the right to acquire,
pursuant to any merger or other acquisition agreement between the Company and
such Person (or one or more of such Person’s Affiliates or Associates) if, prior
to there being an Acquisition Person, such agreement has been approved by the
Board, (3) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (4) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event, if such Rights were
acquired by such Person or any of such Person’s Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
“Original
Rights”) or pursuant to Section 11(a)(i) or Section 11(p) hereof in
connection with an adjustment made with respect to any Original Rights; (B)
nothing in this Section 1(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 acquired through such Person’s participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition, and then only if such securities continue to be owned by
such Person at such expiration of 40 days; and (C) no Person who is an officer,
director or employee of an Exempt Person shall be deemed, solely by reason of
such Person’s status or authority as such, to be the “Beneficial Owner” of, or
to “beneficially own” any securities that are “beneficially owned” (as defined
in this Section 1(c)), including, without limitation, in a fiduciary capacity,
by an Exempt Person or by any other such officer, director or employee of an
Exempt Person.

     

    (d)           “Business Day” shall
mean any day other than a Saturday, Sunday or a day on which banking
institutions in the state of New York or the state of New Jersey 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 local 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” shall
mean the Common Stock, $0.00001 par value, of the Company, except that “Common
Stock” when used with reference to any Person other than the Company shall mean
the capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.

     

    (g)           “Distribution Date”
shall mean the earlier of (i) the Close of Business on the 10th day
after the Stock Acquisition Date (or, if the 10th day
after the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date), or (ii) the Close of Business on the 10th
Business Day (or, if such 10th
Business Day occurs before the Record Date, the Close of Business on the Record
Date), or such specified or unspecified later date on or after the Record Date
as may be determined by action of the Board, after the date of the commencement
(within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act) by any Person (other than an Exempt Person) of, or the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender offer or exchange offer, the consummation of which
would result in any Person (other than an Exempt Person) becoming the Beneficial
Owner of shares of Common Stock of the Company aggregating 15% or more of the
Common Stock of the Company then outstanding and becoming an Acquiring
Person.

     

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (i)           “Exempt Person” shall
mean the Company or any Subsidiary of the Company, in each case including,
without limitation, in its fiduciary capacity, or any employee benefit or
compensation plan of the Company or of any Subsidiary of the Company, or any
Person or entity holding Common Stock for or pursuant to the terms of any such
plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the
Company.

     

    (j)           “Existing Holder”
shall mean any Person who, as of the Rights Dividend Declaration Date, is the
Beneficial Owner of 15% or more of the Common Stock of the Company then
outstanding; provided, however, that if such
Person shall, after the Rights Dividend Declaration Date, become the Beneficial
Owner of additional shares of Common Stock of the Company representing 1% or
more of the shares of Common Stock of the Company then outstanding without the
prior written consent of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock in
shares of Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock, in each case payable and paid ratably to all holders of Common
Stock) and, upon becoming the Beneficial Owner of such additional shares of
Common Stock of the Company, shall then Beneficially Own more than 15% of the
Common Stock of the Company then outstanding, then such Person shall no longer
be an “Existing Holder”; it being hereby understood that the Company shall be
entitled to rely in good faith solely on publicly available information to make
any determination as to the status of any Person as an Existing
Holder.

     

    (k)           “Expiration Date”
shall mean the earliest of (i) the Close of Business on the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, or (iii) the time at which the Board mandates the exchange of the Rights
as provided in Section 24 hereof.

     

    
      (l)           “Final Expiration Date”
shall mean the earlier of (i) the Close of Business on March 24, 2015 or (ii)
the thirtieth (30th) day
following the Company’s 2012 Annual Meeting, if the Stockholder Approval does
not occur at such Annual Meeting.

       

    

    (m)           “Person” shall mean
any natural person, partnership, joint venture, firm, corporation, limited
liability company, limited liability partnership, unincorporated association,
trust or other entity, and shall include any successor (by merger or otherwise)
of the foregoing.

     

    (n)           “Preferred Stock”
shall mean shares of Series A Junior Participating Preferred Stock, $0.00001 par
value, of the Company, having the rights and preferences set forth in the form
of Certificate of Designation, Preferences and Rights attached hereto as Exhibit
A.

     

    (o)           “SEC” shall mean the
U.S. Securities and Exchange Commission.

     

    (p)           “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii) (A), (B) or
(C) hereof.

     

    (q)           “Section 13 Event”
shall mean any event described in clauses (x), (y) or (z) of Section 13(a)
hereof.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (r)           “Stock Acquisition
Date” shall mean the date of the first public announcement (which, for
purposes of this definition, shall include, without limitation, the filing of
any report pursuant to Section 13(d) of the Exchange Act or pursuant to any
comparable successor statute) by the Company or an Acquiring Person that an
Acquiring Person has become such or that discloses information which reveals the
existence of an Acquiring Person, or such earlier date as a majority of the
Board shall become aware of the existence of an Acquiring Person.

     

    (s)           “Stockholder Approval”
shall mean the approval of this Agreement by the affirmative vote of the holders
of a majority of the shares of Common Stock of the Company entitled to vote and
that are present, or represented by proxy, and are voted on the proposal to
approve this Agreement, at a meeting of stockholders of the Company duly held in
accordance with applicable law.

     

    (t)           “Subsidiary” shall
mean, with reference to any Person, including the Company, any corporation of
which an amount of voting securities sufficient to elect at least a majority of
the directors of such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.

     

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

     

    (v)           The
following terms shall have the meanings for such terms in the Sections set forth
below:

     

    
      
        
          
            
              
                	
                        Term

                      	 	
                        Section

                      
	 	 	 
	
                        Act

                      	 	
                        9(c)

                      
	
                        Adjustment
      Shares

                      	 	
                        11(a)(ii)

                      
	
                        Agreement

                      	 	
                        Preamble

                      
	
                        Board

                      	 	
                        Recitals

                      
	
                        Company

                      	 	
                        Preamble

                      
	
                        current
      market price

                      	 	
                        11(d)(ii)

                      
	
                        Current
      Value

                      	 	
                        11(a)(iii)

                      
	
                        Derivative
      Common Shares

                      	 	
                        1(c)

                      
	
                        equivalent
      preferred stock

                      	 	
                        11(b)

                      
	
                        NASDAQ

                      	 	
                        9(b)

                      
	
                        NASDAQ
      GM

                      	 	
                        9(b)

                      
	
                        Original
      Rights

                      	 	
                        1(c)

                      
	
                        Post
      Transferee

                      	 	
                        7(e)

                      
	
                        Principal
      Party

                      	 	
                        13(b)

                      
	
                        Prior
      Transferee

                      	 	
                        7(e)

                      
	
                        Purchase
      Price

                      	 	
                        13(a)

                      
	
                        Ratio
      of Exchange

                      	 	
                        24(a)

                      
	
                        Record
      Date

                      	 	
                        Recitals

                      
	
                        Redemption
      Price

                      	 	
                        23(a)

                      
	
                        Rights
      Agent

                      	 	
                        Preamble

                      
	
                        Right

                      	 	
                        Recitals

                      
	
                        Rights
      Certificates

                      	 	
                        3(a)

                      
	
                        Rights
      Dividend Declaration Date

                      	 	
                        Recitals

                      
	
                        Section
      11(a)(ii) Trigger Date

                      	 	
                        11(a)(iii)

                      

              

            

          

        

      

    

    
      	
              Spread

            	 	
              11(a)(iii)

            
	
              Substitution
      Period

            	 	
              11(a)(iii)

            
	
              Summary
      of Rights

            	 	
              3(b)

            
	
              Trading
      Day

            	 	
              11(d)(i)

            

    

     

    
      
         

      

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

     

    Section
3.            Issuance of Rights
Certificates.

     

    (a)           Until
the Distribution Date, (x) the Rights shall be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates evidencing
the Common Stock registered in the names of the holders of the Common Stock
(which certificates evidencing the Common Stock shall be deemed also to be
certificates evidencing the Rights) and not by separate certificates, and (y)
the Rights shall be transferable only in connection with the transfer of the
underlying shares of Common Stock (including any transfer to the Company). The
Company promptly shall notify the Rights Agent in writing upon the occurrence of
the Distribution Date and, if such notification is given orally, the Company
shall confirm the same in writing on or prior to the next following Business
Day. Until such notice is received by the Rights Agent, the Rights Agent may
presume conclusively for all purposes that the Distribution Date has not
occurred. As soon as practicable after the Distribution Date, and the receipt by
the Rights Agent of notice of such occurrence, the Rights Agent, if requested by
the Company and provided with all necessary information and documentation, shall
send by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder then shown on the records of the Company or the transfer
agent or the registrar for the Common Stock, one or more rights certificates, in
substantially the form of Exhibit B hereto (the
“Rights
Certificates”), duly executed and countersigned in the manner provided
for in Section 5(a) hereof, evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. If an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. From and after the Distribution Date, the Rights shall be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of one or more shares of Common Stock, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders
thereof.

