Document:

WWW.EXFILE.COM, INC. -- 888-775-4789 -- ZAP -- EXHIBIT 10.4 TO FORM 8-K

     

    
      Exhibit
10.4   Warrant to Purchase Common Stock dated June 9, 2009 issued
to The Banks Development Trust

    

     

    

    THIS WARRANT (THIS “WARRANT”)
AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE
WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER
OR SALE. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (I) MAY BE PLEDGED OR
HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN LOAN OR OTHER FINANCING
SECURED BY SUCH SECURITIES OR (II) MAY BE TRANSFERRED OR ASSIGNED TO AN
AFFILIATE OF THE HOLDER HEREOF WITHOUT THE NECESSITY OF AN OPINION OF COUNSEL OR
THE CONSENT OF THE ISSUER HEREOF.

     

    

     

    WARRANT

     

    TO
PURCHASE COMMON STOCK

    

    OF

     

    ZAP

     

    

     

    Issue
Date: June 9, 2009 Warrant No. 2

    

    THIS CERTIFIES that Ronald S. Berg,
Trustee of The Banks Development Trust or any permitted subsequent holder hereof
(the “Holder”),
has the right to purchase from ZAP, a California corporation (the “Company”),
up to Four Million (4,000,000) fully paid and nonassessable shares of the
Company’s common stock, no par value (the “Common
Stock”), subject to adjustment as provided herein, at a price per share
equal to the Exercise Price (as defined below), at any time and from time to
time beginning on the date on which this Warrant is issued (the “Issue
Date”) and ending at 5:00 p.m., Pacific Standard time, on June 1, 2014
or, if such day is not a Business Day, on the next succeeding Business Day (the
“Expiration
Date”). This Warrant is issued pursuant to a Subscription Agreement,
dated as of June 9, 2009 (the “Securities
Purchase Agreement”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           EXERCISE.

    

    (a)           Right to Exercise; Exercise
Price.  The Holder shall have the right to exercise this
Warrant at any time and from time to time during the period beginning on the
Issue Date and ending at 5 p.m., Pacific Standard time, on the Expiration Date
as to all or any part of the shares of Common Stock covered hereby (the “Warrant
Shares”).  The “Exercise
Price” for each Warrant Share purchased by the Holder upon the exercise
of this Warrant shall be $0.50.

    

    (b)           Exercise
Notice.  In order to exercise this Warrant, the Holder shall
notify the Company at any time prior to 5:00 p.m., Pacific Standard time, on the
Business Day on which the Holder wishes to effect such exercise (the “Exercise
Date”), to the Company an executed copy of the notice of exercise in the
form attached hereto as Exhibit A
(the “Exercise
Notice”) and (ii) in the case of a Cash Exercise (as defined below),
deliver the Exercise Price to the Company by wire transfer of immediately
available funds.  The Holder shall promptly thereafter deliver the
original Warrant to the Company for cancellation (and replacement with a new
Warrant if exercised in part) pursuant to Section
1(d) of this Warrant.  Subject to Section
8(d), the Exercise Notice shall also state
the name or names in which the Warrant Shares issuable on such exercise shall be
issued if other than the Holder.

    

    (c)           Holder of
Record.  The Holder shall, for all purposes, be deemed to have
become the holder of record of the Warrant Shares specified in an Exercise
Notice on the Exercise Date specified therein, irrespective of the date of
delivery of such Warrant Shares. Except as specifically provided herein, nothing
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company prior to the Exercise Date.

    

    (d)           Cancellation of
Warrant.  This Warrant shall be canceled upon its exercise and,
if this Warrant is exercised in part, the Company shall, at the time that it
delivers Warrant Shares to the Holder pursuant to such exercise as provided
herein, issue a new warrant, and deliver to the Holder a certificate
representing such new warrant, with terms identical in all respects to this
Warrant (except that such new warrant shall be exercisable into the number of
shares of Common Stock with respect to which this Warrant shall remain
unexercised); provided,
however, that the Holder shall be entitled to exercise all or any portion
of such new warrant at any time following the time at which this Warrant is
exercised, regardless of whether the Company has actually issued such new
warrant or delivered to the Holder a certificate therefor.

    

    (e)           Stock Splits, Stock
Interests, Etc.  If, at any time on or after the Issue Date,
the number of outstanding shares of Common Stock is increased by a stock split,
stock dividend,  reclassification or other similar event, the Exercise
Price shall be proportionately reduced and the number of shares of Common Stock
shall be proportionately increased such that there shall have been no dilution
to Holder, or if the number of outstanding shares of Common Stock is decreased
by a reverse stock split, combination, reclassification or other similar event,
the Exercise Price shall be proportionately increased. The Company shall notify
the Holder and the Company’s transfer agent of such change.

     

    (1)                 Distributions.  If,
at any time after the Issue Date, the Company declares or makes any distribution
of cash or any other assets (or rights to acquire such assets) to holders of

     

    
      
         

      

      
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    Common
Stock, including without limitation any dividend or distribution to the
Company’s stockholders in shares (or rights to acquire shares) of capital stock
of a subsidiary) (a “Distribution”),
the Company shall deliver written notice of such Distribution (a “Distribution
Notice”) to the Holder at least fifteen (15) days prior to the earlier to
occur of (i) the record date for determining stockholders entitled to such
Distribution (the “Record
Date”) or (ii) the date on which such Distribution is made (the “Distribution
Date”) (the earlier of such dates being referred to as the “Determination
Date”).  Upon receipt of the Distribution Notice, the Holder
shall promptly (but in no event later than three (3) Business Days) notify the
Company whether it has elected (A) to receive the same amount and type of assets
(including, without limitation, cash) being distributed as though the Holder
were, on the Determination Date, a holder of a number of shares of Common Stock
into which this Warrant is exercisable as of such Determination Date (such
number of shares to be determined without giving effect to any limitations on
such exercise) or (B) upon any exercise of this Warrant on or after the
Distribution Date, to reduce the Exercise Price in effect on the Business Day
immediately preceding the Record Date by an amount equal to the fair market
value of the assets to be distributed divided by the number
of shares of Common Stock as to which such Distribution is to be made, such fair
market value to be reasonably determined in good faith by the independent
members of the Company’s Board of Directors.  Upon receipt of such
election notice from the Holder, the Company shall timely effectuate the
transaction or adjustment contemplated herein. Notwithstanding the foregoing, no
adjustment shall be made pursuant to this section if such adjustment would
result in an increase in the Exercise Price.

     

    
      
         

      

      
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    8.           MISCELLANEOUS.

     

    (a)           Failure to Exercise Rights
not Waiver.  No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof. All rights
and remedies of the Holder hereunder are cumulative and not exclusive of any
rights or remedies otherwise available. In the event that the Company breaches
any of its obligations hereunder to issue Warrant Shares or pay any amounts as
and when due, the Company shall bear all costs incurred by the Holder in
collecting such amount, including without limitation reasonable legal fees and
expenses.

     

    (b)           Notices. Any notice,
demand or request required or permitted to be given by the Company or the Holder
pursuant to the terms of this Warrant shall be in writing and shall be deemed
delivered (i) when delivered personally or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case
such delivery will be deemed to be made on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to an overnight courier and
(iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:

    

      
        	 
      	
                If
      to the Company:

                 

                ZAP

                501
      Fourth Street

                Santa
      Rosa, California  95401

                 

                If
      to the Holder:

                 

                Ronald
      S. Berg, Esq., Berg and Berg, L.L.P.

                Post
      Office Box 8817

                Calabasas,
      CA 91372-8817

              

      

       

    

    and if to
the Holder at the above address and to such address for such party as shall
appear on the signature page of the Securities Purchase Agreement executed by
such party, or as shall be designated by such party in writing to the other
parties hereto in accordance this Section
8(b).

    

    (c)           Amendments and
Waivers.  No amendment, modification or other change to, or
waiver of any provision of, this Warrant or any other Warrant may be made unless
such amendment, modification or change, or request for waiver, is (A) set forth
in writing and is signed by the Company and Holder and (B) applied to all of the
Warrants.  Upon the satisfaction 

     

    
      
         

      

      
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    of the
conditions described in (A) and (B), this Warrant shall be deemed to incorporate
the amendment, modification, change or waiver effected thereby as of the
effective date thereof.

     

    (d)           Transfer of
Warrant.  The Holder may sell, transfer or otherwise dispose of
all or any part of this Warrant (including without limitation pursuant to a
pledge) to any person or entity as long as such sale, transfer or disposition is
the subject of an effective registration statement under the Securities Act of
1933, as amended, and applicable state securities laws, or is exempt from
registration there under, and is otherwise made in accordance with the
applicable law and applicable provisions of the Securities Purchase
Agreement.  From and after the date of any such sale, transfer or
disposition, the transferee hereof shall be deemed to be the holder of the
portion of this Warrant acquired by such transferee, and the Company shall, as
promptly as practicable, issue and deliver to such transferee a new Warrant
identical in all respects to this Warrant, in the name of such transferee. The
Company shall be entitled to treat the original Holder as the holder of this
entire Warrant unless and until it receives written notice of the sale, transfer
or disposition hereof.   Company and its officers and directors
shall take such action as may be required by law to remove the Rule 144
restrictions, if any, immediately upon six months having elapsed from the
Exercise Date.  This obligation shall apply to all, or any part, of
the Common Stock purchased by Holder pursuant to the terms of this
Warrant.  This shall include, but not be limited to, the Company
having legal counsel issue an opinion letter in form satisfactory to the
transfer agent, or such other person or entity, as may be required by law, to
have the Rule 144 restriction immediately removed from the Common Shares such
that the same are immediately freely and without restriction saleable or
transferable by Holder.

     

    (e)           Lost or Stolen
Warrant.  Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver to the Holder a new Warrant identical in all
respects to this Warrant.

