Document:

Unassociated Document

    Manufacture
Factory Purchase and Sale Contract

    

    Item No.:
SK2010-003

    Contract
No.: SK2010CF-001

    

    Seller
(Party
A):                  Guangdong
Dongguan Yong Xu Paper Co., Ltd.

    

    Buyer
(Party
B):                  Suo
Ke (Tongchuan) Clean Energy Co. Ltd.

    

    In
accordance with relevant provisions in the Contract Law of People’s Republic of
China, both parties hereto, observing the principle of voluntariness, equality
and good faith, through consultation and consensus with regard to Party B’s
purchase of a manufacture factory (the “Premises”) from Party A, reach the
agreement as follows:

    

    
      	
              I.

            	
              General
      Information about Premises:

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      Premises Party B purchases from Party A is located in Liuyongwei
      Industrial Area of Wanjiang District in Dongguan City, Guangdong
      Province;

            

    

    
      	
               
      

            	
              2.

            	
              Involved
      Items of the Premises: land, factories, warehouses, as well as
      infrastructures for water, electricity and
  alike.

            

    

    

    
      	
              II.

            	
              Items
      under Agreement:

            

    

    

    
      	
               
      

            	
              1.

            	
              Party
      A shall complete infrastructure constructions prior to October 25, 2010,
      in accordance with the basic blueprints of manufacturing facilities
      provided by Party B.

            

    

    
      	
               
      

            	
              2.

            	
              Party
      A shall improve and perfect the supporting projects related to water and
      electricity in accordance to the technical standards required by Party
      B.

            

    

    

    
      	
              III.

            	
              Total
      Price of the Premises:

            

    

    

    The total
price of the Premises is RBM Thirty Seven Million and Two
Hundred Thousand (¥37,200,000
yuan).

    

    Including:

    1. Land: ¥24,000,000 yuan
(approximately 30 mu, subject to Land Certificate);

    2. Factories and supporting facilities:
¥13,200,000
yuan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              IV.

            	
              Payment
      Method and Time:

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      total price of the Premises will be paid in twice. Within 15 days after
      the date of this contract, Party B shall pay Party A 10% of the total
      price stipulated herein, namely RMB Three Million Seventy
      Hundred and Twenty Thousand (¥3,720,000
      yuan), as the deposit.

            

    

    

    (1) As
required by Party B, Party A shall hand the Premises over to Party B prior to
October 31, 2010. Upon the receipt of the handover, Party B shall pay to Party A
60% of the total price herein, namely RMB Twenty Four Million One
hundred and Eighty Thousand (¥ 24,180,000
yuan).

    

    (2) For
the remaining 25% of the total price hereunder, namely RMB Nine Million and Three
Hundred Thousand (¥9,300,000 yuan),
shall be paid off in one lump sum within 7 days after Party A has completed the
transaction procedures (subject to the Property Ownership Certificate verified
and issued by the Property Transaction Center). Party A shall be responsible for
all the costs incurred in the procedures of the property
transaction.

    

    
      	
               
      

            	
              2.

            	
              The
      amounts above shall be paid through bank account transfer. Any overdue
      payment will result in a surcharge as twice of bank interest. If Party B
      fails to make a payment for more than three months,  Party A is
      entitled to terminate the contract, and to receive a default penalty equal
      to 10% of the total transaction price hereunder on Party B’s
      part.  If Party A fails to transfer the Land Certificate and
      Property Certificate to Party B on schedule,  or leaves the land
      and property to a thrid party as pledge, this contract will become
      invalid. In such an event, Party A shall unconditionally return the
      purchase payments in full to Party B, in addition to a default penalty
      equal to 10% of the total transaction
price.

            

    

    

    
      	
              V.

            	
              Other
      Provisions

            

    

    

    
      	
               
      

            	
              1.

            	
              On
      the date of handover, both parties are required to join the construction
      and supervison units for the examination and approval of the Premises. The
      procedure of the handover shall be jointly handled by two or more
      representatives.

            

    

    

    
      	
               
      

            	
              2.

            	
              Up
      to the handover, Party A is solely liable for all of its dets and
      disputes.

            

    

    

    
      	
               
      

            	
              3.

            	
              Upon
      the completion of the sale of the Premises, Party B is entitled to manage
      and use the Premises, in which Party A has no right
    interfere.

            

    

    

    
      	
               
      

            	
              4.

            	
              The
      warranty of the Premises will be valid winthin one year after its
      handover.

            

    

    

    
      
        	
                VI.

              	
                Other
      matters not covered herein may be stipulated in supplemental agreements
      between both parties. Any supplemental agreement shall have the same legal
      validity as this
contract.

              

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              VII.

            	
              This
      contract becomes effective upon the signatures/seals of both
      parties.  This contract is executed in quadruplicate, with two
      to each party and all of them have the same legal
  validity.

            

    

     

    
      	
              Party
      A (seal):

            	
              Guangdong
      Dongguan Yong Xu Paper Co., Ltd (seal print
  present)

            

    

     

    
      	
              Address:

            	
              Liuyong
      Industrial Area, Wanjiang District in Dongguan City, Guangdong
      Province

            

    

     

    
      	
              Legal
      Representative (or the Entrustee):

            	
              /s/
      LEI Guangyou

            

    

     

    
      	
              Date:

            	
              August
      24, 2010

            

    

     

    
      	
              Party
      B (seal):

            	
              Suoke
      (Tongchuan) Clean Energy Co., Ltd. (seal print
  present)

            

    

     

    
      	
              Address:

            	
              Wangzuo
      International City, Building D, Rm. 1502, Tangyan Road,  High
      and New Technology District, Xi’an
City.

            

    

     

    
      	
              Legal
      Representative (or the Entrustee):

            	
              /s/
      REN Baowen

            

    

     

    
      	
              Date:

            	
              August
      24, 2010RIGHTS
AGREEMENT

     

    THIS
RIGHTS AGREEMENT, dated as of November 9, 2010, is made by and between
TOWERSTREAM CORPORATION, a Delaware corporation (the “Company”),
and Continental Stock Transfer & Trust Company, as Rights Agent (the “Rights
Agent”).

     

    WITNESSETH

     

    WHEREAS,
effective November 8, 2010 (the “Declaration
Date”) the Board of Directors of the Company authorized and declared a
dividend distribution of one right (a “Right”) for each share of the Common
Stock, par value $0.001 per share, of the Company (the “Common
Stock”) outstanding at the Close of Business on November 24, 2010 (the
“Record
Date”) and has further authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of this Rights
Agreement) with respect to each share of Common Stock issued between the Record
Date and the earliest of the Distribution Date and the Expiration Date (as such
terms are hereinafter defined).  Each Right shall represent the right
to purchase, upon the terms and subject to the conditions hereinafter set forth,
one one-one hundredth (1/100th) of a share (subject to adjustment) of the Series
A Preferred Stock, par value $0.001 per share, of the Company (the “Preferred
Stock”) having the rights and preferences set forth in the form of
Certificate of Designation of Rights, Preferences and Privileges of Series A
Preferred Stock attached hereto as Exhibit
A;

     

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

     

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

     

    “Acquiring
Person” shall mean (i) any Person (as hereinafter defined) who is an
Adverse Person (as hereinafter defined), or (ii) any Person who or which,
together with all Affiliates (as hereinafter defined) and Associates (as
hereinafter defined) of such Person, shall, subsequent to the Declaration Date,
become the Beneficial Owner (as hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding, but shall not include (x) any Exempt
Person (as hereinafter defined), (y) any Permitted Holder, or (z) any Person who
becomes a Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding solely because (1) of a change in the aggregate number of shares of
Common Stock outstanding since the last date on which such Person acquired
Beneficial Ownership of any shares of Common Stock, or (2) it acquired such
Beneficial Ownership in the good faith belief that such acquisition would not
(A) cause such Beneficial Ownership to equal or exceed 15% of the shares of
Common Stock then outstanding (or in the case of a Permitted Holder, the
percentage the Permitted Holder may hold without ceasing to be a Permitted
Holder) and such Person relied in good faith in computing the percentage of its
Beneficial Ownership on publicly filed reports or documents of the Company which
are inaccurate or out-of-date, or (B) otherwise cause a Distribution Date or the
adjustment provided for in Section 14 to
occur.  Notwithstanding clause (z) of the prior sentence, if any
Person that is not an Acquiring Person because of the operation of such clause
(z) does not reduce its Beneficial Ownership of shares of Common Stock to less
than 15% (or in the case of a Permitted Holder, the percentage the Permitted
Holder may hold without ceasing to be a Permitted Holder) by the Close of
Business on the fifth Business Day after notice from the Company (the date of
notice being the first day) that such Person’s Beneficial Ownership of Common
Stock equals or exceeds 15% (or in the case of a Permitted Holder, the
percentage the Permitted Holder may hold without ceasing to be a Permitted
Holder), such Person shall, at the end of such five Business Day period, become
an Acquiring Person (and clause (z) shall no longer apply to such
Person).  For purposes of this definition, the determination whether
any Person acted in “good faith” shall be conclusively determined by the Board
of Directors, acting by a vote of those directors of the Company whose approval
would be required to redeem the Rights under Section
25.  Notwithstanding the foregoing, the Board of Directors of
the Company may, in its discretion, determine that any Person shall not be
deemed to be an “Acquiring Person” for any purposes of this
Agreement.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Adverse
Person” shall mean any Person other than an Exempt Person who is declared
to be an Adverse Person by the Board of Directors of the Company upon a
determination that such Person, alone or together with its Affiliates and
Associates, has, at any time after the Declaration Date, become the Beneficial
Owner of a number of shares of Common Stock that the Board of Directors
determines to be substantial (which amount shall in no event be less than 10% of
the shares of Common Stock then outstanding) and a determination by a majority
of the Board of Directors after reasonable inquiry and investigation, including
consultation with such Persons as the Board of Directors shall deem appropriate,
that (i) such Beneficial Ownership by such Person is intended to cause the
Company to repurchase the shares of Common Stock beneficially owned by such
Person or to cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such Person with
short-term financial gain under circumstances where the Board of Directors
determines that the best long-term interest of the Company and its stockholders
would not be served by taking such action or entering into such transaction or
series of transactions at that time, or (ii) such Beneficial Ownership is
causing or reasonably likely to cause a material adverse impact on the business
or prospects of the Company.