    
      
         

      

      
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    (b)           As
promptly as practicable following the Record Date, the Company shall send a copy
of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary of Rights”),
by first-class, postage prepaid mail, to each record holder of the 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 or the transfer agent or the registrar for
the Common Stock. With respect to certificates evidencing the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights shall
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates evidencing shares of Common Stock in
respect of which Rights have been issued also shall constitute the transfer of
the Rights associated with such shares of Common Stock.

     

    (c)           Unless
the Board by resolution adopted at or before the time of the issuance (including
pursuant to the exercise of rights under the Company’s employee benefit plans)
of any Common Stock specifies to the contrary, Rights shall be issued in respect
of all shares of Common Stock that are issued (whether originally issued or from
the Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock in respect of which Rights are issued pursuant to the first
sentence of this Section 3(c) also shall be deemed to be certificates for
Rights, and commencing as soon as reasonably practicable following the date
hereof shall bear a legend in substantially the following form:

     

    “This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between Vitacost.com, Inc., a Delaware
corporation (the “Company”), and Mellon
Investor Services LLC (operating with the service name BNY Mellon Shareowner
Services), a New Jersey limited liability company, as Rights Agent (the “Rights Agent”), dated
March 24, 2010 (the “Rights Agreement”),
the terms of which are incorporated herein by reference in their entirety and a
copy of which is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and no longer will be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of any written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an “Acquiring Person” or any “Affiliate”
or “Associate” thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.”

    With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated
with the Common Stock evidenced by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock also shall be the
registered holders of the associated Rights, and the transfer of any of such
certificates also shall constitute the transfer of the Rights associated with
the Common Stock evidenced by such certificates. If the Company purchases or
acquires any Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Stock shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Stock which are no longer outstanding.

     

    
      
        
        

      

      
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    Section
4.           Form of Rights
Certificates.

     

    (a)           The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall each be substantially in the form set
forth in 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, which are not inconsistent with the provisions of this Agreement
and which do not affect the rights, duties, liabilities or responsibilities of
the Rights Agent, 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 on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11, Section 13 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-thousandths of a share, the “Purchase Price”), but
the amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as provided
herein.

     

    (b)           Any
Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person (or any
Associate or Affiliate of an Acquiring Person), (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either a transfer (A) (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, plan, arrangement or understanding regarding the
transferred Rights (or any right thereto or interest therein) or (B) which the
Board has determined is part of an agreement, plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent the
Rights Agent has knowledge hereof and to the extent feasible) a legend in
substantially the following form:

     

    “The
Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e) of such
Agreement.”

    
      
         

      

      
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    Section
5.           Countersignature and
Registration.

     

    (a)           The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President and Chief Executive Officer, its Chief Financial
Officer or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company’s seal or a facsimile thereof, which
shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
either manually or by facsimile signature countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights 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 Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such Person was not such an
officer.

     

    (b)           Following
the Distribution Date, and receipt by the Rights Agent of notice of such
occurrence, and of all other necessary information and documentation, as
provided in Section 3(a) hereof, the Rights Agent shall keep or cause to be
kept, at its office or offices designated as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates, the
Rights Certificate number and the date of each of the Rights
Certificates.

     

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

    (a)           Subject
to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock (or following
a Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office or offices of the
Rights Agent designated for such purpose. The Rights Certificates shall be
transferable only on the registry books of the Rights Agent. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate or
Certificates until the registered holder thereof shall have (i) properly
completed and duly executed the certificate contained in the form of assignment
on the reverse side of such Rights Certificate, (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof and of the Rights evidenced thereby or of the Affiliates or Associates
of such Beneficial Owner (or former Beneficial Owner) as the Company or the
Rights Agent shall reasonably request, and (iii) paid a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates as required by Section 9(e)
hereof.  Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested, registered in such name or names as may be designated by
the surrendering registered holder. The Rights Agent shall promptly forward any
such sum collected by it to the Company or to such Persons as the Company may
specify by written notice.  The Rights Agent shall have no duty or
obligation under any section of this Agreement which requires the payment of
taxes or charges unless and until it is satisfied that all such taxes and/or
charges have been paid.

     

    
      
        
        

      

      
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    (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 Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them, and 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 Rights Certificate if mutilated, the Company shall
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

     

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

     

    (a)           Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof properly completed and duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (or other securities
or property, as the case may be) as to which such surrendered Rights are then
exercisable, and an amount equal to any tax or charge required to be paid under
Section 9(e) hereof, at or prior to the Expiration Date. Except for those
provisions herein which expressly survive the termination of this Agreement,
this Agreement shall terminate at such time as the Rights are no longer
exercisable hereunder.

     

    (b)           The
Purchase Price for each one one-thousandths of a share of Preferred Stock
pursuant to the exercise of a Right initially shall be $45.00, and shall be
subject to adjustment from time to time as provided in Section 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c)
below.

    
      
         

      

      
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    (c)           Subject
to Section 7(e) hereof, upon receipt of a Rights Certificate evidencing
exercisable Rights, with the form of election to purchase and the certificate
properly completed and duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandths of a
share of Preferred Stock (or other shares, securities or property, as the case
may be) to be purchased as set forth below and an amount equal to any tax or
charge required to be paid under Section 9(e) hereof, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes each such transfer agent to comply
with all such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs each
such depositary agent to comply with such request, (ii) when necessary to comply
with this Agreement, requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when necessary to comply with this Agreement, after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) and an amount equal
to any tax or charge required to be paid under Section 9(e) hereof, may be made
(x) in cash or by certified bank check, cashier’s check, bank draft or money
order payable to the order of the Company, or (y) by delivery of a certificate
or certificates (with appropriate stock powers executed in blank attached
thereto) evidencing a number of shares of Common Stock equal to the sum of the
then Purchase Price and an amount equal to any tax or charge required to be paid
under Section 9(e) hereof, divided by the closing market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the Trading Date
immediately preceding the date of such exercise. In the event that the Company
is obligated to issue other securities (including Common Stock) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when necessary to comply with this Agreement.  The Company reserves
the right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, such number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.

     

    (d)           In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and, if requested and provided with all necessary information and
documents, delivered to, or upon the order of, the registered holder of such
Rights Certificate or to its duly authorized assigns, registered in such name or
names as may be designated by such holder, subject to the provisions of Section
14 hereof.

    
      
         

      

      
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    (e)           Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person
(or an Associate or Affiliate of an Acquiring Person) other than any such Person
that the Board in good faith determines was not involved in and did not cause or
facilitate, directly or indirectly, such Triggering Event, (ii) a direct or
indirect transferee of such Rights from such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after such Acquiring Person
becomes such (a “Post
Transferee”), or (iii) a direct or indirect transferee of such Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights
pursuant to either a transfer (A) (whether or not for consideration) from such
Acquiring Person (or such Affiliate or Associate) to holders of equity interests
in such Acquiring Person (or such Affiliate or Associate) or to any Person with
whom such Acquiring Person (or such Affiliate or Associate) has any continuing
agreement, plan, arrangement or understanding regarding the transferred Rights
(or any right thereto or interest therein) or (B) that the Board determines is
part of an agreement, plan, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e) (a “Prior Transferee”),
or (iv) any subsequent transferee receiving transferred Rights from a Post
Transferee or a Prior Transferee, either directly, or indirectly through one or
more intermediate transferees, shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall notify the Rights Agent when this Section 7(e)
and/or Section 4(b) hereof applies and shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but neither the Company nor the Rights Agent shall have any
liability or obligation to any holder of Rights Certificates or other Person as
a result of the Company’s failure to make any determinations with respect to an
Acquiring Person or any of its Affiliates, Associates or transferees
hereunder.  Until such notice is received by the Rights Agent, the
Rights Agent shall have no duties, responsibilities or obligations with respect
to this Section 7(e) and Section 4(b) hereof.

     

    (f)           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 of Rights or other securities upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and duly executed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the
Rights evidenced thereby or of the Affiliates or Associates of such Beneficial
Owner (or former Beneficial Owner) as the Company or the Rights Agent shall
reasonably request.

     

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

     

    Section
9.           Reservation and Availability
of Capital Stock.

     

    (a)           The
Company shall cause to be reserved and keep available for issuance out of its
authorized and unissued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that, as
provided in this Agreement, including subject to Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding
Rights.