     

    (f)           Governing
Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and to be performed entirely within the State of California.

     

    (g)           Successors and
Assigns.  The terms and conditions of this Warrant shall inure
to the benefit of and be binding upon the respective successors (whether by
merger or otherwise) and permitted assigns of the Company and the Holder. The
Company may not assign its rights or obligations under this Warrant except as
specifically required or permitted pursuant to the terms hereof.

    

    

    
      
         

      

      
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    [Signature
Page to Follow]

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as of
the Issue Date.

    

    

    

     

    
      	 	      
              ZAP

              

              

              By    /s/Steven
      Schneider        

              Steven
      Schneider

              CEO 

            

    

     

    

    

    
 

     

     

     

    
 

    
      
         

      

      
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    EXHIBIT A to
WARRANT

    

    EXERCISE
NOTICE

    

    

    The undersigned Holder hereby
irrevocably exercises the right to purchase   of the shares
of Common Stock (“Warrant Shares”) of
ZAP evidenced by the attached Warrant (the “Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

    

    1.           Form
of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as:

    

    ______ a Cash Exercise with
respect to _________________ Warrant Shares; and/or

    

    ______ a Cashless Exercise
with respect to _________________ Warrant Shares, as permitted by the attached
Warrant.

    

    2.           Payment
of Exercise Price.  In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the sum of $________________ to the Company in
accordance with the terms of the Warrant.

    

    

    Date:
______________________

    

    

    ___________________________________

    Name of Registered Holder

    

    By:  _______________________________

           Name:

           Title:

    

    

    

    Holder Requests Delivery to
be made: (check one)

    

    
      	
              

            	
              By
      Delivery of Physical Certificates to the Above
  Address

            

    

    

    
      	
              

            	
              Through
      Depository Trust Corporation

            

    

    (Account  )

     

     

    
      
         

      

      
        8Exhibit 4.1

 

EXECUTION
COPY

 

Interval Leisure Group, Inc.

 

 

and

 

 

The Bank of New York Mellon,

as Rights Agent

 

 

Rights Agreement

 

Dated as of June 10, 2009

 

 

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

  	
  11

  
	
  Section 7.

  	
  Exercise of Rights;
  Purchase Price; Expiration Date of Rights

  	
  12

  
	
  Section 8.

  	
  Cancellation and
  Destruction of Rights Certificates

  	
  14

  
	
  Section 9.

  	
  Reservation and
  Availability of Capital Stock

  	
  14

  
	
  Section 10.

  	
  Preferred Stock Record
  Date

  	
  16

  
	
  Section 11.

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

  	
  16

  
	
  Section 12.

  	
  Certificate of Adjusted
  Purchase Price or Number of Shares

  	
  23

  
	
  Section 13.

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

  	
  24

  
	
  Section 14.

  	
  Fractional Rights and
  Fractional Shares

  	
  26

  
	
  Section 15.

  	
  Rights of Action

  	
  28

  
	
  Section 16.

  	
  Agreement of Rights
  Holders

  	
  28

  
	
  Section 17.

  	
  Rights Certificate
  Holder Not Deemed a Stockholder

  	
  29

  
	
  Section 18.

  	
  Concerning the Rights
  Agent

  	
  29

  
	
  Section 19.

  	
  Merger or Consolidation
  or Change of Name of Rights Agent

  	
  30

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  30

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  33

  
	
  Section 22.

  	
  Issuance of New Rights
  Certificates

  	
  34

  
	
  Section 23.

  	
  Redemption and Termination

  	
  34

  
	
  Section 24.

  	
  Exchange

  	
  35

  
	
  Section 25.

  	
  Notice of Certain
  Events

  	
  36

  
	
  Section 26.

  	
  Notices

  	
  37

  
	
  Section 27.

  	
  Supplements and
  Amendments

  	
  37

  
	
  Section 28.

  	
  Successors

  	
  38

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Determinations and
  Actions by the Board of Directors, etc

  	
  38

  
	
  Section 30.

  	
  Benefits of this
  Agreement

  	
  38

  
	
  Section 31.

  	
  Severability

  	
  38

  
	
  Section 32.

  	
  Governing Law

  	
  39

  
	
  Section 33.

  	
  Counterparts

  	
  39

  
	
  Section 34.

  	
  Interpretation

  	
  39

  
	
  Section 35.

  	
  Force Majeure

  	
  39

  

 

ii

 

RIGHTS AGREEMENT

 

RIGHTS AGREEMENT, dated as of June 10, 2009 (the “Agreement”),
between Interval Leisure Group, Inc., a Delaware corporation (the “Company”),
and The Bank of New York Mellon, a New York banking corporation, as Rights
Agent (the “Rights Agent”).

 

W I T N E S E T H

 

WHEREAS, on June 10, 2009 (the “Rights Dividend Declaration
Date”), the Board of Directors of the Company (the “Board”)  authorized and declared a dividend distribution
of one right (a “Right”) for each share of common stock, par value $0.01
per share, of  the Company (the “Common Stock”) outstanding (it being  understood that shares held by direct or
indirect wholly owned Subsidiaries of  the Company shall not be considered as  outstanding) at the Close of Business on June 22,
2009 (the “Record  Date”), and has authorized 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 issued between the Record Date (whether originally issued or delivered
from  the Company’s
treasury) and the Distribution Date (as hereinafter defined),  each Right initially representing the
right to purchase one one-thousandth of  a share of Series A Junior Participating
Preferred Stock of the Company (the  “Preferred Stock”) having the rights, powers
and preferences set forth in the  form of Certificate of Designation, Preferences and
Rights attached hereto as  Exhibit A, upon the terms and subject to the conditions hereinafter set forth.

 

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

 

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

 

(a)           “Acquiring Person” shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Stock then outstanding, but shall
not include:

 

(i)            the Company;

 

(ii)           any Subsidiary of the Company;

 

(iii)          any
employee benefit plan of the Company, or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan;

 

(iv)          any Exempt Person;

 

(v)           any Person who becomes the Beneficial
Owner of 15% or more of the Common Stock then outstanding as a result of a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company unless and until such
Person, after becoming aware that such Person has become the Beneficial Owner
of 15% or more of the then outstanding Common Stock, acquires beneficial
ownership of

 

 

additional shares of Common Stock representing 1% or
more of the Common Stock then outstanding; or

 

(vi)          any Exempt Person who ceases to be an
Exempt Person as a result of a reduction in the number of shares of Common
Stock outstanding due to the repurchase of shares of Common Stock by the
Company unless and until such Exempt Person, after becoming aware that it has
ceased to be an Exempt Person as a result of such reduction, acquires
beneficial ownership of such number of additional shares of Common Stock which
represents 1% or more of the Common Stock outstanding at the time of
acquisition of any such additional shares pursuant to this clause (vi);

 

provided, however, that if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an “Acquiring
Person” as defined pursuant to the foregoing provisions of this subsection (a) has
become such inadvertently, and such Person promptly (and in any event
within 5 Business Days after being so requested by the Company) divests or
enters into an irrevocable commitment satisfactory to the Board promptly (and
in any event within 5 Business Days or such shorter period as shall be
determined by the Board) to divest, and thereafter divests as required by such
commitment, a
sufficient number of shares of Common Stock so that such Person would no longer
be an “Acquiring Person,” as defined pursuant to the foregoing provisions of
this subsection (a), then such Person shall not be deemed to be an “Acquiring
Person” for any purposes of this Agreement.

 

(b)           “Act” shall mean the Securities Act of 1933, as
amended.

 

(c)           Subject to subsection (x) of this Section 1,
“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.

 

(d)           “Applicable Percentage” shall have the meaning
set forth in the Spinco Agreement.

 

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

 

(i)            that such Person or any of such  Person’s Affiliates or Associates, directly
or indirectly, has the  right to acquire (whether such right is exercisable immediately or  only after the passage of time or upon
the satisfaction of one or  more conditions (whether or not within the control of
such Person))  pursuant to any agreement, arrangement or understanding (whether or  not in writing) or upon the exercise of
conversion rights, exchange  rights, other rights, warrants or options, or
otherwise, and  including any securities of the Company represented by “when-issued”
trading  thereof; provided,
however, that a Person shall not be deemed the “Beneficial
Owner” of,  or to “beneficially
own,” (A) securities tendered pursuant to a  tender or exchange offer made by such Person
or any of such Person’s
Affiliates or Associates until such tendered securities are accepted  for purchase or exchange, (B) securities
issuable upon exercise of  Rights at any time prior to the occurrence of a Triggering Event (as  

 

2

 

hereinafter defined), or (C) securities issuable upon exercise of  Rights from and after the
occurrence of a Triggering Event which  Rights were acquired by such Person or any of
such Person’s  Affiliates or
Associates prior to the Distribution Date (as  hereinafter defined) or pursuant to Section 3(a) or
Section 22 hereof
(the “Original Rights”) or pursuant to Section 11(i) hereof
in  connection with
an adjustment made with respect to any Original  Rights;

 

(ii)           that such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own,” any security under this clause (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement, arrangement
or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); provided, further, that in determining whether a Person
is the “Beneficial Owner” of, or “beneficially owns,” any security under this clause
(ii), a hedging transaction between Liberty and a counterparty that is in
accordance with Section 5(d)(v) of the Spinco Agreement shall not on
its own be deemed to create a “group” between Liberty and such counterparty; or

 

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

 

provided, however, that nothing in this subsection (e) 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 forty days after the date of such
acquisition, and  then only if such securities continue to be owned by such Person at  such expiration of forty days.

 

(f)            “Board” shall have the meaning set forth in the
preamble of this Agreement.

 

(g)           “Book-Entry” shall mean an uncertificated
book-entry in the account system of the transfer agent for the Company’s Common
Stock.