     

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

     

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

     

    (i)           which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, is deemed to beneficially own (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement) or has the right to dispose of;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (ii)           which
such Person or any of such Person’s Affiliates or Associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), arrangement
or understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided,
however, that a Person
shall not be deemed the “Beneficial Owner”  of or to “beneficially
own,” or to have the “Beneficial Ownership” of, (1) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for payment or exchange; or (2) securities issuable upon exercise of Rights at
any time prior to the occurrence of the Distribution Date, (B) the right to
vote, 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,” or to have the
“Beneficial Ownership” of, any security under this clause (ii)(B) as a result of
an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from a revocable proxy
or consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act, and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or

     

    (iii)           which
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s
Affiliates or Associates has any agreement (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (B) of subparagraph (ii) of this
definition) or disposing of any voting securities of the Company.

     

    “Board of
Directors” shall mean the Board of Directors of the Company or any duly
authorized committee thereof.

     

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

     

    “Certificate of
Designation” shall mean the Certificate of Designation of Rights,
Preferences and Privileges of Series A Preferred Stock, a copy of which is
attached hereto as Exhibit
A.

     

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

     

    “Common
Stock” when used with reference to the Company shall mean the shares of
Common Stock, presently par value $0.001 per share, of the Company, or any other
shares of capital stock of the Company into which the Common Stock shall be
reclassified or changed.  “Common Stock” when used with reference to
any Person other than the Company shall mean the Common Stock (or, in the case
of a trust, partnership or other unincorporated entity, the equivalent equity
interest) with the greatest voting power of such Person (or, (i) if such Person
is a Subsidiary of another Person, the Person which ultimately controls such
first-mentioned Person, or (ii) if such Person is ultimately controlled by two
or more Persons, the controlling Person having Common Stock or equivalent equity
interests with the greatest aggregate current market value (determined by
reference to the Current Market Price of such Common Stock or equivalent equity
interests), together with all rights and benefits (however denominated or
constituted) relating to such Common Stock (including, without limitation, any
rights or warrants to acquire additional shares of such Common Stock or other
securities or assets, or to participate in any trust for the benefit of holders
of such shares, or to share in the benefits of any agreements or other
arrangements for the benefit of such holders), whether or not such rights are
yet exercisable, and together with any other securities which are represented by
the certificates for such shares or are transferred in connection with transfers
of such shares.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Current Market
Price” per share of Common Stock or Preferred Stock (“Stock”) on
any date shall be deemed to be the average of the daily closing price per share
of Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Current Market Price per share of Stock is determined during a period
following the announcement by the issuer of such Stock of (A) a dividend or
distribution on such Stock, or (B) any subdivision, combination or
reclassification of such Stock, and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification of such Stock, then, and
in such case, the “Current Market Price” shall be proportionately adjusted to
take into account ex-dividend or ex-distribution 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 NASDAQ or, if the Stock is not listed or admitted to trading on
NASDAQ, as reported in the principal consolidated transaction reporting system
with respect to securities listed or the principal national securities exchange
on which the Stock is listed or admitted to trading or, if the Stock is not
listed or admitted to trading on any national securities exchange, the last
price or, if not so quoted, the average of the closing bid and asked prices per
share for the securities in the over-the-counter market, as reported by the
Financial Industry Regulatory Authority, Inc. (“FINRA”) or such other system
then in use, or, if on any such date the security is not quoted by such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Stock selected by the Board of
Directors.  If on any such date no market maker is making a market in
the Stock the fair value of such shares on such date as determined in good faith
by the Board of Directors shall be used.  The term “Trading Day” shall
mean a day on which the principal national securities exchange on which the
shares of the Stock are listed or admitted to trading or traded is open for the
transaction of business or, if the Stock is 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 of Common Stock as determined in
good faith by the Board of Directors.

     

    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 traded, the
“Current Market Price” per share of the Preferred Stock shall be conclusively
deemed to be an amount equal to the Current Market Price per share of the Common
Stock as determined pursuant to the immediately preceding paragraph, multiplied
by the Formula Number.  If neither the Common Stock nor the Preferred
Stock are publicly held or so listed or traded, the “Current Market Price” per
share of the Preferred Stock shall mean the fair value per share as determined
in good faith by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive and binding
for all purposes.  For all purposes of this Rights Agreement, the
Current Market Price of one one-hundredth of a share of Preferred Stock shall be
equal to the Current Market Price of one share of Preferred Stock divided by
1,000.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Distribution
Date” shall have the meaning set forth in Section 3
hereof.

     

    “Exchange
Act” shall mean the Securities Exchange Act of 1934, as in effect on the
date in question, unless otherwise specifically provided.

     

    “Exempt
Person” shall include (i) the Company, (ii) any Subsidiary (as
hereinafter defined) of the Company, (iii) any employee benefit plan of the
Company or any of its Subsidiaries, or any entity holding shares of Common Stock
which was organized, appointed or established by the Company or any Subsidiary
of the Company for or pursuant to the terms of any such plan.

     

    “Permitted
Acquisition” shall mean an acquisition of shares of Common Stock by a
Person in a transaction or series of transactions, which has been previously
approved by a majority of the Board of Directors.

     

    “Permitted
Holder” shall mean a Person who acquires Beneficial Ownership of the
Common Stock of the Company pursuant to a Permitted Acquisition; provided, however, a Permitted Holder
shall remain a Permitted Holder so long as the aggregate Beneficial Ownership of
Common Stock held by such Person does not exceed that number of shares of Common
Stock held by such Person immediately following the Permitted Acquisition
pursuant to which such Person became a Permitted Holder (reduced by the number
of shares of Common Stock from time to time disposed of by such Person) plus a
number of additional shares of Common Stock equal to 1% of the then outstanding
shares of Common Stock of the Company; provided, however, any shares of Common
Stock issued or issuable to a Permitted Holder pursuant to employee benefit
plans maintained by the Company for the benefit of its employees, directors and
consultants shall be disregarded and not counted for purposes of calculating the
limitations imposed by the immediately preceding sentence.

     

    “Person”
shall mean any individual, firm, corporation, trust, partnership or other
entity, whether similar or dissimilar to the foregoing.

     

    “Preferred
Stock” shall mean the Series A Preferred Stock, par value $0.001 per
share, of the Company having the rights and preferences set forth in the form of
Certificate of Designation.

     

    “Purchase
Price” with respect to each Right shall mean $18.00, as such amount may
from time to time be adjusted as provided herein, and shall be payable in lawful
money of the United States of America.  All references herein to the
Purchase Price shall mean the Purchase Price as in effect at the time in
question.

     

    “Record
Date” shall mean November 24, 2010.

     

    “Redemption
Date” shall have the meaning set forth in Section
25.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Redemption
Price” with respect to each Right shall mean $0.001, as such amount may
from time to time be adjusted in accordance with Section
25.  All references herein to the Redemption Price shall mean
the Redemption Price in effect at the time in question.

     

    “Right
Certificate” shall mean a certificate representing a Right in
substantially the form attached hereto as Exhibit
B.

     

    “Rights”
shall mean the rights to purchase shares of Preferred Stock, Common Stock and/or
other securities, as the case may be, as provided in this Rights
Agreement.

     

    “Securities
Act” shall mean the Securities Act of 1933, as in effect on the date in
question, unless otherwise specifically provided.

     

    “Stock Acquisition
Date” shall mean 5:00 P.M., Eastern time, on the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.

     

    “Subsidiary”
shall mean, with respect to any Person, any other Person of which securities or
other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors of such Person (if
such Person is a corporation) or to participate in the management and control of
such Person (if such Person is not a corporation), are at the time directly or
indirectly owned by such first Person.

     

    The terms
set forth below are defined in the Sections indicated below:

     

    
      
        	
                Term

              	 
      	
                Section

              
	
                Declaration
      Date

              	 
      	
                RECITAL

              
	
                Distribution
      Date

              	 
      	
                3(a)

              
	
                Exchange
      Consideration

              	 
      	
                16

              
	
                Expiration
      Date

              	 
      	
                7(a)

              
	
                Final
      Expiration Date

              	 
      	
                7(a)

              
	
                Formula
      Number

              	 
      	
                Exhibit
      A

              
	
                Principal
      Party

              	 
      	
                14(b)

              
	
                Summary
      of Rights

              	 
      	
                3(b)

              

      

    

    

    Section
2.       Appointment
of Rights Agent.  The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.  The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.  In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Section
3.        Issuance
of Right Certificates.