     

    
      
        
        

      

      
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    (b)           So
long as the shares of Preferred Stock (and following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and deliverable
upon the exercise of the Rights may be listed on the NASDAQ Global Market
(“NASDAQ GM”)
or any other national securities exchange or traded in the over-the-counter
market and quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”), the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on the
NASDAQ GM or such other exchange or quoted on the NASDAQ upon official notice of
issuance upon such exercise.

     

    (c)           The
Company shall use its best efforts to (i) file with the SEC, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement on an appropriate form under the Securities Act of
1933, as amended (the “Act”), with respect
to the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to be declared effective by the SEC as soon as
practicable after such filing, and (iii) cause such registration statement to
remain so effective (with a prospectus therein at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the Expiration
Date. The Company also shall 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 temporarily may
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file with the SEC such registration statement and
permit it to become effective. Upon any suspension of the exercisability of the
Rights referred to in this Section 9(c), 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. The Company shall notify the Rights Agent in writing whenever
it makes a public announcement pursuant to this Section 9(c) and furnish the
Rights Agent with a copy of such announcement(s). Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement (if required) has been declared
effective.

     

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

     

    
      
        
        

      

      
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    (e)           The
Company also shall pay when due and payable any and all taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any tax or charge which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until any such tax or charge shall have
been paid (any such tax or charge being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company’s or the Rights Agent’s satisfaction that no such tax or charge is
due.

     

    Section
10.           Preferred Stock Record
Date. Each
Person in whose name any certificate evidencing a number of one one-thousandths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
evidenced thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all taxes or charges) was duly made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions (including, without limitation, upon the dissolution or winding up
of the Company) or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as expressly
provided herein.

     

    Section
11.           Adjustment of Purchase
Price, Number and Kind of Shares or Number of Rights.  The
Purchase Price, the number and kind of 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.

     

    
      
        
        

      

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

     

    (ii)           Subject
to Sections 23 and 24 of this Agreement, other than a transaction or
transactions to which the provisions of Section 13(a) apply,
if:

    (A)           any
Acquiring Person (or any Associate or Affiliate of any Acquiring Person), at any
time after the Rights Dividend Declaration Date, directly or indirectly, shall
(1) consolidate with or merge with and into the Company or any of its
Subsidiaries or otherwise combine with the Company or any of its Subsidiaries,
and as a result thereof the Company or such Subsidiary shall be the continuing
or surviving corporation of such consolidation, merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed into or exchanged for stock or other securities of the Company or of
any other Person or into or for cash or any other property, (2) in one
transaction or a series of transactions, other than in connection with the
exercise of a Right or Rights, and other than in connection with the exchange,
exercise or conversion of securities exchangeable or exercisable for or
convertible into securities of the Company or any Subsidiary of the Company,
transfer any assets or property to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for shares of Common Stock, for shares of other
equity securities of the Company or any Subsidiary of the Company, or for
securities exchangeable or exercisable for or convertible into shares of equity
securities of the Company or any Subsidiary of the Company (Common Stock or
otherwise) or otherwise obtain from the Company or any of its Subsidiaries, with
or without consideration, any additional shares of such equity securities or
securities exchangeable or exercisable for or convertible into shares of such
equity securities (other than pursuant to a pro rata offer or a distribution by
the Company or such Subsidiary to all holders of Common Stock that is made
ratably to all holders of Common Stock), (3) sell, purchase, lease, exchange,
assign, mortgage, pledge, transfer or otherwise acquire (other than as a pro
rata dividend) or dispose of, in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of its Subsidiaries,
assets (including securities) on terms and conditions less favorable to Company
or such Subsidiary than the Company or such Subsidiary would be able to obtain
in an arm’s length negotiation with an unaffiliated third party, (4) receive any
compensation or other remuneration or economic benefit from the Company or any
of the Company’s Subsidiaries for services other than compensation for
employment as a regular full-time or part-time employee, or fees for serving as
a director of the Company or any of its Subsidiaries, at reasonable and
customary rates in accordance with the Company’s (or its Subsidiaries’) past
practices, (5) receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a requirement of
law or governmental regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries, or (6) engage in any transaction with
the Company or any of its Subsidiaries involving the sale, license, transfer,
assignment or grant of any right in, or disclosure of, any patents, copyrights,
trade secrets, trademarks, know-how or any other intellectual or industrial
property rights recognized under any country’s intellectual property laws which
the Company (including its Subsidiaries) owns or has the right to use on terms
and conditions not approved by the Board, or

     

    
      
        
        

      

      
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    (B)           any
Person, alone or together with any Affiliates and Associates of such Person,
shall, at any time after the Rights Dividend Declaration Date, become an
Acquiring Person, or

     

    (C)           during
such time as there is an Acquiring Person after the Rights Dividend Declaration
Date, there shall be any reclassification of securities (including any reverse
stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of an Acquiring Person), or any repurchase
by the Company or any of its Subsidiaries of shares of Common Stock of the
Company or of any other class or series of securities issued by the Company,
which reclassification, recapitalization, merger, consolidation or repurchase
has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
or securities exchangeable or exercisable for or convertible into any class of
equity securities of the Company or any of its Subsidiaries which is directly or
indirectly owned by an Acquiring Person or any Associate or Affiliate of an
Acquiring Person,

     

    then, in
each such case, upon the Close of Business on the 10th day
next following the date of the occurrence of an event described in Section
11(a)(ii)(B) hereof, and immediately upon the occurrence of any event described
in Section 11(a)(ii)(A) or (C) hereof, proper provision shall be made so that
each holder of a Right (except as provided below and as set forth in Section
7(e) hereof) thereafter shall have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of Preferred
Stock, 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 then
number of one one-thousandths of a share of Preferred Stock for which a Right
was or would have been exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event, whether or not such Right was then exercisable, and
(y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the “Adjustment
Shares”).  The Company shall provide the Rights Agent with
written notice of the identity of any Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing, and the Rights Agent may rely on such
notice in carrying out its duties under this Agreement, and shall be deemed not
to have any knowledge of the identity of any such Acquiring Person, Associate or
Affiliate, or the nominee of any of the foregoing unless and until it shall have
received such notice.

    
      
         

      

      
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    (iii)           If
the number of shares of Common Stock which are authorized by the Company’s
Restated Certificate of Incorporation, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current
Value”) over (2) the Purchase Price (such excess, the “Spread”), and (B)
with respect to each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares, upon the exercise of a Right
and payment of the applicable Purchase Price, (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 has deemed 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 (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board and based upon the advice of a
nationally recognized investment banking firm selected by the Board; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as 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 in the aggregate are equal to the Spread. If the Board 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 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days following the first occurrence of a Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval
for the authorization of the issuance 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 Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution Period
in order to seek any authorization of the issuance 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. If there occurs any such
suspension, the Company shall issue a public announcement (with prompt written
notice thereof to the Rights Agent) stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement (with
prompt written notice thereof to the Rights Agent) at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of the Common Stock on the date of
the first occurrence of a 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.

     

    
      
        
        

      

      
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    (b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock (“equivalent preferred
stock”)) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); 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 the exercise of one Right. In case such subscription price may be
paid by delivery of 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, whose determination shall be described in a written statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock 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 or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

     

    (c)           In
case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular cash
dividend out of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) 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 current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board, whose determination
shall be described in a written statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock; 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 the 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 be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.

    
      
         

      

      
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    (d)           (i)
For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “current market price” per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the 30 consecutive Trading Days
immediately prior to but not including such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the “current market
price” per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 10
consecutive Trading Days immediately following but not including such date;
provided, however, that in the
event that the current market price per share of the Common Stock is determined
during a period following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination or reclassification of
such Common Stock, and prior to, but not including, the expiration of the
requisite 30-Trading-Day or 10-Trading-Day period, as set forth above, after the
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 market price” shall be properly adjusted to take into account the
effect of such dividend, distribution, subdivision, combination or
reclassification. 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 NASDAQ GM or, if on any such date the
shares of Common Stock are not listed or admitted to trading on the NASDAQ GM,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if on any
such date the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on any such date
the shares of Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be used. The
term “Trading
Day” shall mean a day on which the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common Stock are not listed
or admitted to trading on any national securities exchange, a Business Day. If
the Common Stock is not publicly held or not so listed or traded, “current
market price” per share shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a written
statement filed with the Rights Agent and shall be conclusive for all
purposes.

    
      
         

      

      
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    (ii)   
        For the purpose of any
computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(d) (other than the
last sentence thereof). If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “current market price” per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number may
be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, “current market price” per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a written statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the “current market price” of one one-thousandth of a share of
Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 1,000.

     

    (iii)           For
the purpose of any computation hereunder, the value of any securities or assets
other than Common Stock or Preferred Stock shall be the fair value as determined
in good faith by the Board or by a nationally recognized investment banking firm
selected by the Board, which determination shall be described in a written
statement filed with the Rights Agent and shall be conclusive for all
purposes.