 

3

 

(h)           “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 New Jersey are authorized or obligated by law or executive order to
close.

 

(i)            “Capital Stock” shall mean, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or nonvoting) of the Company and any rights (other than
debt securities convertible into capital stock), warrants or options to acquire
such capital stock, whether now outstanding or issued after the date of this
Agreement.

 

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

 

(k)           “Common Stock” shall mean the common stock, par
value $0.01 per share, of the Company at the date hereof or any other stock
resulting from successive changes or reclassifications of the common stock, 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.

 

(l)            “Common Stock Equivalents” shall have the
meaning set forth in Section 11(a)(iii) hereof.

 

(m)          “Company” shall have the meaning set forth in
the preamble of this Agreement.

 

(n)           “Current Market Price” shall have the meaning
determined in accordance with Section 11(d)(i) hereof.

 

(o)           “Current Value” shall have the meaning set
forth in Section 11(a)(iii) hereof.

 

(p)           “Distribution Date” shall have the meaning set
forth in Section 3(a) hereof.

 

(q)           “Equity Securities” shall have the meaning set
forth in the Spinco Agreement.

 

(r)            “Equivalent Preferred Stock” shall have the
meaning set forth in Section 11(b) hereof.

 

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

 

(t)            “Exchange Ratio” shall have the meaning set
forth in Section 24(a) hereof.

 

4

 

(u)           “Exempt Person” shall mean:

 

(i)            Liberty; provided, that Liberty shall be
considered an Exempt Person only if and so long as Liberty’s Ownership
Percentage with respect to the Company does not exceed the Applicable
Percentage (as from time to time in effect) except that Liberty shall
not cease to be an Exempt Person by reason of a purchase of Equity Securities
of the Company resulting in an Ownership Percentage in excess of the Applicable
Percentage to the extent such purchase is in a Rights Offering (as defined in
the Spinco Agreement) or an offer that was made generally available to holders
of equity securities of the Company;  provided, further, that
Liberty shall cease to be an Exempt Person immediately at such time as the
Applicable Percentage is less than 15%; and

 

(ii)           each Person (other than Liberty) that
Beneficially Owns on the Rights Dividend Declaration Date a number of shares of
Common Stock representing more than 15% of the Common Stock then outstanding; provided,
that each such Person shall be considered an Exempt Person only if and so long
as the shares of Common Stock Beneficially Owned by such Person do not exceed
the lesser of (A) 20% of the Common Stock then outstanding (or such
greater number of shares as are Beneficially Owned by such Person on the Rights
Dividend Declaration Date), and (B) the number of shares which are
Beneficially Owned by such Person on the  Rights Dividend Declaration
Date, plus any additional shares of Common  Stock representing not more
than (1) 3% of the Common
Stock  then outstanding, if such Person is an institution that reports its
ownership of Common Stock to the SEC on Schedule 13G pursuant to Rule 13d-1(b)(1) or
advises the Company in writing of its intention and eligibility to do so, or (2) if
otherwise, 1% of the Common Stock then outstanding; provided, further,
that such Person shall cease to be an Exempt Person immediately at such time as
such Person ceases to be the Beneficial Owner of more than 15% of the Common Stock then outstanding.

 

(v)           “Expiration Date” shall have the meaning set
forth in Section 7(a) hereof.

 

(w)          “Final Expiration Date” shall have the meaning
set forth in Section 7(a) hereof.

 

(x)            “Liberty” shall mean the Liberty
Parties (as defined in the Spinco Agreement) and their Affiliates (for purposes
of this definition only, as such term is defined in the Spinco Agreement).

 

(y)           “Ownership Percentage” shall have the meaning
set forth in the Spinco Agreement.

 

5

 

(z)           “Person” shall mean any individual, firm,
corporation, limited liability company, partnership, trust or other entity, and
shall include any successor (by merger or otherwise) thereof or thereto.

 

(aa)         “Preferred Stock” shall mean shares of Series A
Junior Participating Preferred Stock, par value $0.01 per share, of the
Company, and, to the extent that there are not a sufficient number of shares of
Series A Junior Participating Preferred Stock authorized to permit the
full exercise of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar to the terms
of the Series A Junior Participating Preferred Stock.

 

(bb)         “Principal Party” shall have the meaning set
forth in Section 13(b) hereof.

 

(cc)         “Purchase Price” shall have the meaning set
forth in Section 4(a) hereof.

 

(dd)         “Record Date” shall have the meaning set forth
in the preamble of this Agreement.

 

(ee)         “Rights” shall have the meaning set forth in
the preamble of this Agreement.

 

(ff)           “Rights Agent” shall have the
meaning set forth in the preamble of this Agreement.

 

(gg)         “Rights Certificate” shall have the meaning set
forth in Section 3(a) hereof.

 

(hh)         “Rights Dividend Declaration Date” shall have
the meaning set forth in the preamble of this Agreement.

 

(ii)           “Section 11(a)(ii) Event” shall mean
any event described in Section 11(a)(ii) hereof.

 

(jj)           “Section 11(a)(ii) Trigger Date”
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

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

 

(ll)           “Spinco Agreement” shall mean the Spinco
Agreement, dated May 13, 2008, among IAC/InterActiveCorp, Liberty Media
Corporation, LMC Silver King, Inc., Liberty HSN II, Inc., LMC USA
VIII, Inc., LMC USA IX, Inc., LMC USA XI, Inc., LMC USA XII, Inc.,
LMC USA XIII, Inc., LMC USA XIV, Inc., LMC USA XV, Inc., Liberty
Tweety, Inc., BDTV Inc., BDTV II Inc., BDTV III Inc., BDTV IV Inc. and
Barry Diller, as assumed by the Company pursuant to the Spinco Assignment and
Assumption Agreement, dated 

 

6

 

August 20, 2008, among the Company,
IAC/InterActiveCorp, Liberty Media Corporation and Liberty USA Holdings, LLC.

 

(mm)      “Spread” shall have the meaning
set forth in Section 11(a)(iii) hereof.

 

(nn)        “Stock Acquisition Date” shall
mean the first date of public announcement (which, for purposes of this
definition, shall include a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.

 

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

 

(pp)        “Substitution Period” shall have
the meaning set forth in Section 11(a)(iii) hereof.

 

(qq)        “Summary of Rights” shall have the
meaning set forth in Section 3(b) hereof.

 

(rr)          “Trading Day” shall have the
meaning set forth in Section 11(d)(i) hereof.

 

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

 

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

 

Section 3.               Issuance of Rights Certificates.

 

(a)           Until the earlier of (i) the Close of Business  on the 10th Business Day after the Stock Acquisition Date,
and (ii) the Close of Business on  the 10th Business Day (or such later date as the Board
shall determine) after  the date that a tender or exchange offer by any Person (other than the  Company, any Subsidiary of the Company,
any employee benefit plan of the  Company or of any Subsidiary of the Company, or any
Person or entity  organized, appointed or established by the Company for or pursuant to
the  terms of any
such plan) is first published or sent or given within the meaning  of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act,  if, upon consummation thereof, such Person would
become an Acquiring Person  (the earlier of (i) and (ii) being herein
referred to as the “Distribution  Date”), (x) the Rights will be evidenced
(subject to the provisions of subsection (b) of this  Section 3) by the
balances in the Book-Entries registered in the names of the holders of

 

7

 

Common Stock (which
Book-Entries shall also be deemed to be book-entries for Rights) and not by
separate book-entries or Rights Certificates (as defined below), and  (y) the Rights will be
transferable only in connection with the transfer of  the underlying shares of Common Stock
(including a transfer to the Company). 
As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested and provided
with all necessary information, 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 shown on the records of the Company or the
transfer agent or registrar for the shares of Common Stock, one or more Rights  certificates, in
substantially the form of Exhibit B hereto (the “Rights  Certificates”), evidencing
one Right for each share of Common Stock so held,  subject to adjustment as provided
herein.  In the event that 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.  As of and after the Distribution Date, the
Rights will be  evidenced
solely by such Rights Certificates, and the Rights will be transferable
separately from the transfer of shares of Common Stock.  The Company shall promptly  notify the Rights Agent in
writing upon the occurrence of the Distribution  Date and, if such notification is given
orally, the Company shall confirm same in writing on or prior to the Business
Day next following.  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.

 

(b)           The Company will make available, as promptly as
practicable following the Record Date, a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the “Summary
of Rights”) to any holder of Rights who may so request from time to time
prior to the Expiration Date.  With
respect to shares of Common Stock outstanding as of the Record Date, or issued
subsequent to the Record Date, unless and until the Distribution Date shall occur,
the Rights associated with such shares will be evidenced by the balances in the
Book-Entries registered in the names of the holders of the Common Stock and not
by separate book-entries or Rights Certificates, and the registered holders of
the Common Stock represented by such Book-Entries shall also be the registered
holders of the associated Rights.  Until
the earlier of the Distribution Date and the Expiration Date, the transfer of
any shares of Common Stock in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such shares of
Common Stock.