     

    (a)      Until
the earlier of (i) the Close of Business on the tenth day after the Stock
Acquisition Date (including any such date which is after the Declaration Date
and prior to the issuance of the Rights), and (ii) the Close of Business on the
tenth day (or such later day as may be determined by action of the Board of
Directors) after the date of the first public announcement (as defined in Rule
14d-2 under the Exchange Act) of a tender or exchange offer by any Person (other
than an Exempt Person) to acquire (when added to any equity securities as to
which such Person is the Beneficial Owner immediately prior to such
commencement) Beneficial Ownership of that number of shares of the issued and
outstanding Common Stock which would cause such Person to become an Acquiring
Person pursuant to the terms of this Agreement (including any such date which is
after the Declaration Date and prior to the issuance of the Rights) (the earlier
of such dates referred to in clauses (i) and (ii) of this Section 3(a) being
herein referred to as the “Distribution
Date”), (A) the Rights will be evidenced (subject to the provisions of
Section 3(b)
hereof) by the certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for shares of Common Stock shall
also be deemed to be Right Certificates (as such term is hereinafter defined))
and not by separate Right Certificates, and (B) the Rights (and the right to
receive Right Certificates) will be transferable only in connection with the
transfer of the underlying Common Stock; provided, that if the
Distribution Date would be prior to the Record Date, the Record Date shall be
the Distribution Date, and provided, further, that (x) if,
following the occurrence of the Stock Acquisition Date and prior to the
Distribution Date, (1) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock of the
Company in one transaction or a series of transactions (not directly or
indirectly involving the Company or any of its Subsidiaries) such that such
Person is thereafter the Beneficial Owner of less than 15% (or (a) in the case
of a Permitted Holder, the percentage the Permitted Holder may hold without
ceasing to be a Permitted Holder, and (b) in the case of an Adverse Person, the
percentage such Person may hold as determined by the Board of Directors, which
in no event may the Board of Directors require to be less than 10% of the shares
of Common Stock then outstanding, so that the Board of Directors no longer
declares such Person to be an Adverse Person) of the outstanding Common Stock of
the Company, (2) there are no other Persons, immediately following the
occurrence of the event described in clause (1), who are Acquiring Persons, and
(3) the Board of Directors of the Company shall so approve, then, for purposes
of this Agreement, the Stock Acquisition Date shall be deemed never to have
occurred, and (y) if a tender or exchange offer referred to in clauses (ii) or
(iii) above is canceled or withdrawn prior to the Distribution Date, such offer
shall be deemed, for purposes of this Agreement, never to have been
made.  As soon as practicable after the Company has notified the
Rights Agent of the occurrence of the Distribution Date, the Rights Agent will
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, one or more Right
Certificates, evidencing one Right for each share of Common Stock so held,
subject to adjustment as herein provided.  As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

     

    (b)      On
the Record Date or as soon as practicable thereafter, the Company will send a
copy of a Summary of Rights to Purchase Preferred Stock, in substantially the
form of Exhibit
C hereto (the “Summary of
Rights”), by first-class, postage prepaid mail, to each record holder of
the Common Stock on the Record Date, as shown by the records of the Company, at
the address of such holder shown on the records of the Company.  With
respect to certificates for Common Stock outstanding as of the Record Date,
until the Distribution Date (or the earlier redemption, exchange, expiration or
termination of the Rights), the Rights will be evidenced solely by such
certificates for Common Stock registered in the names of the holders of the
Common Stock and the registered holders of the Common Stock shall also be
registered holders of the associated Rights.  Until the Distribution
Date (or the earlier redemption, exchange, expiration or termination of the
Rights), the surrender for transfer of any certificate for Common Stock in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificates.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (c)      The
Company will mail to any record holder of a Right (including, prior to the
Distribution Date, a record holder of Common Stock) a copy of this Rights
Agreement, without charge, within ten Business Days of receipt of a written
request therefor.

     

    (d)      Rights
shall be issued in respect of all shares of Common Stock which are issued or
sold out of treasury after the Record Date but prior to the Distribution Date
(or the earlier redemption, exchange, expiration or termination of the
Rights).  All certificates for Common Stock issued or sold after the
Record Date but prior to the earlier of the Distribution Date and the Expiration
Date shall be deemed also to be certificates for Rights and shall have impressed
on, printed on, written on or otherwise affixed to them the following
legend:

     

    This certificate also evidences and
entitles the holder hereof to certain Rights as set forth in a Rights Agreement
between Towerstream Corporation (the “Company”) and Continental Stock Transfer
& Trust Company as Rights Agent, dated as of November 9, 2010, as it may
from time to time be supplemented or amended pursuant to its terms (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of the
Company.  Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may be evidenced by
separate certificates and no longer be evidenced by this
certificate.  The Company will mail to the holder of record of this
certificate a copy of the Rights Agreement without charge within ten business
days after receipt of a written request therefor.  Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.

     

    With
respect to certificates containing the foregoing legend, until the Distribution
Date (or the earlier redemption, exchange, expiration or termination of the
Rights) the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificates.  Notwithstanding this clause (d), the omission of a
legend shall not affect the enforceability of any part of this Rights Agreement
or the rights of any holder of Rights.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Section
4.        Form of
Right Certificates.  The Right Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall be substantially in the form of 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 Rights Agreement, or as may be
required to comply with any applicable law, rule or regulation or with any rule
or regulation of any stock exchange or quotation system on which the Rights may
from time to time be listed, or to conform to usage.  Subject to the
provisions of Section 7, Section 11 and Section 24 hereof,
the Right Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of one one-hundredth (1/100th) of one share of Preferred Stock as shall
be set forth therein at the Purchase Price set forth therein, but the number and
type of shares of Preferred Stock, Common Stock and other securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.  To the extent provided in Section 7(f) hereof,
certain Rights Certificates shall contain the legend provided for
therein.

     

    Section
5.        Execution,
Countersignature and Registration.

     

    (a)      The
Right Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its Chief Executive Officer, President, Chief Operating Officer,
Chief Financial Officer or any Vice President or the Secretary, either manually
or by facsimile signature.  The Right Certificates shall be
countersigned by the Rights Agent via manual or facsimile signature and shall
not be valid for any purpose unless so countersigned.  In case any
officer of the Company whose manual or facsimile signature is affixed to the
Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
issued and delivered with the same force and effect as though the Person who
signed such Right Certificates had not ceased to be such officer of the
Company.  Any Right Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such Person was not such an officer.

     

    (b)      Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender of
Right Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates issued hereunder.  Such books shall
show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

    
      
         

      

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

     

    (a)      Subject
to the provisions of Section 7(f) and
Section 15
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 Right Certificate
or Right Certificates (other than Right Certificates representing Rights that
have become null and void pursuant to Section 7(f) hereof
or that have been exchanged pursuant to Section 16 hereof)
may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, representing, in the aggregate, the same
number of Rights as the Right Certificate or Right Certificates surrendered then
represented.  Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose.  Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner, former
Beneficial Owner and transferee Beneficial Owner (and Associates and Affiliates
of the foregoing) as the Company shall reasonably request.  Thereupon
the Rights Agent shall, subject to Section 7(f) and
Section 15
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested.  The Company may require payment by such holder of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

     

    (b)      Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

     

    (c)      Notwithstanding
any other provision hereof, the Company and the Rights Agent may amend this
Rights Agreement to provide for uncertificated Rights in addition to or in place
of Rights evidenced by Right Certificates.

     

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

     

    (a)      Subject
to Section
7(f), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase Price at any
time after the Distribution Date and prior to the earlier of (i) the Close of
Business on November 8, 2020 (the “Final Expiration
Date”), (ii) the Redemption Date and (iii) the time at which all
exercisable Rights are exchanged pursuant to Section 16 hereof
(the earlier of (i), (ii) and (iii) being herein referred to as the “Expiration
Date”), one one-hundredth (1/100th) of a share of Preferred Stock,
subject to adjustment from time to time as provided in Sections 11, 12 and 14
hereof.

     

    (b)     
The registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date, upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with payment
of the Purchase Price for each one one-hundredth (1/100th) of a share of
Preferred Stock as to which the Rights are exercised, at or prior to the
Expiration Date.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (c)      The
Purchase Price for each one one-hundredth (1/100th) of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $18.00, shall be
subject to adjustment from time to time as provided in Sections 11, 12 and 14 hereof and shall,
except as otherwise provided in this Section 7(c), be
payable in lawful money of the United States of America in accordance with Section 7(d)
below.  In lieu of the cash payment referred to in the immediately
preceding sentence, following the occurrence of a Distribution Date, the
registered holder of a Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part upon surrender
of the Right Certificate together with an election to exercise such Rights
without payment of cash on the reverse side thereof duly
completed.  With respect to any such Rights as to which such an
election is made, the holder shall receive a number of one one-hundredths
(1/100ths) of a share of Preferred Stock, Common Stock and/or other securities,
as the case may be, having a value equal to the difference between (i) the value
of the Preferred Stock, Common Stock and/or other securities, as the case may
be, that would have been issuable upon payment of the Purchase Price and (ii)
the Purchase Price.  For purposes of this Section 7(c), the
value of any securities shall be the Current Market Price thereof (or of the
security to which such security is deemed for purposes of this Agreement to be
an equivalent) on the Trading Day immediately preceding the Distribution
Date.(d)  Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-hundredth (1/100th) of a share of Preferred Stock, Common
Stock and/or other securities, as the case may be, to be purchased, and an
amount equal to any applicable transfer tax, in cash or by certified check or
bank draft payable to the order of the Company, or a duly completed election to
exercise without payment of cash, the Rights Agent shall, subject to Section 22(k) hereof,
thereupon promptly (i)(A) requisition from any transfer agent of the Preferred
Stock, Common Stock and/or other securities, as the case may be, (or make
available, if the Rights Agent is the transfer agent) certificates for the total
number of shares of Preferred Stock, Common Stock and/or other securities, as
the case may be, to be purchased or acquired and/or (B) requisition from the
depositary agent depositary receipts representing such number of fractional
shares of Preferred Stock, Common Stock and/or other securities, as the case may
be, as are to be purchased, in which case certificates for the fractional shares
of Preferred Stock, Common Stock and/or other securities, as the case may be, so
represented shall be deposited with the depositary agent (and the Company hereby
irrevocably authorizes and directs its transfer agent and any such depositary
agent to comply with all such requests), (ii) when appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 15 hereof,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, promptly deliver any
such cash to or upon the order of the registered holder of such Right
Certificate.  In the event that the Company is obligated to issue
other securities (including Common Stock of the Company) and/or distribute cash
or other property pursuant to Sections 9, 11, 12 or 14 hereof, the
Company will make all arrangements necessary so that such other securities, cash
or other property are available for distribution by the Rights Agent, if and
when appropriate.