     

    (e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1.0% 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 ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which mandates such adjustment, or (ii) the Expiration
Date.

     

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

    
      
         

      

      
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    (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 share of Preferred Stock
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 share of
Preferred Stock (calculated to the nearest one millionth) 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.

     

    (i)        
   The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-thousandths of a share of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock 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 ten-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 (with prompt written notice thereof to
the Rights Agent) of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and delivered by the Company and countersigned and delivered by the Rights Agent
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the holders
of record of Rights Certificates on the record date specified in the public
announcement.

    
      
         

      

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

     

    (k)        
   Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par or stated value, if any, of the
number of one one-thousandths of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of one
one-thousandths of a share of Preferred Stock 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 (with prompt written
notice thereof to the Rights Agent) until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of one one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock 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 (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.

     

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

     

    (n)           The
Company shall not, at any time after the Distribution Date, (i) consolidate with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the “Principal Party” for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously Beneficially Owned by such Person or any of its Affiliates and
Associates.

    
      
         

      

      
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    (o)           The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23, Section 24 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.

     

    (p)           Anything
in this Agreement to the contrary notwithstanding, if the Company shall at any
time after the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of 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, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.

     

    Section
12.            Certificate of Adjusted
Purchase Price or Number of Shares.
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including without limitation an event which causes Rights to
become null and void) occurs as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event, and a brief, reasonably detailed statement
of the facts, computations and methodology accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of such adjustment or the force
or effect of the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect to,
and shall not be deemed to have knowledge of, any adjustment or any such event
unless and until it shall have received such a certificate.

     

    
      
         

      

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

     

    (a)           If,
following the Stock Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with and into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or portion of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or into or for cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o) hereof),
then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, thereafter shall
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradable
shares of Common Stock of the Principal Party, not subject to any liens,
encumbrances, rights of first refusal, preemptive subscription rights or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for
each Right and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d)(i) hereof) per share of the Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party thereafter shall be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term “Company” thereafter
shall be deemed to refer to such Principal Party, it being specifically hereby
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; provided, however, that upon
the subsequent occurrence of any merger, consolidation, sale of all or
substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right thereupon shall be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.

    
      
         

      

      
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    (b)           “Principal Party”
shall mean:

     

    (i)           in
the case of any transaction described in clause (x) or (y) of the first sentence
of Section 13(a), (A) the Person that is the issuer of the securities into which
shares of Common Stock of the Company are changed or exchanged in such merger or
consolidation, or, if there is more than one such issuer, the issuer of the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person that
is the other party to such merger, if such Person survives such merger, or, if
there is more than one such Person, the Person the shares of Common Stock of
which have the greatest aggregate market value of shares outstanding or (y) if
the Person that is the other party to the merger does not survive the merger,
the Person that does survive the merger (including the Company if it survives)
or (z) the Person resulting from the consolidation; and

     

    (ii)           in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares
outstanding;

     

    provided, however, that in any
such case, (1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, “Principal Party” shall refer to such other Person whose Common
Stock is so registered; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or more of which
are and have been so registered, “Principal Party” shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest aggregate
market value; and (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.

     

    (c)           If,
for any reason, the Rights cannot be exercised for Common Stock of such
Principal Party as provided in Section 13(a), then each holder of Rights shall
have the right to exchange its Rights for cash from such Principal Party in an
amount equal to the product of (x) the number of shares of Common Stock that it
would otherwise be entitled to purchase and (y) 50% of the current market price,
as determined pursuant to Section 11(d) hereof, per share of such Common Stock
of such Principal Party. If, for any reason, the foregoing formulation cannot be
applied to determine the cash amount into which the Rights are exchangeable,
then the Board, based upon the advice of one or more nationally recognized
investment banking firms, and based upon the total value of the Company, shall
determine such amount reasonably and with good faith to the holders of Rights.
Any such determination shall be final and binding on the Rights
Agent.

    
      
         

      

      
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    (d)           The
Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such consolidation, merger, sale
or transfer shall have executed and delivered to the Rights Agent an agreement
confirming that the requirements set forth in paragraphs (a) and (b) of this
Section 13 shall promptly be performed in accordance with their terms and that
such consolidation, merger, sale, or transfer of assets shall not result in a
default by the Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after executing
such agreement pursuant to this Section 13, the Principal Party at its own
expense will:

     

    (i)        
    prepare and file with the SEC a registration statement
on an appropriate form under the Act, if necessary, with respect to the Rights
and the securities purchasable upon exercise of the Rights, use its best efforts
to cause such registration statement to be declared effective by the SEC as soon
as practicable after such filing and use its best efforts to cause such
registration statement to remain so effective (with a prospectus therein at all
times meeting the requirements of the Act) until the Expiration
Date;

     

    (ii)      
     use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the
securities or blue sky laws of such states or jurisdictions as may be necessary
or appropriate;

     

    (iii)           use
its best efforts, if the Common Stock of the Principal Party shall be or become
listed or admitted to trading on the NASDAQ GM or on another national securities
exchange, to list or admit to trading (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on the NASDAQ GM or
on such other national securities exchange, or, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on the NASDAQ GM or
on another national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be authorized for quotation on NASDAQ
GM or on such other system then in use;

     

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

     

    (v)           obtain
waivers of any rights of first refusal or preemptive rights in respect of the
Common Stock of the Principal Party subject to purchase upon exercise of the
outstanding Rights.

    
      
         

      

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

     

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

     

    Section
14.            Fractional Rights and
Fractional Shares.

     

    (a)       
    The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights 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 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 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 NASDAQ
GM, or, if on any such date the Rights are not listed or admitted to trading on
the NASDAQ GM, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or, if on any
such date the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no market maker is making a market in
the Rights, the current market value of the Rights on such date shall be the
fair value of the Rights as determined in good faith by the
Board.

    
      
         

      

      
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    (b)      
     The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a share
of Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one
one-thousandth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-thousandth of a share of Preferred
Stock shall be one-thousandth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.

     

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

     

    (d)     
      Whenever a payment for fractional Rights or
any fractional shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting forth in
reasonable detail the facts related to such payments and the prices and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to, and shall not be deemed to
have knowledge of any payment for fractional Rights or fractional shares under
any Section of this Agreement relating to the payment of fractional Rights or
fractional shares unless and until the Rights Agent shall have received such a
certificate and sufficient monies.

     

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

    
      
         

      

      
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    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 and Section 20 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach by the Company of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations by the Company of the obligations hereunder of any Person
subject to this Agreement. Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment decree or ruling (whether
interlocutory or final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company
must use all reasonable efforts to have any such injunction, order, judgment,
decree or ruling lifted or otherwise overturned as soon as
possible.

     

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

     

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

     

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

     

    (c)        
   subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated 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 required to be affected by any
notice to the contrary.

     

    Section
17.            Rights Certificate Holder
Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions
hereof.

    
      
         

      

      
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    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 disbursements and
other disbursements incurred in the preparation, negotiation, delivery,
amendment, 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, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense (including,
without limitation, the reasonable fees and expenses of legal counsel) for any
action taken, suffered or omitted to be taken by the Rights Agent in connection
with the acceptance, administration, exercise and performance of its duties
under this Agreement, including the costs and expenses of defending against any
claim of liability in the premises and the costs and expenses of enforcing this
right of indemnification; provided, however, that the
Company shall not be liable under this Section 18(a) to the extent that a court
of competent jurisdiction shall have determined by a final, non-appealable
order, judgment, decree or ruling that such loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense resulted from any
action taken, suffered or omitted to be taken by the Rights Agent through its
own gross negligence, bad faith or willful misconduct. The provisions of this
Section 18 and Section 20 hereof shall survive the termination of this
Agreement, the exercise or expiration of the Rights and the resignation,
replacement or removal of the Rights Agent.

     

    (b)           The
Rights Agent shall be authorized and protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its acceptance and administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.  The Rights Agent
shall not be deemed to have knowledge of any event of which it was supposed to
receive notice thereof hereunder, and the Rights Agent shall be fully protected
and shall incur no liability for failing to take any action in connection
therewith, unless and until it has received such notice.

     

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

     

    (a)           Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the shareholder services, stock transfer or
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, however, that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

    
      
         

      

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

     

    Section
20.            Rights and Duties of Rights
Agent. The
Rights Agent undertakes to perform only the duties and obligations expressly
imposed by this Agreement (and no implied duties) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:

     

    (a)           The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or an employee of the Rights Agent), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to, and the Rights Agent shall incur no liability for or in respect of,
any action taken, suffered or omitted to be taken by it in accordance with such
advice or 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 (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent for, and the Rights Agent shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it under the provisions of this Agreement in reliance upon such
certificate.