 

(c)           Rights shall be issued in respect of all shares  of Common Stock which are issued (whether
originally issued or from the  Company’s treasury or transferred to third parties by
wholly owned  Subsidiaries of the Company) after the Record Date but prior to the
earlier of  the
Distribution Date and the Expiration Date. 
If confirmations or written notices are sent to holders of shares of
Common Stock in Book-Entry form, or if the Company issues certificated shares
of Common Stock (including upon transfer of outstanding Common Stock,
disposition of Common Stock out of treasury stock or issuance or reissuance of
Common Stock out of authorized but unissued shares) after the Record Date but
prior to the earlier of the Distribution Date and the  Expiration Date, such confirmations,
written notices or certificates, as applicable, shall have impressed on,
printed on, written on or otherwise affixed to them a legend 

 

8

 

in substantially the following form (but the failure
to have such legend so impressed, printed, written or affixed shall not affect
the status or validity of the Rights evidenced by such shares of Common Stock):

 

The
shares to which this certificate or written notice relates also evidences and
entitles the holder  hereof to certain Rights as set forth in the Rights Agreement between  Interval Leisure Group, Inc. (the “Company”)
and The Bank of New York Mellon, as Rights Agent, dated as of June 10,
2009, as  it may be
amended from time to time (the “Rights Agreement”), the  terms of which are hereby incorporated
herein by reference and a copy  of which is on file at the office of the Company
designated for  such purpose.  Under certain
circumstances, as set forth in the Rights  Agreement, such Rights will be evidenced by separate
certificates and  will no longer be evidenced by the shares to which this statement
relates.  The Company  will mail to the holder of shares to which
this statement relates a copy of the Rights  Agreement, as in effect on the date of mailing,
without charge,  promptly after receipt of a written request therefor.  Under certain  circumstances set forth in the Rights Agreement,
Rights issued to, or  held by, any Person who is, was or becomes an Acquiring Person or any  Affiliate or Associate thereof (as such
terms are defined in the  Rights Agreement), whether currently held by or on behalf of such  Person or by any subsequent holder, may
become null and void.

 

With
respect to shares of Common Stock in Book-Entry form for which there has been
sent a confirmation or written notice (whether or not containing the foregoing
legend), until the  earlier of (i) the Distribution Date and (ii) the Expiration
Date, the Rights  associated with such shares of Common Stock shall be  evidenced by the balances indicated in
the Book-Entries registered in the names of the holders of the Common Stock and
not be separate book-entries or Rights Certificates, and registered holders of
such shares of Common Stock  shall also be the registered holders of the associated
Rights, and the  transfer of any of such shares of Common Stock shall also constitute
the transfer of the  Rights associated with such shares of Common Stock.  With respect to certificated shares, if any,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the transfer of
any such certificate shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.

 

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
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to usage
(but which shall not, in any case, affect the rights, duties or
responsibilities of the Rights Agent). 
Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever distributed, shall be dated as of the Record
Date and on 

 

9

 

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-thousandth 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),
Section 11(i) 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) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6, Section 11 or Section 22 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible, and only
if the Company has provided specific written instructions to the Rights Agent)
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 the Rights
Agreement.

 

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 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 countersigned by the Rights Agent, either manually or by facsimile signature
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.

 

10

 

(b)           Following the Distribution Date, upon receipt by the
Rights Agent of notice to that effect and all other relevant information
referred to in Section 3(a), the Rights Agent will keep, or cause to be
kept, at its office designated for such purpose, 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 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 (other than Rights Certificates
representing Rights that have become null and void pursuant to Section 7(e) hereof
or that have been exchanged pursuant to Section 24 hereof) 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 entitles
such holder (or former holder in the case of a  transfer) to purchase.  Any registered holder desiring to transfer,
split up,  combine or exchange any Rights Certificate or Certificates shall make
such  request in writing delivered to the Rights Agent, and shall surrender
the  Rights Certificate or Certificates to be transferred, split up,
combined or  exchanged at the office of the Rights Agent designated for such
purpose.  The Right Certificates are
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 until the
registered holder shall have properly completed and duly signed the  certificate
contained in the form of assignment on the reverse side of such  Rights
Certificate, shall have provided such additional evidence of the  identity of the
Beneficial Owner (or former Beneficial Owner) thereof and of the Rights
evidenced thereby and the Affiliates and Associates of such Beneficial Owner
(or former Beneficial Owner) as the Company or the Rights Agent shall
reasonably request  and shall have 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),
Section 14 and Section 24, 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
shall specify by written notice.  The
Rights Agent shall have no duty or obligation under any Section of this
Agreement that requires the payment of taxes or charges unless and until it is
satisfied that all such taxes and/or charges have been paid.

 

(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 

 

11

 

thereto, and upon surrender to the Rights Agent and
cancellation of  the Rights Certificate, if mutilated, the Company will 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, at any time  after the Distribution Date the
registered holder of any Rights Certificate  may exercise the Rights evidenced thereby (except as
otherwise provided herein  including the restrictions on exercisability set forth
in  Section 9(c),
Section 11(a)(iii), Section 23(b) and Section 24(b) hereof)
in whole or in part  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 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, cash or other assets, 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),
at or prior to the earlier of  (i) 5:00 P.M., New York City time, on June 10, 2019, or
such earlier or  later date as
may be established by the Board prior to the expiration of the  Rights (such date, as it may
be extended by the Board, the “Final Expiration  Date”), and (ii) the
time at which the Rights are redeemed or exchanged as  provided in Section 23
and Section 24 hereof (the earlier of (i) and (ii) being herein
referred to as the “Expiration Date”). 
Except for those provisions herein which expressly survive the
termination of this Agreement, this Agreement shall terminate upon the earlier
of the Expiration Date and such time as all outstanding Rights have been
exercised hereunder (other than Rights which have become null and void pursuant
to the provisions of Section 7(e) hereof).

 

(b)           The Purchase Price for each one one-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right initially shall be
$50.00, and shall be subject to adjustment from time to time as provided in Section 11
and Section 13(a) hereof and shall be payable in lawful money of the
United States of America in accordance with subsection (c) below.

 

(c)           Upon receipt of a Rights Certificate representing
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-thousandth of a
share of Preferred Stock (or other shares, securities, cash or other assets, as
the case may be) to be purchased as set forth below and an amount equal to any
applicable tax or charge required to be paid under Section 9(e), 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 (or make entries in the book-entry account system
of the transfer agent) 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 

 

12

 

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 Rights
Agreement, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts (or confirmation or written
notice that an entry has been made in the book-entry account system of the
transfer agent), 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 Rights Agreement, after receipt thereof, deliver such cash 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 any
taxes or charges required to be paid under Section 9(e) hereof, shall
be made by certified check, cashier’s check, bank draft or money order payable
to the order of the Company.  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, a 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 the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder, subject
to the provisions of Section 14 hereof.

 

(e)           Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), 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 use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or any other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or any
of its Affiliates, Associates or transferees hereunder.

 

13

 

(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 and of the Affiliates and
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 covenants and agrees that it will  cause to be reserved and kept available
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 Section 11(a)(iii) hereof,
will be sufficient to  permit the exercise in full of all outstanding Rights in accordance
with this Agreement.

 

(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 any national securities exchange, 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 such exchange upon  official notice of issuance upon such exercise.

 

(c)           The Company shall use its best efforts to (i) file,
as soon as practicable following the earliest date after the first  occurrence of a Section 11(a)(ii) Event
on which the consideration to be  delivered by the Company upon exercise of the Rights
has been determined in  accordance with Section 11(a)(iii) hereof, a registration
statement under the  Act, with respect to the securities purchasable upon exercise of the
Rights on  an
appropriate form, 

 

14

 

(ii) cause such registration statement to become  effective as soon as practicable after
such filing, and (iii) cause such  registration statement to remain effective (with a
prospectus at all times  meeting the requirements of the Act) until the earlier of (A) the
date as of  which the
Rights are no longer exercisable for such securities, and (B) the  date of the expiration of the
Rights.  The Company will also take such
action  as may be
appropriate under, or to ensure compliance with, the securities or  “blue sky” laws of the various states in
connection with the exercisability of  the Rights.  The
Company may temporarily suspend, for a period of time not to  exceed 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 such registration statement and
permit it to become  effective.  Upon any such
suspension, the Company shall issue a public  announcement stating that the exercisability of the
Rights has been  temporarily suspended, as well as a public announcement at such time as
the  suspension
has been rescinded.  The Company shall
notify the Rights Agent  whenever it makes a public announcement pursuant to this Section 9(c) and
give  the Rights
Agent a copy of such announcement.  In
addition, if the Company  shall determine that a registration statement is required following the  Distribution Date, the Company may
temporarily suspend the exercisability of  the Rights until such time as a registration statement
has been declared  effective.  Notwithstanding any
provision of this Agreement to the contrary,  the Rights shall not be exercisable in any
jurisdiction if the requisite  qualification in such jurisdiction shall not have been
obtained, the exercise  thereof shall not be permitted under applicable law, or a registration  statement shall not have been declared
effective.

 

(d)           The Company covenants and agrees that it will  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 (or entry in the
book-entry account system of the transfer agent) for such  shares (subject to payment of the
Purchase Price and compliance with all other applicable provisions of this
Agreement), be duly and validly  authorized and issued and fully paid and
nonassessable.

 

(e)           The Company further covenants and agrees that  it will 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 (or
entry in the book-entry account system of the transfer agent) 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 transfer tax that 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 (or entry in the book-entry account
system of the transfer agent) 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 Certificates at
the time of surrender) or until it has been  established to the Company’s and the Rights
Agent’s satisfaction  that no such
tax or charge is due.

 

15

 

Section 10.             Preferred Stock Record Date. 
Each Person in  whose name any certificate (or entry in the book-entry account system
of the transfer agent) 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)  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) represented
thereby  on, and such
certificate or book-entry shall be dated, the date upon which the Rights  Certificate evidencing such Rights was
duly surrendered and payment of the  Purchase Price (and all applicable 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 or
book-entry 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
the right to  vote, to
receive dividends or other distributions or to exercise any  preemptive rights, and shall
not be entitled to receive any notice of any  proceedings of the Company, except as
provided herein.

 

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

 

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

 

(ii)           In the event any Person shall, at any
time after the Rights Dividend Declaration Date, become an Acquiring Person,
unless 

 

16

 

the event causing
such Person to become an Acquiring Person is a transaction set forth in Section 13(a) hereof,
then, promptly following the later of the occurrence of such event and the Record
Date, proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the
right to receive, upon 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 exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing
that product (which, following such  first occurrence, shall thereafter be
referred to as the “Purchase  Price” for each such
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 give the Rights Agent written notice of
the identity of any  such 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.