     

    (e)      In
case the registered holder of any Right Certificate shall exercise less than all
the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 15
hereof.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (f)       Notwithstanding
anything in this Rights Agreement to the contrary, from and after the
Distribution Date, any Rights beneficially owned by (i) an Acquiring Person or
any Affiliate or Associate thereof, (ii) a transferee of an Acquiring Person or
any Affiliate or Associate thereof, (iii) a transferee of an Acquiring Person
(or Associate or Affiliate thereof) who becomes the transferee of such Rights
concurrently with such Acquiring Person becoming such or at any time thereafter,
or (iv) a transferee of an Acquiring Person (or Associate of Affiliate thereof)
who becomes a transferee prior to the Acquiring Person becoming such and
receives the Rights pursuant to either (A) a transfer (whether or not for
consideration) by the Acquiring Person to holders of its stock or other equity
securities 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 of Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(f), shall
be null and void, and any existing or subsequent holder of any such Right shall
not have any right to exercise or transfer any such Right.  Any Right
Certificate issued pursuant to this Rights Agreement that represents Rights
beneficially owned by any Person referred to in clause (A) or (B) above, and any
Right Certificate issued upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:

     

    The
Rights represented by this Right Certificate are or were beneficially owned by a
Person who is, was or became an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person (as those terms are defined in the Rights
Agreement).  This Right Certificate and the Rights represented hereby
may become null and void in the circumstances specified in the Rights
Agreement.

     

    The
Company shall use all reasonable efforts to comply with this Section 7(f), but
neither it nor the Rights Agent shall have any liability to any Person as a
result of the failure to make any determination with respect to an Acquiring
Person, or its Associates, Affiliates or any transferees of the foregoing.

     

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

     

    Section
8.       Cancellation
and Destruction of Right Certificates.  All Right Certificates
surrendered or presented for the purpose of exercise, transfer, split-up,
combination or exchange shall, and any Right Certificate representing Rights
that have become null and void and non-transferable pursuant to Section 7(f)
surrendered or presented for any purpose shall, if surrendered to the Company or
to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement.  The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company.  Subject to applicable law and regulation,
the Rights Agent shall maintain in a retrievable database electronic records of
all cancelled or destroyed Rights Certificates which have been cancelled or
destroyed by the Rights Agent.  The Rights Agent shall maintain such
electronic records or physical records for the time period required by
applicable law and regulation. Upon written request of the Company (and at the
expense of the Company), the Rights Agent shall provide to the Company or its
designee copies of such electronic records or physical records relating to
Rights Certificates cancelled or destroyed by the Rights Agent.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Section
9.        Reservation and Availability
of Shares.

     

    (a)      The
Company covenants and agrees that it shall use its best efforts to at all times
cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock, Common Stock and/or other securities, as the case may
be, the number of shares of Preferred Stock, Common Stock and/or other
securities, as the case may be, that, as provided in this Agreement, will be
sufficient to permit the exercise in full of all outstanding
Rights.

     

    (b)      In
the event that there shall not be sufficient shares of Preferred Stock, Common
Stock and/or other securities, as the case may be, issued but not outstanding or
authorized but unissued to permit the exercise or exchange of Rights in
accordance with Section 7 and
Section 16, the
Company covenants and agrees that it will take all such action as may be
necessary to authorize additional Preferred Stock, Common Stock and/or other
securities, as the case may be, for issuance upon the exercise or exchange of
Rights pursuant to Section 7 and Section 16; provided, however, that if the
Company is unable to cause the authorization of additional shares of Preferred
Stock, Common Stock and/or other securities, as the case may be, then the
Company shall, or in lieu of seeking any such authorization, the Company may, to
the extent necessary and permitted by applicable law and any agreements or
instruments in effect prior to the Distribution Date to which it is a party,
(A) upon surrender of a Right, pay cash equal to the Purchase Price in lieu
of issuing Preferred Stock, Common Stock and/or other securities, as the case
may be, and requiring payment therefor, (B) upon due exercise of a Right and
payment of the Purchase Price due and payable with respect to each Right which
is exercised, distribute a combination of Preferred Stock, Common Stock, cash
and/or other equity securities and/or debt securities having an aggregate value
equal to the value of the Preferred Stock, Common Stock and/or other securities,
as the case may be, which otherwise would have been issuable pursuant to Section 7 or Section
16.  To the extent that any legal or contractual restrictions
(pursuant to agreements or instruments in effect prior to the Distribution Date
to which it is party) prevent the Company from paying the full amount payable in
accordance with the foregoing sentence, the Company shall pay to holders of the
Rights as to which such payments are being made all amounts which are not then
restricted on a pro rata basis as such payments become permissible under such
legal or contractual restrictions until such payments have been paid in
full.

     

    (c)      The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of Preferred Stock and/or Common Stock or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares of Preferred Stock or Common Stock
or other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable
shares.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (d)      The
Company covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Right Certificates or of any shares of Preferred
Stock and/or Common Stock or other securities, as the case may be, upon exercise
of Rights.  The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer involved in the
transfer or delivery of Right Certificates or the issuance or delivery of
certificates or depository receipts for shares of Preferred Stock and/or Common
Stock or other securities, as the case may be, in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates or depository receipts for
shares of Preferred Stock and/or Common Stock or other securities, as the case
may be, upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company’s satisfaction
that no such tax is due.

     

    (e)      So
long as the shares of Preferred Stock, Common Stock and/or other securities, as
the case may be, issuable upon the exercise of the Rights may be listed on any
national securities exchange or quoted by FINRA or on any other automated
quotation service, 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 or quoted upon official notice of
issuance of such exercise.

     

    (f)       The
Company shall, unless an appropriate exemption from the provisions of the Act is
available, use its best efforts (i) to file, as soon as practicable following
the Stock Acquisition Date or at such earlier date as may be required by law, as
the case may be, a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act
and the rules and regulations promulgated by the Securities Exchange Commission
thereunder) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the expiration of the
Rights.  The Company will also take such action as may be appropriate
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(f), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective; provided, however, that no such
suspension shall remain effective after, and the Rights without any further
action by the Company or any other Person become exercisable immediately upon,
the effectiveness of such Registration Statement.  Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect.  Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable (x) unless and until the
registration statement under the Act referred to above shall have been declared
effective by the Securities and Exchange Commission, (y) in any jurisdiction,
unless and until any requisite state securities or “blue sky” qualification in
such jurisdiction shall have been obtained, and (z) in a jurisdiction in which
the exercise of such Right shall not then be permitted under applicable
law.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

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

     

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

     

    (a)      (i)           In
the event that the Company shall at any time after the date of this Rights
Agreement (A) declare or pay a dividend on the Preferred Stock which is payable
in shares of Preferred Stock or other securities of the Company, (B) subdivide
or split the outstanding shares of Preferred Stock into a greater number of
shares, (C) combine or consolidate the outstanding shares of Preferred Stock
into a smaller number of shares of Preferred Stock or effect a reverse split of
the outstanding shares of Preferred Stock 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 entity), except as otherwise provided in
this Section
7(f) or 11, the Purchase
Price in effect at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock or interests
therein issuable upon exercise of a Right 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 an amount equal to (x) the Purchase Price
in effect immediately prior to the record date or effective date of such
dividend, subdivision, combination or reclassification multiplied by (y) the
number of one one-hundredth (1/100th) of a share of Preferred Stock, or the
number of shares of capital stock, as the case may be, as to which a Right was
exercisable immediately prior to such date, the aggregate number and kind of
shares of Preferred Stock or of capital stock or interests therein which, if
such Right had been exercised immediately prior to such date he would have owned
upon such exercise and been entitled to receive, or would be deemed to have
owned, by virtue of such dividend, subdivision, combination or
reclassification.  If an event occurs which would require an
adjustment under both this Section 11(a)(i) and
Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section
11(a)(ii) hereof.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (ii)           Subject
to the second proviso of the first sentence of Section 3(a), and
Sections 14(a)
and 16 of this
Agreement, in the event that the Stock Acquisition Date occurs, then, subject to
the last sentence of Section 25(b) hereof,
and in each such case, proper provision shall be made so that each holder of a
Right (except as otherwise provided in Section 7(f) hereof)
thereafter (or if the Distribution Date has not occurred, upon the Distribution
Date) shall have the right to receive, upon exercise thereof at a price equal to
the current Purchase Price in accordance with this Rights Agreement, such number
of one one-hundredth (1/100th) of a share of Preferred Stock as shall equal the
result obtained by multiplying the Purchase Price by a fraction, the numerator
of which is the number of one one-hundredth  (1/100th) of a share of
Preferred Stock for which a Right is then exercisable, and the denominator of
which is 50% of the then Current Market Price of the Common Stock on the Stock
Acquisition Date.