     

    (c)           The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).  Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but
not  limited to lost  profits), even if the Rights Agent has
been advised of the likelihood of such loss or damage.

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

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

     

    (e)       
    The Rights Agent shall not have any liability for or be
under any responsibility with respect to the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or with respect to the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 11 hereof) or any change or adjustment in the terms of the
Rights required under the provisions of Sections 3, 11, 23 or 24 hereof or
responsible for the manner, method or amount thereof or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after receipt
of the certificate described in Section 12 hereof, upon which the Rights Agent
may rely); 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 Common Stock or Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock 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 the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall not be liable for
or in respect of any action taken, suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. The Rights Agent shall be fully authorized and protected in
relying upon the most recent instructions received by any such officer. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken, suffered or omitted by the Rights Agent under this Agreement and the
date on and/or after which such action shall be taken or suffered or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken, suffered or omitted to be taken by it in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or
omitted.

    
      
         

      

      
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    (h)           The
Rights Agent and any stockholder, affiliate, 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 the Rights Agent were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent or
any such stockholder, affiliate, director, officer or employee from acting in
any other capacity for the Company or for any other Person.

     

    (i)        
   The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its directors, officers and employees) 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 or any other Person resulting from any such act, default, neglect
or misconduct, absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction).

     

    (j)      
     No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.

     

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

    
      
         

      

      
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    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 Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 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 Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 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
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for an appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a Person 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 stock transfer or
corporate trust 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 $50,000,000, or (b) an Affiliate of
such a Person described in clause (a) of this sentence. 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 Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

     

    Section
22.            Issuance of New Rights
Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board 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 Certificates
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 any redemption or expiration of the Rights, 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 plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

     

    Section
23.            Redemption.

     

    (a)           The
Board may, at its option, at any time prior to the earlier of (i) the first
occurrence of a Section 11(a)(ii) Event and (ii) the Final Expiration Date,
redeem all (but not less than all) of the then outstanding Rights at a
redemption price of $0.0001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption
Price”).

    
      
         

      

      
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    (b)           The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the “current market value” (as defined in Section 11(d)(i)
hereof) of the Common Stock as of the time of redemption) or any other form of
consideration deemed appropriate by the Board.

     

    (c)           Immediately
upon the action of the Board ordering the redemption of the Rights (or at such
later time as the Board may establish for the effectiveness of such redemption),
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 for each Right so held.  The
Company shall promptly give public notice of any such redemption (with prompt
written notice thereof to the Rights Agent); provided, however, that the failure
to give, or any defect in, such notice shall not affect the legality or validity
of such redemption.  Within 10 days after such action of the Board
ordering the redemption of the Rights (or such later time as the Board may
establish for the effectiveness of such redemption), 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 of the Company.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.  Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.

     

    Section
24.            Exchange.

     

    (a)           Subject
to applicable laws, rules and regulations, and subject to subsection (c) below,
the Company may, at its option, by majority vote of the Board, at any time after
any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Ratio of Exchange”).
Notwithstanding the foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.

     

    (b)           Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Ratio of Exchange. The Company shall promptly give public
notice of any such exchange (with prompt written notice thereof to the Rights
Agent); provided, however, that the
failure to give, or any defect in, such notice shall not affect the legality or
validity of such exchange. The Company shall promptly mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the Common Stock for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.

    
      
         

      

      
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    (c)
           In any
exchange pursuant to this Section 24, the Company, at its option, may substitute
common stock equivalents (as defined in Section 11(a)(iii)) for shares of Common
Stock exchangeable for Rights, at the initial rate of one common stock
equivalent for each share of Common Stock, as appropriately adjusted to reflect
adjustments in dividend, liquidation and voting rights of common stock
equivalents pursuant to the terms thereof, so that each common stock equivalent
delivered in lieu of each share of Common Stock shall have essentially the same
dividend, liquidation and voting rights as one share of Common Stock of the
Company.

     

    (d)           If
the number of shares of Common Stock of the Company which are authorized by the
Company’s Restated Certificate of Incorporation but not outstanding or reserved
for issuance are not sufficient to permit an exchange of Rights as contemplated
by this Section 24, the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock for issuance upon exchange of
Rights.

     

    (e)           The
Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value per share of a whole
share of Common Stock.  For purposes of this Section 24(e), the
current market value of a whole share of Common Stock shall be the closing price
per share of Common Stock (determined pursuant to Section 11(d)(ii) hereof) on
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.

     

    Section
25.            Notice of Certain
Events.

     

    (a)  
         In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular cash
dividend out of earnings or retained earnings of the Company), or (ii) to offer
to the holders of Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, consolidation or combination of the Common Stock (by
reclassification or otherwise than by payment in dividends in Common Stock),
then, in each such case, the Company shall give to the Rights Agent and to the
extent feasible to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier.

    
      
         

      

      
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    (b)           In
case any of the events set forth in Section 11(a)(ii) hereof shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter give
to the Rights Agent and to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.  Until such
notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that no such event set forth in Section 11(a)(ii)
has occurred.

     

    Section
26.            Notices. Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights 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:

     

     Vitacost.com,
Inc.

     5400
Broken Sound Blvd. - NW, Suite 500

     Boca
Raton, Florida 33487-3521

     Attn:
Chief Executive Officer

     Facsimile
No.: (561)

     

    Subject
to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
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:

     

     Mellon
Investor Services LLC

     300
Galleria Parkway

     Suite
1020

     Atlanta,
GA 30339

     Attn:  Judy
Hsu

     Facsimile:
(770) 818-1160

    
      
         

      

      
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     with
a copy to:

     

     Mellon
Investor Services LLC

     480
Washington Boulevard

     Jersey
City, NJ 07310

     Attention:  Legal
Department

     Facsimile:
(201) 680-4610

     

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

     

    Section
27.            Supplements and
Amendments. Subject
to this Section 27, this Agreement may be supplemented or amended at the times
and for the purposes set forth below. Prior to the date any Person becomes an
Acquiring Person, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the date any Person becomes an Acquiring Person, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided, however, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company, which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment;
provided, that, the Rights
Agent may, but shall not be obligated to, enter into any supplement or amendment
that affects the Rights Agent’s own rights, duties, obligations or immunities
under this Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.

     

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

    
      
         

      

      
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    Section
29.            Determinations and Actions
by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations that are done or made by the Board in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties. The Rights Agent shall be entitled to assume the
Board acted in good faith and shall be fully protected and incur no liability in
the Rights Agent’s reliance thereon.

     

    Section
30.            Benefits of this
Agreement. Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of 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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).

     

    Section
31.            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, null and 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; and provided further, that if
any such excluded term, provision, covenant or restriction shall adversely
affect the rights, immunities, duties or obligations of the Rights Agent, the
Rights Agent shall be entitled to resign upon ten (10) days’ notice in writing
to the Company.

     

    Section
32.            Governing
Law. This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely within such
State; provided, however, that all
provisions regarding the rights, duties, obligations and liabilities of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such State.

     

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

     

    
      
        
        

      

      
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    Section
34.            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.

     

    [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
           

        

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

     

    
      
        
          
            
              
                	
                        ATTEST:

                      	 	
                        VITACOST.COM,
      INC.,
a Delaware corporation

                      
	 
      	 
      	 	 
      	 
      
	
                        By:

                      	
                        /s/
      Sonya Lambert

                      	 	
                        By:

                      	
                        /s/
      Mary L. Marbach

                      
	
                        Name: 
      Sonya Lambert

                      	 	
                        Name:  Mary
      L. Marbach

                      
	
                        Title:
      Chief Marketing Officer

                      	 	
                        Title: 
      General Counsel

                      
	 
      	 
      	 	 
      	 
      
	
                        ATTEST:

                      	 	
                        MELLON
      INVESTOR SERVICES LLC, 
a New Jersey limited liability company,
      as

                        Rights
      Agent

                      
	 
      	 
      	 	 
      	 
      
	
                        By:

                      	
                        /s/
      Carmen Anderson

                      	 	
                        By:

                      	
                        /s/
      Judy Hsu

                      
	
                        Name: 
      Carmen
      Anderson

                      	 	
                        Name:
      Judy Hsu

                      
	
                        Title: 
      Vice
      President – Relationship Manager

                      	 	
                        
                          Title: 
      Vice
      President – Relationship
Manager

                        

                      

              

            

          

        

      

    

    

    
      
        
           

        

        
          42

          
            

          

        

        
           

        

      

    

     

    
      EXHIBIT A

    CERTIFICATE
OF DESIGNATION

     

    SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK

      

      
        

      

    

     

    ($0.00001
Par Value)

    of

    VITACOST.COM,
INC.