 

(iii)          In
the event that the number of treasury shares plus the number of shares of
Common Stock that are authorized by the Company’s Amended and Restated
Certificate of Incorporation, as amended, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
clause (ii) of this Section 11(a), the Company shall (A) determine
the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”),  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, such as
the Preferred Stock that the Board has deemed to have essentially  the same value or economic
rights as shares of Common Stock (such  shares of preferred stock being referred to
as “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 (less the amount of any reduction in the  Purchase Price), where such
aggregate value has been determined by  the Board based upon the advice of a
nationally recognized investment  banking firm selected by the Board; provided,
however, that 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)

 

17

 

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 shares  and/or cash
have an aggregate value equal to the Spread. 
For purposes  of the
preceding sentence, the term “Spread” shall mean the excess of  (i) the Current Value
over (ii) the Purchase Price.  If
the Board  determines 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 after the Section 11(a)(ii) Trigger
Date, in order that the
Company may seek stockholder approval for the authorization of such  additional shares (such
30-day period, as it may be  extended, is herein called the “Substitution Period”).  To the extent  that the Company determines that action
should be taken pursuant to  the first and/or third sentences of this Section 11(a)(iii), the  Company (1) shall
provide, subject to Section 7(e) hereof, that such  action shall apply uniformly
to all outstanding Rights, and (2) may suspend the exercisability of the  Rights until the expiration
of the Substitution Period in order to  seek such stockholder approval for such
authorization of additional  shares and/or to decide the appropriate form of distribution to be  made pursuant to such first
sentence and to determine the value  thereof. 
In the event of any such suspension, the Company shall 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 whenever it makes a
public announcement  pursuant to
this Section 11(a)(iii) and give the Rights Agent a copy  of such announcement.  For purposes of this Section 11(a)(iii),
the  value of each
Adjustment Share shall be the Current Market Price per  share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the per share  or per unit value of any
Common Stock Equivalent shall be deemed to  equal the Current Market Price per share of
the Common Stock on such date.

 

(b)                                 In case the Company shall fix a record
date for the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within 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 that 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 

 

18

 

record date, plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). 
In case such subscription price may be paid by delivery of  consideration, part or all
of which may be in a form other than cash, the  value of such consideration shall be as
determined in good faith by the Board,  whose determination shall be described in a
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 that would then be in effect  if such record date had not been fixed.

 

(c)                                  In case the Company shall fix a record
date for the making of a distribution to all holders of Preferred Stock
(including without limitation any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), cash (other than a regular quarterly 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 evidences of indebtedness, or of 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
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.  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 that would have been in effect if
such record date had not been fixed.

 

(d)                                 (i)  The Current Market Price per
share of Common Stock on any date shall be deemed to be (1) for the
purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof,
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 (2) for purposes of computations made pursuant to Section 11(a)(iii) hereof,
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 the ex-dividend date for such dividend or distribution, or  the record date for such
subdivision, combination or reclassification shall  not have occurred prior to, but not
including, the commencement of the requisite 30  Trading Day or 10 Trading Day period, as set
forth above, then, and in  each such 

 

19

 

case, the Current Market
Price shall be properly adjusted to take  into account ex-dividend trading.  The closing price for each day shall be the  last sale price, regular
way, or, in case no such sale takes place on such  day, the average of the closing bid and asked
prices, regular way, in either  case as reported in the principal
consolidated transaction reporting system  with respect to securities listed or admitted
to trading on the Nasdaq Stock Market or, if the shares of Common Stock are not
listed or admitted to
trading on the Nasdaq Stock Market, as reported in the principal  consolidated transaction reporting
system with respect to securities listed on  the principal national securities exchange on
which the shares of Common Stock  are listed or admitted to trading or, if 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 statement filed with
the Rights Agent and shall be  conclusive for all purposes.

 

(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 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% in the
Purchase Price; provided, however, that any adjustments that 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 

 

20

 

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) 3 years  from the date of the transaction that mandates such
adjustment, and (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.

 

(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 such
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 

 

21

 

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.

 

(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-thousandth of a share and the number
of one one-thousandth of a share that 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 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 that 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 that by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, 

 

22

 

hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such stockholders.

 

(n)                                 The Company covenants and agrees that it
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 that
complies with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction that
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, cash flow or earning power aggregating more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its 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
that 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 that constitutes, or would constitute, the “Principal Party” for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by  such Person or any of its
Affiliates and Associates.

 

(o)                                 The Company covenants and agrees that,
after the Distribution Date, it will not, except as permitted by Section 23
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, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of 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 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 an 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 or  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 

 

23

 

with the Rights Agent, and with each  transfer agent for the Preferred Stock
and the Common Stock, a copy of such  certificate, and (c) if a Distribution Date has
occurred, mail a brief summary  thereof to each holder of a Rights Certificate (or, if
prior to the  Distribution Date, to each holder of shares of  Common Stock) in accordance with Section 25
and Section 26 hereof.  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.

 

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

 

(a)                                  In the event that any Person shall become
an Acquiring Person and, 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 that 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 that complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property, or (z) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating more than 50% of
the assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of that 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, shall thereafter 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, non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as such term is hereinafter defined), not subject
to any liens, encumbrances, rights of first refusal 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 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 of a
Section 11(a)(ii) Event), 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 shall thereafter be liable for, and shall
assume, by  virtue of such
Section 13 Event, all the obligations and duties of the Company  pursuant to this Agreement; (iii) the
term “Company” shall thereafter be  deemed to refer to such Principal Party, it being
specifically intended that  the provisions of Section 11 

 

24

 

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

 

(b)                                 “Principal Party” shall mean:

 

(i)                                     in the case of any transaction  described in clause (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into  which shares of Common Stock of the Company are
converted in such  merger or consolidation, and if no securities are so issued, the  Person that is the other party to such
merger or consolidation; and

 

(ii)                                  in the case of any transaction  described in clause (z) of the first
sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion  of the assets, cash flow or earning power transferred
pursuant to  such
transaction or transactions;

 

provided, however, that in any  such case described in clause (i) or
(ii), (1) if the Common Stock of such Person is not at such  time or 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; and (2) if such Person  is a Subsidiary, directly or indirectly,
of more than one Person,  the Common Stock 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.

 

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

 

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

 

25

 

(ii)                                  take all such other action as may be
necessary to enable the Principal Party to issue the securities purchasable
upon exercise of the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities on such
exchanges and trading markets as may be necessary or appropriate; and

 

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

 

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 that have not
theretofore been exercised shall thereafter  become exercisable in the manner described in Section 13(a).

 

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

 

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 that
evidence fractional Rights.  In lieu of
such fractional Rights, the Company shall pay 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 of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect 

 

26

 

to securities listed or admitted to trading on the
Nasdaq Stock Market or, if the Rights are not listed or admitted to trading on
the Nasdaq Stock Market, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use or, 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 such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board shall be
used.

 

(b)                                 The Company shall not be required to
issue fractions of shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights, to authorize book-entries which evidence fractional
shares of Preferred Stock (other than fractions that are integral multiples of
one one-thousandth of a share of Preferred Stock) or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions that
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 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, to authorize Book-Entries that represent
fractional shares of Common Stock or to distribute certificates that 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 per share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise.

 

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

 

(e)                                  Whenever a
payment for fractional Rights or 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

 

27

 

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 of cash
for fractional Rights or fractional shares under any Section of this
Agreement relating to the payment of cash for fractional Rights or fractional
shares unless and until the Rights Agent shall have received such a certificate
and sufficient monies.

 

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, 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  its own behalf and for its own benefit, enforce, and
may institute and  maintain any suit, action or proceeding against the Company to enforce,
or  otherwise act
in respect of, its 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 of this  Agreement and shall be entitled to specific performance of the
obligations  hereunder and
injunctive relief against actual or threatened violations of the  obligations hereunder of any Person
subject to this Agreement.

 

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

 

(a)                                  prior to the Distribution Date, the
Rights shall be evidenced by the Book-Entries representing shares of Common
Stock registered in the names of the holders of Common Stock, which
Book-Entries shall also be deemed book-entries for Rights and not be separate
book-entries or Rights Certificates, and each Right 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 of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;

 

(c)                                  subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock) 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, if any) made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary; and

 

28

 

(d)                                 notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or 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 of competent
jurisdiction 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 its best efforts to have any such injunction, order, judgment, decree or
ruling lifted or otherwise overturned as soon as possible.

 

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 that 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.

 

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 to
reimburse the Rights Agent for all reasonable expenses, counsel fees and
disbursements and other disbursements incurred in the preparation, 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, judgment, fine, penalty, claim, demand, settlement, damage,
cost, liability or expense, including, without limitation, the reasonable fees
and expenses of legal counsel, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent (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), for
any action taken, suffered or omitted by the Rights Agent pursuant to this
Agreement or 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.  The costs and expenses incurred in enforcing
this right of indemnification shall be paid by the Company.  Any liability of the Rights Agent under this
Agreement will be limited to the amount of fees paid by the Company to the
Rights Agent.  The provisions of this Section 18
and Section 20 below shall survive the termination of this Agreement, the
exercise or expiration of the Rights, and the resignation, replacement or
removal of the Rights Agent.

 

29

 

(b)                                 The Rights Agent shall be fully protected
and authorized 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. 
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 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; but only if 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.

 

(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.                                      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 

 

30

 

opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted
by it and 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 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 Persons 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).  In no case, however, will the Rights Agent be
liable for  special,
indirect, punitive, incidental or consequential losses or damages of  any kind whatsoever (including but not
limited to lost profits), even if the  Rights Agent has been advised of the possibility or
likelihood of such losses or damages.