     

    (b)         In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of shares of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or securities having the same rights, privileges
and preferences as the Preferred Stock (“Equivalent
Shares”)) or securities convertible into Preferred Stock or Equivalent
Shares at a price per share of Preferred Stock or per Equivalent Share (or
having a conversion or exercise price per share of Preferred Stock, if a
security convertible into or exercisable for Preferred Shares or Equivalent
Shares) less than the Current Market Price 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
date by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Preferred Stock and Equivalent Shares outstanding on such record date,
plus (ii) the number of shares of Preferred Stock which the aggregate offering
price of the total number of shares of Preferred Stock and/or Equivalent Shares
to be so 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 sum of (A) the number of shares
of Preferred Stock and Equivalent Shares outstanding on such record date plus
(B) the number of additional shares of Preferred Stock and/or Equivalent Shares
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
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agents and
shall be conclusive and binding on the Rights Agent and the holders of
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, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been
fixed.

    
      
         

      

      
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    (c)      In
case the Company shall fix a record date for the making of a distribution to all
holders of shares of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving entity) of evidences of indebtedness or assets (other than a
regular periodic cash dividend or a dividend payable in shares of Preferred
Stock), or convertible securities, 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 difference
between (i) the Current Market Price per share of Preferred Stock on such record
date, minus (ii) the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive and binding on the
Rights Agent and the holder of Rights) of the portion of the assets or evidences
of indebtedness to be so distributed or of such convertible securities,
subscription rights or warrants applicable to one share of Preferred Stock and
the denominator of which shall be such Current Market Price per share of
Preferred Stock.  Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to the Purchase Price which
would then be in effect if such record date had not been fixed.

     

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

     

    (e)      In
the event that at any time, as a result of an adjustment made pursuant to Sections 11, 12 or 14 hereof, the holder
of any Right thereafter exercised shall be entitled to receive upon exercise of
such Right any securities other than shares of Preferred Stock or interests
therein, thereafter the number or amount of such other securities 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
Section 11(a),
(b), (c), (d), (f), (g), (h), (i), (j) and (l), and the
provisions of Sections
7, 9,
10, 12, 14 and 15 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
securities.

     

    (f)       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-hundredth (1/100th) of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustments as provided herein.

    
      
         

      

      
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    (g)      Unless
the Company shall have exercised its election as provided in Section 11(h) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made
in Section
11(a), (b) and (c) hereof, 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-hundredth (1/100th) of a share of Preferred Stock (calculated
to the nearest one one-millionth of a share of Preferred Stock) obtained by (i)
multiplying (A) the number of one one-hundredth (1/100th) of a share of
Preferred Stock covered by a Right immediately prior to this adjustment by (B)
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.

     

    (h)      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-hundredth (1/100th) of a share of Preferred Stock purchasable upon the
exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredth (1/100th) of a share of Preferred Stock for which such 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 one-millionth of a share of Preferred
Stock) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price.  The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made.  This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least 10 days later than the date of the public
announcement.  If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(h), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section
15 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holder shall be entitled after such
adjustment.  Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.

     

    (i)       Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-hundredth (1/100th) of a share of Preferred Stock issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredth
(1/100th) of a share of Preferred Stock which were expressed in the initial
Right Certificates issued hereunder.

     

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

    
      
         

      

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

     

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

     

    (m)     The
Company covenants and agrees that it shall not at any time after the
Distribution Date (i) consolidate with, (ii) merge with or into, or (iii) sell
or transfer, in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person or Persons
(other than any of its subsidiaries in one or more transactions each of which
complies with Section
11(o) hereof) if (A) at the time or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments outstanding
or agreements or arrangements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (B)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of a Person who constitutes, or would constitute, the
“Principal Party” for the purposes of Section 14(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.

     

    (n)      In
the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise then by
payment of dividends in Common Stock) into a greater or lesser number of shares
of Common Stock, then in any such case (i) the number of one one-hundredth
(1/100th) of shares of Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredth (1/100th) of a share of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately before such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (ii) each share of Common Stock outstanding
immediately after such event shall be issued with respect to it that number of
rights which each share of Common Stock outstanding immediately prior to such
event has issued with respect to it.  The adjustments provided for in
this Section
11(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is
effected.

    
      
         

      

      
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    (o)      The
Company covenants and agrees that after the Distribution Date it will not,
except as permitted by Section 25 or Section 28 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 substantially diminish
or otherwise eliminate the benefits intended to be afforded by the
Rights.

     

    Section
12.     Certain
Adjustments.

     

    (a)      To
preserve the actual or potential economic value of the Rights, if at any time
after the date of this Rights Agreement there shall be any change in the Common
Stock or the Preferred Stock, whether by reason of stock dividends, stock
splits, recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or stock subscription rights, options or warrants to
holders of the Common Stock or Preferred Stock, as the case may be or otherwise
(other than a distribution of the Rights or regular quarterly cash dividends or
event described in Section 11 or 14), then in such
event the Board of Directors of the Company shall make such appropriate
adjustments in the number of shares of Preferred Stock, Common Stock or other
securities, as applicable issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each share of Common Stock) such that following such adjustment
such event shall not have had the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such event.

     

    (b)      All
Rights originally issued by the Company subsequent to any adjustment made to the
amount of Preferred Stock or other securities relating to a right shall evidence
the right to purchase, for the Purchase Price, the adjusted number and kind of
securities purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.

     

    (c)      Irrespective
of any adjustment or change in the Purchase Price or the number of shares of
Preferred Stock or number or kind of other securities issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the terms which were expressed in the initial Right
Certificates issued hereunder.

     

    (d)      In
any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Stock and/or other securities, if any, issuable upon such exercise
over and above the Preferred Stock and/or other securities, if any, issuable
before giving effect 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 securities upon the
occurrence of the event requiring such adjustment.

    
      
         

      

      
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    Section
13.     Certificate
of Adjusted Purchase Price or Number of Shares.  Whenever an
adjustment is made as provided in Section 11, 12 or 14 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and Common Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Right Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing Common Stock) in accordance
with Section 26
hereof.  The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained.

     

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

     

    (a)      In
the event that, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person (other than the Company or a Subsidiary
of the Company in one or more transactions each of which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving entity of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in one or more transactions each of which complies with Section 11(o) hereof)
shall consolidate with, or merge with and into the Company, and the Company
shall be the continuing or surviving entity of such merger and, in connection
with such merger, all or part of the 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 or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole and calculated on the basis of the Company’s most recent regularly
prepared financial statements) to any other Person or Persons (other than a
Subsidiary of the Company in one or more transactions each of which complies
with Section
11(o) hereof), then, and in each such case, appropriate provision shall
be made so that (i) each holder of a Right, except as provided in Section 7(f) 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 and nonassessable
shares of freely tradable Common Stock of the Principal Party (as hereinafter
defined, including the Company as successor thereto or as the surviving entity),
not subject to any rights of call or first refusal, liens, encumbrances or other
claims, as shall be equal to the result obtained by (A) multiplying the then
current Purchase Price by the number of one one-hundredth (1/100th) of a share
of Preferred Stock for which a Right is exercisable immediately prior to the
first occurrence of any event described in Section 14(a)(x),
(y) or (z) hereof, and (B)
dividing that product (which, following the first occurrence of any event
referred to in Section
14(a)(x), (y) or (z), 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 per share of Common Stock of such
Principal Party on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
“Company” shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof
shall apply to such Principal Party and (iv) such Principal Party shall take
such steps (including, but not limited to, the authorization and reservation of
a sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 14(a)) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights, provided, that upon the
subsequent occurrence of any merger, consolidation, sale of all or substantially
all of the assets, recapitalization, reclassification of shares, reorganization
or other extraordinary transaction in respect of such Principal Party, each
holder of the Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price, such cash, shares, rights, warrants and
other property which holder would have been entitled to receive had he, at the
time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the occurrence of any event described in
Section
14(a)(x), (y) or (z).

    
      
         

      

      
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    (b)         “Principal
Party” shall mean

     

    (i)           in
the case of any transaction described in clause (x) or (y) of Section 14(a) hereof:
(A) 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, or, if there
is more than one such issuer, the issuer the Common Stock of which has the
greatest aggregate market value of shares outstanding or (B) if no securities
are so issued, (x) the Person that is the other party to the merger, or, if
there is more than one such Person, the Person the Common Stock of which has the
greatest aggregate market value of shares outstanding or (y) if the Person that
is the other party to the merger does not survive the merger, the Person that
does survive the merger (including the Company if it survives) or (z) the Person
resulting from the consolidation; and

     

    (ii)           in
the case of any transaction described in clause (z) of Section 14(a) hereof,
the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions or, if
each person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of Common Stock having
the greatest aggregate market value of shares outstanding; provided, however, that in any such
case described in the foregoing clause (b)(i) or (ii), (A) if the Common Stock
of such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, “Principal
Party” shall refer to such other Person; and (B) 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 of shares outstanding, or (C) if such Person is owned,
directly or indirectly, by a joint venture formed by two or more persons that
are not owned, directly or indirectly, by the same person, the rules set forth
in (A) and (B) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of both or
all of such joint venturers, and the Principal Party in each such case shall
bear the obligations set forth in this Section 14 in the
same ratio as its interest in such Person bears to the total of such
interests.