    Pursuant
to Section 151 of the

    General
Corporation Law of the State of Delaware

     

    
      
  

    VITACOST.COM,
INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Corporation”), in
accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:

     

    FIRST:             
 That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation, as amended, of the Corporation, the
Board of Directors of the Corporation adopted the following resolutions creating
a series of One Hundred Thousand (100,000) shares of Preferred Stock, $0.00001
par value per share, designated as Series A Junior Participating Preferred Stock
(the “Series A Junior
Participating Preferred Stock”):

     

    
      	
            	
              RESOLVED:

            	
              That
      pursuant to the authority expressly vested in the Board of Directors of
      this Corporation in accordance with the provisions of Article FOURTH of
      its Restated Certificate of Incorporation, as amended, a series of
      Preferred Stock, par value $0.00001 per share, of the Corporation be, and
      it hereby is, created, and that the designation and number thereof and the
      voting powers, preferences and relative, participating, optional and other
      special rights of the shares of the Series A Junior Participating
      Preferred Stock, and the qualifications, limitations or restrictions
      thereof, shall be as set forth in Appendix A attached hereto and
      incorporated herein by reference (the “Certificate of
      Designation”).

            

    

     

    
      	
            	
              RESOLVED:

            	
              That
      the Chairman, the President and Chief Executive Officer, the Chief
      Financial Officer, and the Secretary or any Assistant Secretary of the
      Corporation be, and they hereby are, authorized and directed, in the name
      and on behalf of the Corporation, to execute, acknowledge and file the
      Certificate of Designation in accordance with the provisions of the
      General Corporation Law of the state of Delaware and to take such actions
      as they may deem necessary or appropriate to carry out the intent of the
      foregoing resolution.

            

    

     

    
      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

    

    

    SECOND:           That
the aforesaid resolutions were duly and validly adopted in accordance with the
applicable provisions of Section 151 of the General Corporation Law of the State
of Delaware, and the Restated Certificate of Incorporation, as amended, and
By-Laws of the Corporation.

     

    THIRD:               That
the aforesaid designation shall become effective on March 24, 2010.

     

    IN
WITNESS WHEREOF, said Vitacost.com, Inc. has caused this Certificate to be
executed and acknowledged, this 24th day of March, 2010.

     

    
      
        
          	
                  VITACOST.COM,
      INC.

                
	 
      
	 
      
	
                  Name:

                
	
                  Title:

                

        

      

    

     

    
      
        
          	
                  ATTEST:

                
	 
      
	 
      
	
                  Name:

                
	
                  Title:

                

        

      

    

    

    
      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

    

    

    Section
1.              Designation and
Amount.  There
shall be a series of Preferred Stock that shall be designated as “Series A
Junior Participating Preferred Stock” and the number of shares constituting such
series shall be One Hundred Thousand (100,000).  Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A Junior
Participating 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 A
Junior Participating Preferred Stock.

     

    Section
2.              Dividends and
Distributions.

     

    (A)          Subject
to the rights of the holders of any shares of any class or series of capital
stock of the Corporation ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock, in preference to the
holders of Common Stock, $0.00001 par value per share (the “Common Stock”), of
the Corporation, and of any class or series of capital stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock with respect
to dividends, shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds of the Corporation legally available for the
payment of dividends, quarterly dividends payable in cash on March 31, June 30,
September 30 and December 31 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 A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest whole cent) equal to the greater of (a) $1.00 or (b) subject to
the provision for adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock.  In the event the Corporation shall at
any time after the date of filing of this Certificate of Designation declare or
pay any dividend on Common Stock payable in shares of Common Stock or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

    
      
      

       

    

    (B)          The
Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock) and the Corporation shall pay such
dividend or distribution on the Series A Junior Participating Preferred Stock
before the dividend or distribution declared on the Common Stock is paid or set
apart; provided, however, that, in the event that no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

     

    (C)          Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Junior Participating
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 issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares of Series A Junior
Participating 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 A Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than sixty (60) days prior to the
date fixed for the payment thereof.

     

    Section
3.              Voting
Rights. The
holders of shares of Series A Junior Participating Preferred Stock shall have
the following voting rights:

     

    (A)          Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation.  In the event the Corporation shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock or effect
a subdivision, combination of consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Junior Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

     

    (B)          Except
as otherwise provided herein or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.

     

    
      
        
        

      

      
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    (C)          (i)           If
at any time dividends on any Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a “default
period”), which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and paid or set apart
for payment.  During each default period, the number of directors
constituting the Board of Directors shall automatically be increased by two (2)
immediately prior to an annual or special meeting of stockholders called in
accordance with this Section 3(C) to effect the election of such directors, and
the holders of record of the Series A Junior Participating Preferred Stock,
shall, voting together with the holders of any other series of Preferred Stock
entitled to vote thereon, voting together as a single class, shall have the
right, to elect two (2) directors.

     

    (ii)           During
any default period, the voting rights of the holders of Series A Junior
Participating Preferred Stock provided in this Section 3(C) may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders.  The absence of a quorum of the holders of
Common Stock at any annual or special meeting of stockholders shall not affect
the exercise by the voting rights provided to the holders of Series A Junior
Participating Preferred Stock by this Section 3(C).  For so long as
there shall be any shares of Series A Junior Participating Preferred Stock then
outstanding, and during the continuance of any default period, the number of
directors constituting the Board of Directors may not be increased or decreased
without the affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Series A Junior Participating Preferred Stock
and any other series of Preferred Stock entitled to vote thereon, voting
together as a single class.

     

    (iii)           Unless
the holders of the Series A Junior Participating Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
directors as provided in this Section 3(C), the Board of Directors shall
immediately call a special meeting of the holders of Series A Junior
Participating Preferred Stock upon the request of the holders of at least ten
percent (10%) in number of shares of Series A Junior Participating Preferred
Stock and any other series of Preferred Stock entitled to vote thereon then
outstanding, which such meeting shall be called for a date not earlier than 10
days and not later than 60 days after the Corporation’s receipt of such
request.  Notwithstanding the provisions of this Section 3(C), no such
special meeting shall be called during the period sixty (60) days immediately
preceding the date fixed for the next annual meeting of the
stockholders.  Notice of such special meeting and of any annual
meeting at which holders of Series A Junior Participating Preferred Stock are
entitled to vote pursuant to this Section 3(C) shall be given to each holder of
record of Series A Junior Participating Preferred Stock by mailing a copy of
such notice to such holder at his last address as the same appears on the books
of the Corporation.

     

    (iv)           Immediately
upon the expiration of a default period, (x) the right of the holders of Series
A Junior Participating Preferred Stock to elect directors as provided in this
Section 3(C) shall cease, (y) the term of any directors elected by the holders
of Series A Junior Participating Preferred Stock and any other series of
Preferred Stock entitled to vote thereon shall terminate, and (z) the number of
directors constituting the Board of Directors shall automatically be reduced by
two (2).

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

    
       

    

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

     

    Section
4.              Certain
Restrictions.

     

    (A)          Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall
not:

     

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

     

    (ii)          declare
or pay dividends on or make any other distributions on any shares of capital
stock of the Corporation ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
Participating 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 and then entitled;

     

    (iii)         redeem,
purchase or otherwise acquire for consideration shares of any capital stock of
the Corporation ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any capital
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock or, with the consent of the Board of Directors, purchase or
otherwise acquire shares from employees upon their termination of
employment;

     

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

     

    (B)          The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of capital stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.

     

    
      
        
        

      

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

     

    Section
6.              Liquidation, Dissolution or
Winding Up.

     

    (A)          Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of capital
stock of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the “Series A Liquidation
Preference”).  In the event, however, that there are not
sufficient assets of the Corporation available to permit payment in full of the
Series A Liquidation Preference and the liquidation preferences of all other
series of Preferred Stock then outstanding, if any, which rank on a parity with
the Series A Junior Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.  Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the “Common Adjustment”),
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(C) below) (such number in clause (ii), the “Adjustment
Number”).  In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common
Stock.

     

    (B)          Following
the payment of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders of Series
A Junior Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets of
the Corporation legally available to be distributed to stockholders of the
Corporation in the ratio of the Adjustment Number to 1 with respect to such
Series A Junior Participating Preferred Stock and Common Stock, on a per share
basis, respectively.

     

    (C)          In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

     

    
      
        
        

      

      
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    (D)          Neither
the consolidation, merger or other combination of the Corporation with or into
any other corporation or the sale, lease, exchange or conveyance of all or any
part of the property, assets or business of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes of
this Section 6.

     

    Section
7.              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, converted
into or changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged for, converted into or
changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is exchanged for,
converted into or changed into.  In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     

    Section
8.             No
Redemption. The
shares of Series A Junior Participating Preferred Stock shall not be
redeemable.