 

(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 in respect of the validity of this
Agreement or the execution  and delivery hereof (except the due execution and
delivery hereof by the Rights Agent) or  in respect of 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(a)(ii) hereof) or any
change or adjustment in the terms of the Rights (including the manner,  method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, 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, 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.

 

31

 

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

 

(g)                                 The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, 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 from any such officers.  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 or suffered by, or omission of,
the Rights Agent 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.

 

(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 of the
Rights Agent from acting in any other capacity for the Company or for any other
Person.

 

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

 

32

 

(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 any of its rights or powers if it believes that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.

 

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

 

Section 21.                                      Change of Rights Agent. 
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon at least 30 days’ notice
in writing mailed to the Company, and to each transfer agent of the Common
Stock and Preferred Stock known to the Rights Agent, by registered or certified
mail, and, if such resignation occurs after the Distribution Date, to the
registered holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent upon at least 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, if such removal occurs after the Distribution Date, to the
holders of the Rights Certificates by first-class mail.  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of 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 the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a Person organized and
doing business under the laws of the United States or any State thereof, in
good standing, which is authorized under such laws to exercise corporate trust,
stock transfer or stockholder services powers and which at the time of its
appointment as Rights Agent has, or with its parent has, a combined capital and
surplus of at least $25,000,000 or (b) an affiliate of 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 under
this Agreement 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, if such appointment occurs after the
Distribution Date, mail a notice  thereof in writing to the registered holders of the
Rights Certificates.  Failure to give any
notice provided for in this Section 21, however, or any  defect therein, shall not affect the
legality or validity of the resignation  or removal of the Rights Agent or the appointment of
the successor Rights  Agent, as the case may be.

 

33

 

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 the 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 the 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, granted or awarded as of the Distribution Date, 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 and Termination.

 

(a)                                  The Board may, at its option, at any time
prior  to the
earlier of (i) the Stock Acquisition Date, and (ii) the
Final Expiration Date, (x) redeem all but not  less than all of the then
outstanding Rights at a redemption price of $0.001  per Right (rounded up to the
nearest whole $0.01 in the case of any holder  whose holdings are not in a
multiple of ten), 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”) or (y) amend this Agreement  to change the
Final Expiration Date to another date, including an earlier date.  The Company may, at its option, pay the  Redemption
Price in cash, shares of Common Stock (based on the Current Market  Price, as
defined in Section 11(d)(i) hereof, of the Common Stock at the time  of redemption)
or any other form of consideration deemed appropriate by the  Board.

 

(b)                                 Immediately upon the action of the Board  ordering the redemption of the Rights,
written evidence of which shall promptly have been delivered to the Rights
Agent, and without any further action and without any notice,  the right to exercise the Rights will
terminate and the only right thereafter  of the holders of Rights shall be to receive the
Redemption Price for each  Right so held. 
Promptly after the action of the Board ordering the redemption  of the Rights, the Company shall give
notice of such redemption to the Rights  Agent and the holders of the then outstanding Rights
by mailing such notice to  all such holders at each holder’s last address as it
appears upon the registry  books of the Rights Agent or, prior to the
Distribution Date, on the registry  books of the transfer agent for the Common Stock.  Any notice which is mailed  in the manner herein provided shall be
deemed given, whether or not the holder  receives the notice. 
Each such notice of redemption will state the method by  which the payment of the Redemption Price
will be made.

 

34

 

Section 24.                                      Exchange.

 

(a)                                  The Board may, at its option, at any time
after  any Person
becomes an Acquiring Person, exchange all or part of the then  outstanding and exercisable Rights (which
shall not include Rights that have become 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 “Exchange Ratio”).  Notwithstanding the  foregoing, the Board shall
not be empowered to effect such exchange at any  time after any Person (other than the
Company, any Subsidiary of the Company,  any employee benefit plan of the Company or
any such Subsidiary, or any Person  holding Common Stock for or pursuant to the
terms of any such plan), 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 Exchange
Ratio.  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 promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each 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.

 

(c)                                  In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with 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 the
Rights.  In the event the Company shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional
shares of Common Stock, the Company shall substitute, for each share of Common
Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of Preferred Stock or fraction thereof such that the Current
Market Price of one share of Preferred
Stock multiplied by such number or fraction is equal to the Current Market Price of one share of Common Stock as of the
date of issuance of such share of Preferred
Stock or fraction thereof.

 

(d)                                 The Company shall not be required to
issue fractions of shares of Common Stock, to authorize Book-Entries which
evidence fractional shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. 

 

35

 

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 of a whole share of Common Stock. 
For the purposes of this subsection (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for 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
quarterly cash dividend  out of earnings or retained earnings of the Company), (ii) to
offer to the  holders of Preferred Stock rights or warrants to subscribe for or to
purchase  any
additional shares of Preferred Stock or shares of stock of any class or  any other securities, rights or options, (iii) to
effect any  reclassification
of its Preferred Stock (other than a reclassification  involving only the subdivision of
outstanding shares of Preferred Stock), (iv) to effect any consolidation
or merger into or with any other Person  (other than a Subsidiary of the Company in a
transaction that 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, cash
flow or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or  Persons (other than the Company and/or any of its Subsidiaries in one
or more  transactions
each of which complies with Section 11(o) hereof), or (v) to  effect the liquidation,
dissolution or winding up of the Company, then, in  each such case, the Company shall give to 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 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 20 days prior to the record date for determining
holders of the shares of
Preferred Stock for purposes of such action, and in the case of any
such other  action, at
least 20 days prior to the date of the taking of such  proposed action or the date
of participation therein by the holders of the  shares of Preferred Stock, whichever shall be
the earlier.

 

(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
each holder of a Rights Certificate, to  the extent feasible and in accordance with Section 26
hereof, and to the  Rights Agent 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 subsection to Preferred Stock shall
be deemed thereafter to  refer to Common Stock and/or, if appropriate, other securities.

 

36

 

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  delivered in writing to the Rights Agent
by the Company) as follows:

 

Interval
Leisure Group, Inc.

6262 Sunset Drive

Miami, FL  33143

Attention: General Counsel

 

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
delivered in writing by the Rights Agent to the Company) as follows:

 

The
Bank of New York Mellon

BNY Mellon Shareowner Services

300 Galleria Parkway

Suite 1020

Atlanta, GA  30339

Attention: Judy Hsu

 

With a
copy to:

 

The
Bank of New York Mellon

480 Washington Boulevard, 29th Floor

Jersey City, NJ 07310

Attention: General Counsel

 

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  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. 
Prior to the Stock Acquisition Date, 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 shares of
Common Stock.  From and  after the Stock
Acquisition Date, 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, or (iii) 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).  Upon the delivery of a certificate from an
appropriate  officer of the

 

37

 

Company
and, if requested by the Rights Agent, an opinion of counsel, 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. 
Notwithstanding anything contained in this Agreement to the contrary,
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.

 

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 or any other class of
capital 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 the right and power to (i) interpret the provisions
of this Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement).  All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the
Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board, or any of the  directors on the Board to any liability to the holders
of the Rights.  The Rights Agent is entitled always to assume that the Board acted in
good faith and shall be fully protected and incur no liability in 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, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the
Board determines in its good faith judgment that severing the invalid language
from this Agreement would adversely affect the purpose or effect of this 

 

38

 

Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the Close of Business on the 10th Business Day following the date of such
determination by the Board; and
provided further, that 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
immediately.

 

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 of such counterparts
shall for all  purposes be deemed to be an original, and all such counterparts shall
together  constitute
but one and the same instrument.

 

Section 34.             Interpretation.  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.  Whenever the words “include,” “includes” or “including”
are used in this Agreement they shall be deemed to be followed by the words “without
limitation.”  The words “hereof,” “herein”
and “herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, subsection, paragraph and
exhibit references are to the articles, sections, paragraphs and exhibits of
this Agreement unless otherwise specified. 
The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting any gender shall include all genders. 
Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning. 
Nothing in this Agreement is intended as a waiver of any provision of the
Spinco Agreement.

 

Section 35.             Force Majeure.  Notwithstanding anything to the contrary
contained herein, the Rights Agent shall not be liable for any delays or
failures in performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunctions of computer
facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war or civil
unrest.

 

[Signature page follows.]

 

39

 

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

 

 

	
   

  	
  INTERVAL LEISURE GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig M. Nash

  
	
   

  	
  Name: Craig M. Nash

  
	
   

  	
  Title:    Chairman, President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK
  MELLON, as Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitzi J Brinkman

  
	
   

  	
  Name: Mitzi J Brinkman

  
	
   

  	
  Title:    Relationship Manager

  

 

Signature Page to Rights Agreement 

 

 

EXHIBIT A

 

FORM OF

CERTIFICATE OF DESIGNATION, PREFERENCES AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

 

of

INTERVAL LEISURE GROUP, INC.

 

Pursuant to Section 151 of the General
Corporation Law

of the State of Delaware

 

We, the undersigned,
[        ] , [TITLE], and
[          ] , [TITLE], of
Interval Leisure Group, Inc., a Delaware corporation (hereinafter called
the “Corporation”), pursuant to the provisions of Sections 103 and 151
of the General Corporation Law of the State of Delaware, do hereby make this
Certificate of Designation and do hereby state and certify that pursuant to the
authority expressly vested in the Board of Directors of the Corporation by the
Amended and Restated Certificate of Incorporation, the Board of Directors duly
adopted the following resolutions:

 

RESOLVED, that, pursuant to Section FOURTH, B. of
the Amended and Restated Certificate of Incorporation (which authorizes
25,000,000 shares of preferred stock, $0.01 par value per share (“Preferred
Stock”) of which none have already been designated), the Board of Directors
hereby fixes the designations, powers, preferences and rights, and the
qualifications, limitations and restrictions, of a series of Preferred Stock;

 

RESOLVED, that pursuant to
the authority vested in the Board  of Directors of this Corporation in
accordance with the provisions of its  Amended and Restated Certificate of
Incorporation, a series of Preferred Stock  of the Corporation be and it hereby is
created, and that the designation and  amount thereof and the voting powers,
preferences and rights of the shares of such series, and the  qualifications, limitations
or restrictions thereof are as follows:

 

Section 1.               Designation and Amount.  The shares of
such series  shall be
designated as “Series A Junior Participating Preferred Stock” and
the  number of
shares constituting such series shall be 100,000.