    
      
         

      

      
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    (c)         The
Company shall not enter into any transaction of the kind referred to in this
Section 14 if
at the time of such transaction there are rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights.  The Company shall
not agree to consummate or consummate any such consolidation, merger, sale or
transfer unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 14 and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement so providing, confirming
that the requirements of Sections 14(a) and
(b) hereof
shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Agreement as the same shall have been assumed
by the Principal Party pursuant to Sections 14(a) and
(b) hereof and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in Section 14(a), the
Principal Party will:

     

    (i)           prepare
and file a registration statement under the Act, if necessary, with respect to
the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts to cause such registration statement
to become effective as soon as practicable after such filing and to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the date of expiration of the Rights, and similarly comply with applicable
state securities laws; and

     

    (ii)           use
its best efforts, if the Common Stock of the Principal Party shall become listed
on a national securities exchange, to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on such
securities exchange and, if the Common Stock of the Principal Party shall not be
listed on a national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by FINRA or such other
system then in use; and

     

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

     

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

    
      
         

      

      
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    The
provisions of this Section 14 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.  If any event described in this Section 14 shall
occur at any time after the occurrence of a Stock Acquisition Date, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 14(a)
hereof.

     

    (d)      If
the Principal Party which is to be a party to a transaction referred to in this
Section 14 has
a provision in any of its authorized securities or in its Certificate of
Incorporation or Bylaws 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 the
transaction referred to in this Section 14, shares of
Common Stock of such Principal Party at less than the Current Market Price per
share 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 14) 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
14, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with or as a consequence of, the consummation of
the proposed transaction.

     

    Section
15.      Fractional
Rights and Fractional Shares.

     

    (a)      The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights.  In lieu of such
fractional Rights existing or arising subsequent to the Distribution Date, there
shall be paid to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Current Market Value of a whole
Right.  For the purposes of this Section 15(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 to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the bid and asked prices in the over-the-counter market, as
reported by FINRA 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 of Directors of the Company.  If on
any such date Rights are not quoted by any such organization and no professional
market maker is making such a market in the Rights, the fair value of the Rights
on such date as determined in good faith by the Board of Directors shall be
used.

    
      
         

      

      
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    (b)      The
Company shall not be required to issue fractional interests in the shares of
Preferred Stock (other than fractional interests which are integral multiples of
one one-hundredth (1/100th) of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional interests in
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth (1/100th) of a share of Preferred
Stock).  Fractional interests in shares of Preferred Stock in integral
multiples of one one-hundredth (1/100th) of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock represented by such depositary
receipts.  In lieu of fractional interests in shares of Preferred
Stock, the Company shall pay to the registered holders of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the Current Market Value of one share of
Preferred Stock or other securities of the Company on the date of
exercise.

     

    (c)      The
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock.  In lieu of fractional shares of Common Stock
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Market Value of one share of Common Stock on the date of
exercise.

     

    (d)      The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights subsequent to the Distribution Date, or any
fractional share of Preferred Stock upon exercise of Rights (except as provided
above).

     

    Section
16.      Exchange.

     

    (a)      The
Board of Directors of the Company may, at its option, at any time after a Stock
Acquisition Date (and, if the Distribution Date has not then occurred, after the
Distribution Date), exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that shall have become null and void and
nontransferable pursuant to the provisions of Section 7(f) hereof)
for consideration per Right consisting of one-half of the securities that would
be issuable at such time upon the exercise of one Right in accordance with Section 11(a) (the
consideration issuable per Right pursuant to this Section 16 being the
“Exchange
Consideration”).  The Board of Directors of the Company may, at
its option, issue, in substitution for Preferred Stock, shares of Common Stock
in an amount per whole share of Preferred Stock equal to the Formula Number if
there are sufficient shares of Common Stock issued but not outstanding or
authorized but unissued.  If the Board of Directors elects to exchange
all the Rights for Exchange Consideration pursuant to this Section 16 prior to
the physical distribution of the Rights Certificates, the Company may distribute
the Exchange Consideration in lieu of distributing Right Certificates, in which
case for purposes of this Rights Agreement holders of Rights shall be deemed to
have simultaneously received and surrendered for exchange Rights Certificates on
the date of such distribution.  Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at any time
after any Person (other than an Exempt Person or a Permitted Holder) which,
together with all Affiliates and Associates of such Person, becomes the
beneficial owner of 50% or more of the Common Stock
outstanding.

    
      
         

      

      
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    (b)      Any
action of the Board of Directors of the Company ordering the exchange of any
Rights pursuant to Section 16(a) shall
be irrevocable and, immediately upon the taking of such action and without any
further action and without any notice, the right to exercise any such Right
shall terminate and the only right thereafter of a holder of such Right shall be
to receive the Exchange Consideration in exchange for each such Right held by
such holder.  The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  The Company promptly shall mail a notice of any such
exchange to all 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 Rights for the Exchange Consideration
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 shall have become
null and void and nontransferable pursuant to the provisions of Section 7(f)) held by
each holder of Rights.

     

    Section
17.     Rights of
Action.  All rights of action in respect of this Rights
Agreement, to the extent any such rights exist, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of Common Stock); and any registered holder of any
Right 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 Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
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 Rights
Agreement and will be entitled to specific performance of the obligations under,
and injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Rights Agreement.

     

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

     

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

     

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

    
      
         

      

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

     

    (d)      notwithstanding
anything in this Rights 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,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company
must use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.

     

    Section
19.    Right
Certificate Holder Not Deemed a Stockholder.  No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of shares of Preferred Stock
or any interest therein or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
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 26 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.

     

    Section
20.     Concerning the Rights
Agent.

     

    (a)      In
the event that the Rights Agent is not the Company, the Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder.

     

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

    
      
         

      

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

     

    (a)      Any
trust, corporation or other entity into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any trust,
corporation or other entity resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party or any trust,
corporation or other entity succeeding to the corporate trust business of the
Rights Agent, shall be the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or any further action on
the part of any of the parties hereto, provided that such trust, corporation or
other entity would be eligible for appointment as a successor Rights Agent under
the provisions of Section 23
hereof.  In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.

     

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

     

    Section
22.     Duties of
Rights Agent.  The Rights Agent undertakes the duties and
obligations expressly set forth in this Rights Agreement and no implied duties
or obligations shall be read into this Rights Agreement against the Rights
Agent.  The Rights Agent undertakes the duties and obligations imposed
by this Rights Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound;

     

    (a)      The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.

    
      
         

      

      
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    (b)      Whenever
in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person or any Affiliate or Associate
thereof and the determination of Current Market Price) be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, the Chief
Operating Officer or any Vice President and by the Chief Financial Officer,
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.

     

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

     

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

     

    (e)      The
Rights Agent shall not be under any responsibility in respect of the validity of
this Rights Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Rights Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including
certain of the Rights becoming void pursuant to Section 7(f) hereof)
or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 12, 14, 16 or 25 hereof, or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock, Common Stock and/or other
securities, as the case may be,  to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock, Common Stock and/or other securities, as the case may
be,  will, when issued, be validly authorized and issued, fully paid
and nonassessable.

     

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

     

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

    
      
         

      

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

     

    (i)       The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents or for any
loss to the Company resulting from any such act, default, neglect or misconduct,
provided reasonable
care was exercised in the selection and continued employment
thereof.

     

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

     

    (k)      If,
with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate 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 of
transfer without first consulting with the Company.

     

    (l)       The
Company agrees to indemnify and to hold the Rights Agent harmless against any
loss, liability, damage or expense (including reasonable fees and expenses of
counsel) which the Rights Agent may incur resulting from its actions as Rights
Agent pursuant to this Rights Agreement; provided, however, that the Rights
Agent shall not be indemnified or held harmless with respect to any such loss,
liability, damage or expense incurred by the Rights Agent as a result of, or
arising out of, its own gross negligence, bad faith or willful
misconduct.  In no case shall the Company be liable with respect to
any action, proceeding, suit or claim against the Rights Agent unless the Rights
Agent shall have notified the Company, by letter or by facsimile confirmed by
letter, of the assertion of an action, proceeding, suit or claim against the
Rights Agent, promptly after the Rights Agent shall have notice of any such
assertion of an action, proceeding, suit or claim or have been served with the
summons or other first legal process giving information as to the nature and
basis of the action, proceeding, suit or claim.  The Company shall be
entitled to participate at its own expense in the defense of any such action,
proceeding, suit or claim, and, if the Company so elects, the Company shall
assume the defense of any such action, proceeding, suit or claim.  In
the event that the Company assumes such defense, the Company shall not
thereafter be liable for the fees and expenses of any additional counsel
retained by the Rights Agent, so long as the Company shall retain counsel
satisfactory to the Rights Agent, in the exercise of its reasonable judgment, to
defend such action, proceeding, suit or claim.  The Rights Agent
agrees not to settle any litigation in connection with any action, proceeding,
suit or claim with respect to which it may seek indemnification from the Company
without the prior written consent of the Company.

    
      
         

      

      
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    Section
23.     Change of
Rights Agent.  The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Rights Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent of the
shares of Common Stock and Preferred Stock, if any, by registered or certified
mail, and, subsequent to the Distribution Date, to the holders of the Right
Certificates by first-class mail.  The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, if any, by registered or
certified mail, and subsequent to the Distribution Date, to the holders of the
Right Certificates by first-class mail.  If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent.  If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights
Agent.  Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be a corporation organized and doing business under
the laws of the United States or of any state at the United States, in good
standing, having a principal office in the United States of America, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by federal or state
authority.  After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective date of 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,
subsequent to the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates.  Failure to give any
notice provided for in this Section 23, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

     

    Section
24.    Issuance
of New Right Certificates.  Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
Preferred Stock, Common Stock and/or other securities, as the case may be,
purchasable under the Right Certificates made in accordance with the provisions
of this Rights Agreement.  In addition, if deemed necessary or
appropriate by the Board of Directors of the Company, the Company may issue
Right Certificates representing the appropriate number of Rights in connection
with the issuance or sale of Common Stock following the Distribution Date but
prior to the Expiration Date; provided, however, that (a) no such
Right  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 Right Certificate would be issued, and (b) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

    
      
         

      

      
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    Section
25.      Redemption.