     

    Section
9.              Ranking. The
Series A Junior Participating 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.

     

    Section
10.            Amendment. For so
long as there shall be any shares of Series A Junior Participating Preferred
Stock then outstanding, the certificate of incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least seventy-five percent (75%) of the outstanding shares of
Series A Junior Participating Preferred Stock, voting separately as a single
class.

     

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

    

    
      
        
           

        

        
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        EXHIBIT B

         

      

    

    [FORM OF
RIGHTS CERTIFICATE]

     

    
      	
              Certificate
      No. R-

            	
              _________
      Rights

            

    

     

    NOT
EXERCISABLE AFTER THE FINAL EXPIRATION DATE OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.0001 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE MAY BE OR MAY HAVE
BEEN BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE OR BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.

     

    Rights
Certificate

     

    VITACOST.COM,
INC.

     

    This
Rights Certificate certifies that _____________________, or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the holder thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated March 24, 2010 (the “Rights Agreement”),
between Vitacost.com, Inc., a Delaware corporation (the “Company”), and Mellon
Investor Services LLC (operating with the service name BNY Mellon Shareowner
Services), a New Jersey limited liability company, as rights agent (the “Rights Agent”), to
purchase from the Company after the Distribution Date (as such term is defined
in the Rights Agreement) and at any time prior to the Expiration Date (as such
term is defined in the Rights Agreement) at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock (the “Preferred Stock”) of
the Company, at a purchase price of $45.00 per one one-thousandth of a share
(the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of
________, 20__, based on the Preferred Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that a number of Rights
be exercised so that only whole shares of Preferred Stock will be
issued.

    

    
      
        
           

        

        
          B-1

          
            

          

        

        
           

        

      

    

    

    Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Rights Agreement.

     

    Upon the
occurrence of a Triggering Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate of an Acquiring Person), or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person (or an Associate or Affiliate of
an Acquiring Person), such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Triggering Event.

     

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

     

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

     

    This
Rights Certificate, with or without other Rights Certificates, upon surrender at
the principal office or offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

     

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at the option of the Board at a
redemption price of $0.0001 per Right at any time prior to the earlier of (i)
the first occurrence of a Section 11(a)(ii) Event and (ii) the Final Expiration
Date.

     

    No
fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are
integral-multiples of one one-thousandth of a share of Preferred Stock), but in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    No holder
of this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock 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
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

     

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

     

    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal by its authorized officers.

     

    Dated:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	
                                                      ATTEST:

                                                    	 	
                                                      VITACOST.COM,
      INC.,

                                                    	 
	 
      	 	 	
                                                      a
      Delaware corporation

                                                    	 
	 
      	 	 	 
      	 
      	 
	
                                                       

                                                    	 	
                                                      By:

                                                    	 
      	 
	 
      	 	 	 
      	
                                                      Name:

                                                    	 
	
                                                      Its

                                                    	 	 
      	
                                                      Its:

                                                    	 
	 
      	 	 	 
      	 
      	 
	
                                                      Countersigned:

                                                    	 	 
      	 
      	 
	 
      	 	 	 
      	 
      	 
	
                                                      MELLON
      INVESTOR SERVICES LLC,

                                                    	 	 
      	 
      	 
	
                                                      a
      ________________________________

                                                    	 	 
      	 
      	 
	 
      	 	 	 
      	 
      	 
	
                                                      By:

                                                    	 	 	 
      	 
      	 
	 	
                                                      Authorized
      Signature

                                                    	 	 	 	 

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
           

        

        
          B-3

          
            

          

        

        
           

        

      

    

     

    [Form of
Reverse Side of Rights Certificate]

     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Rights Certificate.)

     

    FOR VALUE
RECEIVED __________________________________________________________________

    

    hereby
sells, assigns and transfers unto
__________________________________________________________

    

    

      
        

      

    

    (Please
print name and address of transferee)

     

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

    

    
      
        
          	
                  Dated:

                	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                  Signature

                
	 
      	 
      
	
                  Signature
      Guaranteed:

                	 
      

        

      

    

    

    NOTICE:  The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    

    
      
        
           

        

        
          B-4

          
            

          

        

        
           

        

      

    

     

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    
      	
              Dated:

            	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              Signature

            
	 
      	 
      
	
              Signature
      Guaranteed:

            	 
      

    

     

    NOTICE

     

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

     

    The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    

    
      
        
           

        

        
          B-5

          
            

          

        

        
           

        

      

    

    

    FORM OF
ELECTION TO PURCHASE

     

    (To be
executed if holder desires to

    exercise
Rights represented by the

    Rights
Certificate.)

     

    To:          VITACOST.COM,
INC.:

     

    The
undersigned hereby irrevocably elects to exercise ______ Rights represented by
this Rights Certificate to purchase the shares or portion thereof of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:

     

    Please
insert social security

    or other
identifying number

     

    

      
 

    

      
        
(Please
print name and address)

    

     

    If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance 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

                

        

      

    

    

    
      
        
           

        

        
          B-6

          
            

          

        

        
           

        

      

    

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    
      	
              Dated:

            	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              Signature

            
	 
      	 
      
	
              Signature
      Guaranteed:

            	 
      

    

     

    NOTICE

     

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

     

    The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    

    
      
        
           

        

        
          B-7

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
C

     

    VITACOST.COM,
INC.

     

    SUMMARY
OF RIGHTS TO PURCHASE PREFERRED STOCK

     

    On March
24, 2010, the Board of Directors of Vitacost.com, Inc. (the “Company”) declared a
dividend distribution of one preferred stock purchase right (a “Right”) for each
outstanding share of common stock, $0.00001 par value, of the Company (the
“Common
Stock”).  Each Right entitles the registered holder to purchase
from the Company, after the Distribution Date described below, one
one-thousandth of a share of its Series A Junior Participating Preferred Stock,
$0.00001 par value (the “Preferred Stock”), at
a price of $45.00 per one one-thousandth share of Preferred Stock (the “Purchase Price”),
subject to adjustment.  Each share of Preferred Stock is designed to
be the economic equivalent of 1,000 shares of Common Stock.  The
distribution of Rights is payable to the holders of record of Common Stock at
the close of business on March 24, 2010 (the “Record
Date”).  One Right will also be issued for each share of Common
Stock issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date described below.

     

    Exercisability of the
Rights.  The Rights are not exercisable until the “Distribution Date”,
which is defined as the earlier of:

     

    
      	
               
      

            	
              ·

            	
              the
      close of business on the 10th
      day after the date of the first public announcement that a person or group
      of affiliated or associated persons (with certain exceptions discussed
      below, an “Acquiring
      Person”) has acquired, or obtained the right to acquire, beneficial
      ownership of 15% or more of the outstanding Common Stock (which includes
      Common Stock referenced in derivative transactions and securities), or
      such earlier date as a majority of the Board shall become aware of such
      acquisition of Common Stock (the “Stock Acquisition
      Date”), or

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      close of business on the 10th
      business day, or such specified or unspecified later date on or after the
      Record Date as may be determined by action of the Board of Directors of
      the Company, following the commencement of, or announcement of an
      intention to make, a tender offer or exchange offer the consummation of
      which would result in the beneficial ownership by a person or group of 15%
      or more of the Company’s outstanding Common
  Stock.

            

    

     

    Exceptions to Definition of
Acquiring Person. An “Acquiring Person” will not include:

     

    
      	
               
      

            	
              ·

            	
              the
      Company or any subsidiary of the Company, in each case including, without
      limitation, in its fiduciary capacity, any employee benefit or
      compensation plan of the Company or of any subsidiary of the Company, or
      any person or entity holding Common Stock for or pursuant to the terms of
      any such plan or for the purpose of funding any such plan or funding other
      employee benefits for employees of the Company or any subsidiary of the
      Company (an “Exempt
      Person”),

            

    

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              ·

            	
              any
      person who, as of March 24, 2010, is the Beneficial Owner of 15% or more
      of the Common Stock then outstanding, provided that if such person
      thereafter becomes the beneficial owner of additional shares of Common
      Stock representing 1% or more of the shares of Common Stock then
      outstanding without the prior written consent of the Company (with certain
      exceptions) and then beneficially owns more than 15% of the Common Stock
      then outstanding, such Person will no longer be exempted from the
      definition of Acquiring Person, or

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      person or group of affiliated or associated persons that have
      inadvertently become the beneficial owner of 15% or more of the
      outstanding Common Stock of the Company, or have become such solely as a
      result of a reduction in the outstanding shares of Common Stock of the
      Company, provided that if such person or group of affiliated or associated
      persons shall become the beneficial owner of one or more additional shares
      of Common Stock of the Company without the prior written consent of the
      Company (with certain exceptions) and thereafter beneficially owns more
      than 15% of the Common Stock of the Company then outstanding, then such
      person or group of affiliated or associated persons will no longer be
      exempted from the definition of Acquiring
  Person.