 

Section 2.               Dividends and Distributions.

 

(a)                                           Subject to the prior and superior rights
of the holders  of any shares of any series of Preferred Stock 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 shall be entitled to receive, when, as and if
declared by the Board of  Directors out of funds legally available for the purpose, quarterly
dividends  payable in
cash on the 1st day of March, June, September and December in
each  year (each
such date being referred to herein as a “Quarterly Dividend Payment  Date”), commencing on the first Quarterly Dividend Payment
Date after the  first issuance of a share or fraction of a share of Series A
Junior

 

A-1

 

Participating Preferred
Stock, in an amount per share (rounded to the nearest  cent) equal to the greater of (i) $0.10
or (ii) 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 of the Corporation 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 [June 10],
2009 (the “Rights Declaration Date”) (A) declare any dividend on
Common Stock payable in shares of Common  Stock, (B) subdivide the outstanding Common
Stock, or (C) combine the  outstanding Common Stock into a smaller number of
shares, 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 (ii) of the preceding sentence shall be adjusted by multiplying
such amount by a  fraction the numerator of which is the number of shares of Common Stock  outstanding immediately after such event
and the denominator of which is the  number of shares of Common Stock that were outstanding
immediately prior to  such event.

 

(b)                                           The Corporation shall declare a dividend
or distribution  on the Series A Junior Participating Preferred Stock as provided
in Section 2(a) above immediately after it declares a dividend or
distribution on the  Common Stock (other than a dividend payable in shares of Common Stock);  provided that, in the event no dividend or distribution
shall have been declared on the Common
Stock during  the period between any Quarterly Dividend
Payment Date and the next subsequent  Quarterly Dividend Payment
Date, a dividend of $0.10 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 30 days prior to the
date fixed for the payment thereof.

 

A-2

 

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 after the Rights Declaration Date (i) declare any
dividend on Common  Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common  Stock, or (iii) combine the outstanding Common Stock into a
smaller number of  shares, then in each such case the 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 and the  holders of shares of Common Stock shall vote together
as one class on all  matters submitted to a vote of stockholders of the Corporation.

 

(c)                                           (i)            If
at any time dividends on any Series A Junior  Participating Preferred Stock shall be in arrears in
an amount equal to 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, all holders of Preferred
Stock (including holders of the  Series A Junior Participating Preferred Stock)
with dividends in arrears in an  amount equal to 6 quarterly dividends thereon, voting
as a class,  irrespective
of series, shall have the right to elect 2 directors.

 

(ii)           During any default period, such  voting right of the holders of Series A
Junior Participating  Preferred Stock may be exercised initially at a special meeting  called pursuant to Section 3(c)(iii) or
at any  annual
meeting of stockholders, and thereafter at annual meetings of  stockholders, provided that neither such
voting right nor the right  of the holders of any other series of Preferred Stock,
if any, to  increase, in
certain cases, the authorized number of directors shall  be exercised unless the holders of 10% in
number of  shares of
Preferred Stock outstanding shall be present in person or  by proxy. 
The absence of a quorum of the holders of Common Stock  shall not affect the exercise by the
holders of Preferred Stock of  such voting right. 
At any meeting at which the holders of Preferred  Stock shall exercise such voting right
initially during an existing  default period, they shall have the right, voting as a
class, to  elect
directors to fill such vacancies, if any, in the Board of  Directors as may then exist up to 2
directors or, if such  right is exercised at an annual meeting, to elect 2 directors.  If the number which may be so elected at any
special meeting does  not amount to the required number, the holders of the Preferred  Stock shall have the right to make such
increase in the number of  directors as shall be necessary to permit the election
by them of  the required
number.  After the holders of the
Preferred Stock shall have exercised their right to elect directors
in any default  

 

A-3

 

period
and during the continuance of such period, the number of  directors shall not be
increased or decreased except by vote of the  holders of Preferred Stock as herein provided
or pursuant to the  rights of any
equity securities ranking senior to or pari passu with  the Series A Junior
Participating Preferred Stock.

 

(iii)          Unless the holders of
Preferred  Stock shall,
during an existing default period, have previously  exercised their right to elect directors, the
Board of Directors may  order, or any stockholder or
stockholders owning in the
aggregate  not less than
10% of the total number of shares of  Preferred Stock outstanding, irrespective of
series, may request,  the calling of
a special meeting of the holders of Preferred Stock,  which meeting shall thereupon be called by
the President, a  Vice-President
or the Secretary of the Corporation. 
Notice of such
meeting and of any annual meeting at which holders of Preferred  Stock are entitled to vote
pursuant to this Section 3(c)(iii) shall  be given to each holder of record of
Preferred Stock by mailing a  copy of such notice to such holder at its last address as the same
appears  on the books of
the Corporation.  Such meeting shall be
called for a  time not
earlier than 20 days and not later than 60 days after such  order or request or in
default of the calling of such meeting within  60 days after such order or request, such
meeting may be called on
similar notice by any stockholder or stockholders owning in the  aggregate not less than 10%
of the total number of
shares of Preferred Stock outstanding. 
Notwithstanding the foregoing  provisions of this Section 3(c)(iii), no
such special meeting shall  be called during the period within 60 days immediately preceding the  date fixed for the next
annual meeting of the stockholders.

 

(iv)          In any default period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect 2 directors voting as
a class, after the exercise of which right (x) the directors so elected by
the holders of Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as
provided in Section 3(c)(ii)) be filled by vote of a majority of the
remaining directors theretofore elected by the holders of the class of stock
which elected the director whose office shall have become  vacant. 
References in this Section 3(c) to directors elected by the  holders of a particular class of stock
shall include directors  elected by such directors to fill vacancies as provided in clause (y) of
the foregoing sentence.

 

(v)           Immediately upon the
expiration of a  default period,
(x) the right of the holders of Preferred Stock as a  class to elect directors
shall cease, (y) the term of any directors  elected by the holders of Preferred Stock as
a class shall terminate,
and (z) the number of directors shall be such
number as may be  provided for in
the certificate of incorporation or by-laws of
the Corporation  irrespective of
any increase made pursuant to the provisions of  Section 3(c)(ii) (such number being
subject,  however, to
change thereafter in any manner provided by law or in the  certificate of incorporation
or by-laws).  Any vacancies in the Board  of Directors effected by the
provisions of clauses (y) and (z) in the  preceding sentence may be filled by a
majority of the remaining  directors.

 

(d)                                           Except as set forth herein, holders of Series A
Junior  Participating
Preferred Stock shall have no special voting rights and their  consent shall not be 

 

A-4

 

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

 

(ii)           declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity  (either as to dividends or upon
liquidation, dissolution or winding  up) with the Series 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 are then entitled;

 

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

 

(iv)          purchase or otherwise
acquire for  consideration any shares of Series A Junior Participating
Preferred  Stock, or any shares of stock 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  stock of the
Corporation unless the Corporation could, under Section 4(a), purchase or
otherwise acquire such shares at such time and in  such manner.

 

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 

 

A-5

 

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 stock  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 an amount equal to $1.00 per
share of Series A Participating  Preferred Stock, 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”).  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 Section 6(c) below to  reflect such events as stock
splits, stock dividends and recapitalizations  with respect to the Common Stock) (such
number in clause (ii), the “Adjustment  Number”).  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 to be distributed in the
ratio of the Adjustment Number to 1  with respect to such Preferred Stock and
Common Stock, on a per share basis,  respectively.

 

(b)                                           In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, 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.  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.

 

(c)                                           In
the event the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the 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.

 

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 or changed into other stock or securities, cash
and/or any other property, 

 

A-6

 

then in any such case the shares of Series A
Junior Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged.  In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the 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.  At any time when any shares of Series A
Junior Participating Preferred Stock are outstanding, the Amended and Restated
Certificate of Incorporation of the Corporation shall not be amended (whether
by merger or otherwise) 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 a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a
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 holder’s fractional shares, to exercise voting  rights, receive dividends, participate in
distributions and to have the  benefit of all other rights of holders of Series A
Junior Participating  Preferred Stock.

 

Section 12.             Certain Definitions.  As used herein with respect to the Series A
Junior Participating Preferred Stock, the term “Common Stock” means the
common stock, par value $0.01 per share, of the Corporation at the date hereof
or any other class of stock resulting from successive changes or
reclassification of the common stock.

 

A-7

 

IN WITNESS WHEREOF, we have executed and subscribed
this Certificate  and do affirm the foregoing as true under the penalties of perjury this
[    ]th  day of
[              ],
2009.

 

	
   

  	
   

  
	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [NAME]

  	
   

  	
   

  

 

A-8

 

EXHIBIT B

 

[Form of Rights Certificate]

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT
EXERCISABLE AFTER JUNE 10, 2019, UNLESS EXTENDED PRIOR THERETO BY THE  BOARD OF DIRECTORS OF THE COMPANY, OR
EARLIER IF REDEEMED BY THE COMPANY.  THE  RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.001 PER  RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.  UNDER CERTAIN  CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY 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  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.](1)

 

Rights Certificate

 

INTERVAL LEISURE GROUP, INC.