     

    (a)      The
Company may, by resolution of the Board of Directors, at its option, at any time
prior to the earlier to occur of (i) the Close of Business on the tenth day
following the Stock Acquisition Date, and (ii) the Close of Business on the
Final Expiration Date, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right (the date of such
redemption being the “Redemption
Date”), appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the “Redemption
Price”).  The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock or Preferred Stock (based on the Current
Market Price of the Common Stock or Preferred Stock, as applicable at the time
of redemption) or any other form of consideration deemed appropriate by the
Board of Directors.

     

    (b)      If,
following the occurrence of a Stock Acquisition Date and prior to the
Distribution Date, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock of the
Company in one transaction, or a series of transactions (not directly or
indirectly involving the Company or any of its Subsidiaries), which did not
result in an event described in Section 14 hereof,
such that such Person is thereafter a Beneficial Owner of less than 15% (or (a)
in the case of a Permitted Holder, the percentage the Permitted Holder may hold
without ceasing to be a Permitted Holder, and (b) in the case of an Adverse
Person, the percentage such Person may hold as determined by the Board of
Directors, which in no event may the Board of Directors require to be less than
10% of the shares of Common Stock then outstanding, so that the Board of
Directors no longer declares such Person to be an Adverse Person)  of
the outstanding Common Stock of the Company, (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i), who
are Acquiring Persons, and (iii) the Board of Directors of the Company shall so
approve, then the Company’s right of redemption provided in subparagraph (a) of
this Section 25
shall be reinstated and thereafter all outstanding Rights shall again be subject
to the provisions of this Section
25.  Notwithstanding anything to the contrary contained in this
Rights Agreement, the Rights shall not be exercisable after the first occurrence
of a Stock Acquisition Date until such time as the Company’s right of redemption
hereunder has expired.

     

    (c)      Immediately
upon the action of the Board of Directors of the Company electing to redeem the
Rights (or, if such redemption is subject to conditions, immediately upon
satisfaction of such conditions), evidence of which shall have been filed with
the Rights Agent, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held.  Promptly (but, in any event, within ten days) after the action
of the Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent for the
Common Stock.  Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made.  Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than as specifically set forth
in this Section
25, and other than in connection with the purchase, acquisition or
redemption of Common Stock prior to the Distribution Date.

    
      
         

      

      
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    Section
26.      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 securities of the Company of any class to the
holders of its shares of Preferred Stock or to make any other distribution to
the holders of shares of Preferred Stock (other than a regular periodic cash
dividend), or (ii) to offer to the holders of its shares of Preferred Stock
rights, options or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or securities convertible into shares of Preferred
Stock, or (iii) to effect any reclassification of its shares of Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, (i) the Company shall give
to each holder of a Right, to the extent feasible and in accordance with Section 26, a notice
of such proposed action, which notice shall specify the proposed event and the
consequences of the event to the holders of Rights under Section 11(a), Section 12 or Section 14 hereof, as
the case may be, and, upon consummating such transaction, shall similarly give
notice thereof to each holder of Rights and (ii) all references in the preceding
paragraph (a) to Preferred Stock shall be deemed thereafter referred to Common
Stock or other securities, as appropriate 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 Common 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),
(ii) or (v) above at least 20 days prior to the record date for determining
holders of Common 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 Common Stock,
whichever shall be the earlier.  The failure to give notice required
by this Section
26 or any defect therein shall not affect the legality or validity of the
action taken by the Company or the vote upon any such action.

     

    (b)     Notwithstanding
anything in this Rights Agreement to the contrary, prior to the Distribution
Date a filing by the Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of securities of the Company,
including the Rights, for purposes of this Rights Agreement and no other notice
need be given.

     

    Section
27.     Notices.  Notices
or demands authorized by this Rights Agreement to be given or made by the Rights
Agents or by the holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock) to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address if filed in writing with the Rights Agent) as follows:

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     
Towerstream Corporation

      55
Hammarlund Way

     
Middletown, Rhode Island 02842

     
Attention: Chief Executive Officer

    

    Subject
to the provisions of Section 23 hereof,
any notice or demand authorized by this Rights Agreement to be given or made by
the Company or by the holder of any Right Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:

     

     
Continental Stock Transfer & Trust Company

      17
Battery Place

     
New York, NY 10004

     
Attention:

    

    Notices
or demands authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing 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
28.    Supplements
and Amendments.  Prior to the Distribution Date, the Company
may and the Rights Agent shall, if the Company so directs, supplement or amend
any provision of this Rights Agreement (including, without limitation, the date
on which the Distribution Date shall occur, the definition of Acquiring Person
or Adverse Person, the time during which the Rights may be redeemed or any
provision of the Certificate of Designation) without the approval of any holders
of certificates representing shares of Common Stock.  From and after
the Distribution Date and subject to the penultimate sentence of this Section 28, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Rights Agreement without the approval of any holders of Rights
Certificates in order (a) to cure any ambiguity, (b) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (c) to shorten or lengthen any time period hereunder or
(d) to change or supplement the provisions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificate (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, however, that this Rights
Agreement may not be supplemented or amended to lengthen, pursuant to clause (c)
of this sentence, (i) a time period relating to when the Rights may be redeemed
at such time as the Rights are not then redeemable or (ii) any other time period
unless such lengthening is for the purposes of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of
Rights.  Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 28, the
Rights Agent shall execute such supplement or amendment.  Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

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

     

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

     

    Section
32.    Severability.  If
any term, provision, covenant or restriction of this Rights 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 Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

     

    Section
33.    Governing
Law.  This Rights Agreement, each right and each right
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 to
be made and performed entirely within such state.

     

    Section
34.    Counterparts;
Effectiveness.  This Rights 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
one and the same instrument.  This Rights Agreement shall be effective
as of the Close of Business on the date hereof.

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    Section
35.    Descriptive
Headings.  The captions herein are included for convenience of
reference only, do not constitute a part of this Rights Agreement and shall be
ignored in the construction and interpretation hereof.

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

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

     

    
      
        	 
      	
                TOWERSTREAM
      CORPORATION,

              
	 
      	
                a
      Delaware corporation

              
	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Jeffrey
      Thompson

              
	 
      	
                Title:  

              	
                President
      and Chief Executive Officer

              
	 
      	 
      
	
                Attest:

              	
                Continental
      Stock Transfer & Trust Company,

              
	 
      	
                as
      Rights Agent

              
	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	 
      
	 
      	
                Title:

              	
                  

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	 
      
	 
      	
                Title:

              	
                  

              

      

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    Exhibit
A

     

    Certificate
Of Designation of

    Rights,
Preferences, and Privileges

    of
Series A Preferred Stock

    of

    Towerstream
Corporation

    

    (Pursuant
to § 151 of the

    Delaware
General Corporation Law)

    

    I, Joseph
Hernon, Secretary of Towerstream Corporation (the “Corporation”),
a corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:

     

    That
pursuant to the authority conferred upon the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, the said
Board of Directors on November 8, 2010, adopted the following resolutions
creating a series of the Corporation’s Preferred Stock designated as Series A
Preferred Stock:

     

    RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors
of the Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors hereby creates a series
of Series A Preferred Stock, with a par value of $0.001 per share, of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences and limitations thereof as follows (the
following provisions being intended to operate in addition to any other
provisions of said Certificate of Incorporation applicable to any series of
Preferred Stock):

     

    Series
A Preferred Stock

     

    Section
1.         Designation and
Amount.  The shares of such series shall be designated as
“Series A Preferred Stock” (the “Series A
Preferred Stock”) and the number of shares constituting the Series A
Preferred Stock shall be 350,000 shares of Series A Preferred Stock, par value
$0.001 per share.  Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Section
2.          Dividends and
Distributions

     

    (a)   
    Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock, par
value $0.001 per share (the “Common
Stock”), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, (i) cash dividends in an amount per
whole share (rounded to the nearest cent) equal to the Formula Number (as
defined below) then in effect, times the aggregate per share amount of all cash
dividends declared or paid on the Common Stock, and (ii) a preferential cash
dividend (a “Preferential
Dividend”), if any, on the first day of April, July, October and January
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 Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to $1.00 per share of Series A Preferred Stock less the per share amount
of all cash dividends declared on the Series A Preferred Stock pursuant to
clause (i) of this sentence since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock.  In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each whole outstanding share of
Series A Preferred Stock, a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock.  The dividends and distributions on the Series A
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and the second sentence of this paragraph
are hereinafter referred to as “Participating
Dividends.”  As used herein, the “Formula
Number” shall be 100; provided, however, that if at any time after
November 9,, 2010, the Corporation shall (i) declare or pay any dividend or make
any distribution on the Common Stock, payable in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise), the outstanding shares of Common
Stock into a larger number of shares of Common Stock, or (iii) combine (by a
reverse stock split or otherwise) the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then in each such case the Formula
Number in effect immediately prior to such event shall be adjusted to a number
determined by multiplying the Formula Number then in effect 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
(and rounding the result to the nearest whole number); and provided further,
that, if at any time after November 9,, 2010 the Corporation shall issue any
shares of its capital stock in a merger, reclassification, or change of the
outstanding shares of Common Stock, then in each such event the Formula Number
shall be appropriately adjusted to reflect such merger, reclassification, or
change so that each share of Series A Preferred Stock continues to be the
economic equivalent of a Formula Number of shares of Common Stock prior to such
merger, reclassification or change.