            

    

     

    “Flip-In”
Events.  If, after March 24, 2010, (i) any person becomes an
Acquiring Person, (ii) any Acquiring Person engages in certain “self-dealing”
transactions with the Company (described below) or (iii) while there exists an
Acquiring Person, an event occurs which results in such Acquiring Person’s
ownership interest in any class of securities of the Company being increased by
more than 1% (e.g., a reverse stock split), in each case which would not
otherwise trigger a “flip-over” event as described below, each holder of a Right
would thereafter have the right to receive, upon exercise of the Right, that
number of shares of Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) which equals the Purchase Price divided by
50% of the “current market price” (as defined in the Rights Agreement) of the
Common Stock at the date of the occurrence of the
event.  Notwithstanding the foregoing, following the occurrence of any
of such events, any Rights beneficially owned by any Acquiring Person would
immediately become null and void.

     

    “Self-dealing”
transactions are defined to include (i) a consolidation, merger or other
combination of any Acquiring Person with the Company or any subsidiary of the
Company in which the Company or such subsidiary is the surviving corporation and
the Common Stock of the Company remains outstanding and no shares are changed
into or exchanged for stock or other securities or cash or any other property,
(ii) the transfer of assets or property to the Company or any subsidiary of the
Company in exchange (in whole or in part) for securities of the Company or any
of its subsidiaries, (iii) the acquisition of securities of the Company (other
than in a pro rata distribution payable ratably to all stockholders), (iv) the
sale, purchase, transfer, distribution, lease, mortgage, pledge or acquisition
of assets by the Acquiring Person to, from or with the Company, other than on an
arm’s length basis, (v) the receipt of any compensation by an Acquiring Person
for services (other than for employment as a regular full-time or part-time
employee or director on a basis consistent with the Company’s past practice),
(vi) the receipt of the benefit of a loan or provision of other financial
assistance (except proportionately as a stockholder) by an Acquiring Person, or
(vii) the licensing, sale or other transfer of proprietary technology or
know-how from the Company to the Acquiring Person on terms not approved by the
Board.

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

     

    “Flip-Over”
Events.  If, after the Stock Acquisition Date, the Company is
acquired in a merger or other business combination in which the Common Stock is
exchanged or converted or in which the Company is not the surviving corporation,
or 50% or more of its assets or earning power are sold, each holder of a Right
thereafter shall have the right to purchase, upon payment of the then current
Purchase Price, such number of shares of common stock of the acquiring company
which equals the Purchase Price divided by 50% of the “current market price” (as
defined in the Rights Agreement) of such common stock at the date of the
occurrence of the event. Notwithstanding the foregoing, following the occurrence
of any of such events, any Rights beneficially owned by any Acquiring Person
would immediately become null and void.

     

    Exchange
Option.  The Company may, at its option, by majority vote of
the Board, at any time after any person becomes an Acquiring Person, mandate the
exchange of all or part of the then outstanding and exercisable Rights for
shares of Common Stock at an exchange ratio of one share of Common Stock per
Right (subject to adjustment).  The Board, however, may not effect an
exchange at any time after any person (other than an Exempt Person), together
with all affiliates of such person, becomes the beneficial owner of 50% or more
of the Common Stock then outstanding.  Immediately upon the action of
the Board ordering the exchange of any Rights and without any further action and
without any notice, the right to exercise such Rights will terminate and the
only right thereafter of a holder of such Rights will be to receive that number
of shares of Common Stock equal to the number of such Rights held by the
holder.

     

    Transferability of
Rights.  Until the Distribution Date, the Rights will be
evidenced by the stock certificates representing outstanding Common Stock, no
separate certificates evidencing the Rights will be distributed, and the
transfer of certificates representing outstanding Common Stock will constitute a
transfer of the Rights. After the Distribution Date, separate certificates
evidencing the Rights will be mailed to holders of record of the Company’s
Common Stock as of the close of business on the Distribution Date, and such
separate Rights certificates alone will evidence the Rights.

     

    Redemption.  The
Board of Directors may, at its option, at any time prior to the earlier of (i)
the first occurrence of a “flip-in” event and (ii) the Final Expiration Date (as
defined below), redeem the Rights at a redemption price of $0.0001 per Right
(the “Redemption
Price”), payable, at the option of the Company, in cash, shares of Common
Stock or such other form of consideration as the Board of Directors of the
Company shall determine.  Immediately upon such redemption, the right
to exercise the Rights will terminate, and the holders of Rights will become
entitled only to receive the Redemption Price.

     

    
      Expiration of
Rights.  The Rights will expire on the earliest of (i) the
close of business on the Final Expiration Date, (ii) the time at which the
Rights are redeemed, or (iii) the time at which the Board mandates the exchange
of the Rights (the “Expiration Date”).
The “Final Expiration
Date” is the earlier of (i) the thirtieth (30th) day
following the Company’s 2012 annual meeting, if the approval of the Company’s
stockholders does not occur at such meeting.

    

     

    
      
        
        

      

      
        C-3

        
          

        

      

      
        
        

      

    

     

    Anti-Dilution
Adjustment.  The Purchase Price, the redemption price, the
exchange ratio and the number of shares of the Preferred Stock or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution under the following
circumstances:

     

    
      	
               
      

            	
              ·

            	
              in
      the event of a stock dividend on, or a subdivision, combination or
      reclassification of the Preferred Stock,
or

            

    

     

    
      	
               
      

            	
              ·

            	
              upon
      the grant to holders of the Preferred Stock of certain rights or warrants
      to subscribe for shares of the Preferred Stock or convertible securities
      at less than the current market price of the Preferred Stock,
      or

            

    

     

    
      	
               
      

            	
              ·

            	
              upon
      the distribution to holders of the Preferred Stock of evidences of
      indebtedness or assets (excluding regular cash dividends out of the
      earnings or retained earnings of the Company and dividends payable in
      shares of Preferred Stock) or of subscription rights or warrants (other
      than those referred to above).

            

    

     

    The
number of Rights associated with each share of Common Stock is also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

     

    With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such
price.  At the Company’s option, cash (based on the market price on
the last trading date prior to the date of the exercise) will be paid instead of
issuing fractional shares of any securities (other than fractional shares of
Preferred Stock in integral multiples of one one-thousandth of a
share).

     

    No Shareholder
Rights.  The Rights themselves do not entitle the holder
thereof to any rights as a stockholder of the Company, including, without
limitation, the right to vote or receive dividends.

     

    Preferred
Stock.  Shares of Preferred Stock issued upon exercise of the
Rights would not be redeemable. Each share of Preferred Stock, if so issued upon
exercise, would be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of the greater of (a) $1.00 per share and (b) an
amount equal to 1,000 times the dividend declared and payable in respect of one
whole share of Common Stock. In the event of any liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock would be entitled
to a minimum preferential payment equal to $1,000 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon.  Each
issued and outstanding share of Preferred Stock would have 1,000 votes, voting
together with the Common Stock.  Finally, in the event of any merger,
consolidation or other transaction in which outstanding shares of Common Stock
were converted or exchanged, each share of Preferred Stock would be entitled to
receive 1,000 times the amount received in respect of one whole share of Common
Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary anti-dilution provisions. Because of the nature of the Preferred
Stock’s dividend, liquidation and voting rights, the value of one one-thousandth
of a share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.

     

    
      
        
        

      

      
        C-4

        
          

        

      

      
        
        

      

    

     

    Amendments.  Any
of the provisions of the Rights Agreement may be amended by the Board prior to
the date any person or group becomes an Acquiring Person without the approval of
any holders of the Rights.  After such date, the Board may amend the
Rights Agreement to cure any ambiguity, to correct or supplement any provision
which may be defective or inconsistent with any other provisions, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement, provided that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights are
not redeemable.

     

    Tax
Matters.  While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.

     

    Rights
Agreement.  The terms of the Rights are set forth in a Rights
Agreement dated March 24, 2010 (the “Rights Agreement”),
between the Company and Mellon Investor Services LLC (operating with the service
name BNY Mellon Shareowner Services), as Rights Agent.  A copy of the
Rights Agreement is an Exhibit to a Current Report on Form 8-K dated March 24,
2010, filed with the Securities and Exchange Commission on such
date.  A copy of the Rights Agreement is available free of charge from
the Rights Agent at the following address:

     

    Mellon
Investor Services LLC

    300
Galleria Parkway

    Suite
1020

    Atlanta,
GA.  30339

    Attention:  Relationship
Manager

    (Vitacost.com,
Inc. Rights Agreement)

     

    This
summary does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated in this summary by
reference.

    

    
      
        
           

        

        
          C-5

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