 

This certifies that
                          ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of June 10,
2009 (the “Rights Agreement”), by and between Interval Leisure Group, Inc.
a Delaware corporation (the “Company”), and The Bank of New York Mellon,
a New York banking corporation, as Rights Agent (the “Rights Agent”), to
purchase from the Company at any time prior to 5:00 P.M. (New York City
time) on June 10, 2019 (unless such date is extended prior thereto by the
Board of Directors) 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
$50.00 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 properly completed and 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 June 10, 2009, based
on the Preferred Stock as constituted at such date.

 

Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms 

 

(1)   The portion of the legend in brackets shall
be inserted only if applicable and shall replace the preceding sentence.

 

B-1

 

are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a Person (as such term is
defined in the Rights Agreement) who, after such transfer, became an Acquiring
Person, or an Affiliate or Associate 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 Section 11(a)(ii) 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 office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing 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 its option at a
redemption price of $0.001 per Right at any time prior to the earlier of (i) the
Stock Acquisition Date, and (ii) the Final Expiration Date (as each such
term is defined in the Rights Agreement). 
In addition, under certain circumstances following the Stock Acquisition
Date, the Rights may be exchanged, in whole or in part, for shares of the
Common Stock, or shares of preferred stock of the Company having essentially
the same value or economic rights as such shares.  Immediately upon the action of the Board of
Directors of the Company authorizing any such exchange, and without any further
action or any notice, the Rights (other than Rights which are not subject to
such exchange) will terminate and the Rights will only enable holders to
receive the shares issuable upon such exchange.

 

The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights, to
authorize book-entries which evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock) or to distribute certificates which evidence fractional
shares of Preferred 

 

B-2

 

Stock (other than fractions that 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 holder of this Rights Certificate 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.  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.

 

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 consent to or withhold consent from 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.

 

B-3

 

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

 

Dated
as of
                      ,

 

	
  ATTEST:

  	
  INTERVAL LEISURE GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
  Secretary

  	
   

  	
  Title:

  
				

 

 

Countersigned:

 

The
Bank of New York Mellon,

as Rights Agent

 

 

	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  

 

B-4

 

[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:

 

Signatures must be
guaranteed by a participant in the Securities Transfer Agent Medallion Program,
the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc.
Medallion Signature Program.

 

B-5

 

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 any such Acquiring
Person (as  such terms
are defined pursuant to the Rights Agreement);

 

(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:

 

Signatures must be
guaranteed by a participant in the Securities Transfer Agent Medallion Program,
the Stock Exchanges Medallion Program or the New York Stock Exchange, Inc.
Medallion Signature Program.

 

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.

 

B-6

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise Rights

represented by the Rights Certificate.)

 

To: INTERVAL
LEISURE GROUP, INC.:

 

The undersigned hereby irrevocably elects to exercise
                          
Rights represented by this Rights Certificate to purchase the shares 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 (or entries for such shares be made in the
book-entry account system of the transfer agent in the name of and with written
confirmation 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

  

 

Signature
Guaranteed:

 

Signatures must be guaranteed by a participant in the
Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program.

 

B-7

 

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 any such Acquiring
Person (as  such terms
are defined pursuant to the Rights Agreement);

 

(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 became an Acquiring Person  or an Affiliate or Associate of an Acquiring Person.

 

Dated:
                    ,

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

Signature
Guaranteed:

 

Signatures must be guaranteed by a participant in the
Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program.

 

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.

 

B-8

 

EXHIBIT C

 

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK

 

On June 10, 2009 (the “Rights Dividend Declaration Date”),
the Board of Directors of Interval Leisure Group, Inc. (the “Company”)
authorized and declared a dividend distribution of one right (a “Right”)
for each outstanding share of common stock, par value $0.01 per share, of the
Company (the “Common Stock”) to stockholders of record at the close of
business on June 22, 2009 (the “Record Date”). Each Right entitles
the registered holder to purchase from the Company a unit consisting of one
one-thousandth of a share (a “Unit”) of Series A Junior
Participating Preferred Stock, par value $0.01 per share (the “Series A
Preferred Stock”) at a Purchase Price of $50.00 per Unit, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”), dated as of June 10, 2009,
between the Company and The Bank of New York Mellon, a New York banking
corporation, as Rights Agent. The Series A Preferred
Stock is established pursuant to a Certificate of Designation, Preferences and
Rights (the “Certificate of Designation”), which is being filed by the
Company with the Secretary of State of the State of Delaware.

 

Initially, the Rights will be attached to all shares of Common Stock
then outstanding, and no separate Rights Certificates will be distributed. Subject
to certain exceptions specified in the Rights Agreement, the Rights will
separate from the Common Stock and a Distribution Date will occur upon the
earlier of (i) 10 business days following a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”)
has acquired beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the “Stock Acquisition Date”), other than as a result of
repurchases of stock by the Company or acquisitions by certain Exempt Persons
(as defined below) or (ii) 10 business days (or such later date as the
Board shall determine) following the commencement of a tender offer or exchange
offer that would result in a person or group becoming an Acquiring Person. An “Exempt
Person” means (i) Liberty Media Corporation and its affiliates (“Liberty”),
except that Liberty will be considered an Exempt Person only if and so long as
the shares of Common Stock beneficially owned by Liberty do not exceed
specified ownership levels designated in the Spinco Agreement between
IAC/InterActiveCorp, Liberty and certain other persons named therein (provided
that Liberty will immediately cease to be an Exempt Person when the
applicable specified ownership level is less than 15%), and (ii) each person (other than
Liberty) that beneficially owns on the Rights Dividend Declaration Date a
number of shares of Common Stock representing more than 15% of the outstanding
shares of Common Stock, except that each such person will be considered an
Exempt Person only if and so long as the shares of Common Stock beneficially
owned by such person do not exceed the lesser of (A) 20% of the
outstanding shares of Common Stock (or such greater number of shares as are
beneficially owned by such person on the Rights Dividend Declaration Date), and
(B) the number of shares which are beneficially owned by such
person on the  Rights Dividend Declaration Date, plus any
additional shares of Common Stock representing not more than (1) if such
person is an institution not seeking to control or influence the Company, 3% of
the shares of Common
Stock then outstanding, or (2) if otherwise, 1% of the shares of Common
Stock then outstanding (provided

 

C-1

 

that a person will cease to be an Exempt
Person immediately at such time as such person ceases to be the beneficial
owner of more than 15% of the shares of Common Stock then outstanding).

 

Until the Distribution Date, (i) the Rights will be evidenced by
the balances in the book-entry account system of the transfer agent for the
Common Stock registered in the names of the holders of the Common Stock, (ii) any
confirmation or written notices sent to holders of Common Stock in book-entry
form and any new Common Stock certificates issued after the Record Date will
contain a notation incorporating the Rights Agreement by reference, and (iii) the
transfer of Common Stock outstanding will also constitute the transfer of the
Rights associated with such shares of Common Stock. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.

 

The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M. (New York City time) on June 10, 2019 (the “Final
Expiration Date”), unless the Rights Agreement is earlier terminated
or such date is extended or the Rights are earlier redeemed or exchanged by the
Company as described below.

 

As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.

 

In the event that a person becomes an Acquiring Person, each holder of
a Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value (as determined pursuant to the Rights Agreement) equal
to two times the exercise price of the Right. Notwithstanding any of the
foregoing, following  the occurrence of the event described in this
paragraph, all Rights that are,  or (under certain
circumstances specified in the Rights Agreement) were,  beneficially
owned by any Acquiring Person will be null and void.

 

In the event that a person becomes an
Acquiring Person and (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation, (ii) the
Company engages in a merger or other business combination transaction in which
the Company is the surviving corporation and the Common Stock of the Company is
changed or exchanged, or (iii) 50% or more of the Company’s assets, cash
flow or earning power is sold or transferred, each holder of a Right (except
Rights which have previously been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the “Triggering Events.”

 

At any time after a person or group becomes
an Acquiring Person and prior to the acquisition by such person or group of 50%
or more of the outstanding Common Stock, the Board may exchange the Rights
(other than Rights owned by such person or group which have become null and
void), in whole or in part, for Common Stock at an exchange ratio of one share
of Common Stock per Right (subject to adjustment). If an insufficient number of
shares of

 

C-2

 

Common Stock are available for such exchange
despite the Company’s good faith efforts to authorize additional shares of
Common Stock, the Company will substitute a number of shares of Preferred Stock
or a fraction thereof for each share of Common Stock that would otherwise be
issuable.

 

The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Preferred Stock, (ii) if holders of the Preferred Stock are
granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash  dividends) or of subscription rights or
warrants (other than those referred to above).

 

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.

 

At any time prior to the Stock Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a price of $0.001 per Right (payable
in cash, Common Stock or other consideration deemed appropriate by the Board of
Directors) or amend the Rights Agreement to change the Final Expiration Date to
another date, including without limitation an earlier date. Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price.

 

Until a Right is exercised, the holder thereof, as such, will have no
separate rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends in respect of the Rights. 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 or in the event of the redemption of the Rights as set forth above.

 

Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Stock Acquisition Date. After
the Stock Acquisition Date, the provisions of the Rights Agreement may only be
amended by the Board in order to cure any ambiguity, to correct any defect or
inconsistency or to make changes which do not adversely affect the interests of
holders of Rights.

 

Copies of the form of Certificate of Designation and the Rights
Agreement have been or will be filed  with the Securities and Exchange Commission as an Exhibit to
a Registration  Statement on Form 8-A of the Company and as an Exhibit to a
Current Report on Form 8-K. A copy of the Rights Agreement is available
free of charge  from the Company. This description of the Rights Agreement and
the Rights does not purport to be complete and is qualified by reference to the
Rights Agreement.

 

C-3

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