     

    (b)   
    The Corporation shall declare each Participating
Dividend immediately prior to or at the same time it declares any cash or
non-cash dividend or distribution on the Common Stock in respect of which a
Participating Dividend is required to be paid.  No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Participating
Dividend is required shall be paid or set aside for payment on the Common Stock
unless a Participating Dividend in respect of such dividend shall have been
paid.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (c)  
     Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A 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 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 Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.

     

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

     

    (a)    
   Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or stockholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common Stock or
stockholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).

     

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

     

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

     

    Section
4.          Certain
Restrictions.

     

    (a)    
   Whenever Preferential Dividends or Participating Dividends are
in arrears or the Corporation shall be in default in payment thereof, thereafter
and until all accrued and unpaid Participating Dividends and Preferential
Dividends, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid or set aside for payment in full, the
Corporation shall not:

     

    (i)           declare
or pay dividends, or 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
Preferred Stock;

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

    Section
6.          Liquidation, Dissolution or
Winding Up.  Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount equal to the accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, plus an amount
equal to the greater of (i) $0.001 per whole share, or (ii) an aggregate amount
per share equal to the Formula Number then in effect times the aggregate amount
to be distributed per share to holders of Common Stock, or (b) to the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of Series A Preferred Stock shares are entitled under clause
(a)(i) of this sentence and to which the holders of such parity shares are
entitled in each case upon such liquidation, dissolution or winding
up.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Section
7.          Consolidation, Merger,
etc.  If the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share equal
to the Formula Number then in effect 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 that both this Section 7 and Section 2 appear to
apply to a transaction, this Section 7 shall
control.

     

    Section
8.          Effective Time of
Adjustments.

     

    (a)        Adjustments
to the Series A Preferred Stock required by the provisions hereof shall be
effective as of the time at which the event requiring such adjustments
occurs.

     

    (b)        The
Corporation shall give prompt written notice to each holder of a share of Series
A Preferred Stock of the effect on any such shares of any adjustment to the
dividend rights or rights upon liquidation, dissolution or winding up of the
Corporation required by the provisions hereof.  Notwithstanding the
foregoing sentence, the failure of the Corporation to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment.

     

    Section
9.          No
Redemption.  The shares of Series A Preferred Stock shall not
be redeemable.

     

    Section
10.        Rank.  Unless
otherwise provided in the Articles of Incorporation or a Certificate of
Designation relating to a subsequent series of Preferred Stock of the
Corporation, the Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation’s Preferred Stock.

     

    Section
11.        Fractional
Shares.  The Series A Preferred Stock shall be issuable upon
exercise of the Rights issued pursuant to the Rights Agreement in whole shares
or in any fraction of a share that is one one-hundredth (1/100th) of a share or
any integral multiple of such fraction which shall entitle the holder, in
proportion to such holder’s fractional shares, to receive dividends, exercise
voting rights, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.  In lieu of fractional
shares, the Corporation, prior to the first issuance of a share or a fraction of
a share of Series A Preferred Stock, may elect (1) to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-hundredth (1/100th) of a share or any integral multiple thereof, or (2) to
issue depository receipts evidencing such authorized fraction
of a share of Series A Preferred Stock pursuant to an appropriate agreement
between the Corporation and a depository selected by the Corporation; provided
that such agreement shall provide that the holders of such depository receipts
shall have the rights, privileges and preferences to which they are entitled as
holders of the Series A Preferred Stock.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Section
12.        Amendment.  The
Certificate of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting together as a single class.

     

    RESOLVED,
that the proper officers of the Corporation be, and each of them hereby is,
authorized to execute a Certificate of Designation with respect to the Series A
Preferred Stock pursuant to Section 151 of the General Corporation Law of the
State of Delaware and to take all appropriate action to cause such Certificate
to become effective, including, but not limited to, the filing and recording of
such Certificate with and/or by the Secretary of State of the State of
Delaware.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, I have executed and subscribed to this Certificate and do
affirm the foregoing as true under penalty of perjury this 9th day of November,
2010.

     

    
      
        
          	
                  By:

                	
                      

                	 
	 
      	
                  Joseph
      Hernon

                	 
	
                  Its:  

                	
                  Secretary

                	 

        

      

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      Exhibit
B

    

     

    FORM
OF RIGHTS CERTIFICATE

    

    
      	
              Certificate
      No. R-

            	
              ____________
      Rights

            

    

    

    NOT
EXERCISABLE AFTER NOVEMBER 8,, 2020 OR EARLIER IF REDEEMED OR EXCHANGED 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 TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID AND NON-TRANSFERABLE.

     

    Right
Certificate

     

    TOWERSTREAM
CORPORATION

     

    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 November 9, 2010 (the “Rights Agreement”) between
Towerstream Corporation, a Delaware corporation (the “Company”), and Continental
Stock Transfer & Trust Company, as Rights Agent (the “Rights Agent”), unless
the rights evidenced hereby shall have been previously redeemed by the Company,
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 p.m. Eastern time on
November 8, 2020, at the principal office or offices of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent
or its successors as Rights Agent, one one-hundredth (1/100th) of a fully paid
and non-assessable share of Series A Preferred Stock, par value $0.001 per
share, of the Company (the “Preferred Stock”), at a cash purchase price of
$18.00 per one one-hundredth (1/100th) of a share of Preferred Stock, as the
same may from time to time be adjusted in accordance with the Rights Agreement
(the “Purchase Price”), upon presentation and surrender of this Right
Certificate with the form of election to purchase and the related certificate
duly executed.  The number of Rights evidenced by this Right
Certificate (and the number of fractional shares of Preferred Stock which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of __________ __, ____ based
on the shares of Preferred Stock as constituted at such date.

     

    As
provided in the Rights Agreement, the Purchase Price and the number of shares of
Preferred Stock which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events, and in certain circumstances may be exercised to
purchase securities other than shares of Preferred Stock or securities of
issuers other than the Company.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    If the
Rights evidenced by this Rights Certificate are at any time beneficially owned
by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement), such Rights shall be null and
void and nontransferable and the holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such Right.

     

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

     

    Continental
Stock Transfer & Trust Company

    17
Battery Place

    New York,
NY 10004

    Attention:

    

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

     

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Right
Certificate may be redeemed by the Board of Directors at a redemption price of
$0.001 per Right (payable in cash or other consideration) appropriately adjusted
as provided in the Rights Agreement at any time prior to the earlier to occur of
(i) 10 days after a Stock Acquisition Date (as defined in the Rights Agreement),
and (ii) the Final Expiration Date.

     

    No
fractional shares of Preferred Stock (other than integral multiples of one
one-hundredths (1/100ths) of a share, which may, at the election of the Company,
be evidenced by depositary receipts) will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.

     

    No holder
of this Right Certificate, as such, 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 give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

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

     

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

     

    
      
        	
                Dated
      as of ______________, ____

              	 
      	
                TOWERSTREAM
      CORPORATION

              
	 
      	 
      	 
      
	
                      

              	 
      	
                By:  

              	
                      

              
	
                Secretary

              	 
      	 
      	
                Title:

              
	 
      	 
      	 
      	 
      
	
                Countersigned:

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Continental
      Stock Transfer & Trust Company,

              	 
      	 
      	 
      
	
                as
      Rights Agent

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                By:  

              	
                      

              	 
      	 
      	 
      
	 
      	
                Title:

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	
                      

              	 
      	 
      	 
      
	 
      	
                Title:

              	 
      	 
      	 
      

      

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    [On
Reverse Side of Rights Certificate]

     

    FORM
OF ELECTION TO PURCHASE

     

    (To be
executed if holder desires to exercise

    Rights
represented by the Right Certificate)

     

    To:        TOWERSTREAM
CORPORATION

     

    The
undersigned hereby irrevocably elects to exercise ______________ Rights
represented by this Right Certificate to purchase one one-hundredth (1/100th) of
a share 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
securities be issued in the name of and delivered to:

     

    Please
insert social security

    or other
identifying number

     

    
      	
              (Please
      print name and address)

            
	
                  

            

    

    

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

            
	
                  

            

    

    

    Optional
Election to Exercise Without Payment of Cash:

     

    With
respect to the exercise of ______________ of the Rights specified above, the
undersigned hereby elects to exercise such Rights without payment of cash and to
receive a number of one one-hundredth (1/100th) of a share of Preferred Stock or
other securities having a value (as determined pursuant to the Rights Agreement)
equal to the difference between (i) the value of the Preferred Stock or other
securities that would have been issuable upon exercise thereof upon payment of
the Purchase Price as provided in the Rights Agreement, and (ii) the amount of
such Purchase Price.

     

    
      
        	
                Dated:  ____________________,
      ____

              	 
      	
                   

              
	 
      	 
      	
                Signature

              

      

    

    

    Signature
Medallion Guaranteed:

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

    1.           the
Rights evidenced by this Right Certificate ____are ____are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in 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 Right Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.

     

    
      
        	
                Dated:  ____________________,
      ____

              	 
      	
                   

              
	 
      	 
      	
                Signature

              

      

    

    

    Signature
Medallion Guaranteed:

       

    NOTICE

     

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

     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Right Certificate)

     

    FOR VALUE
RECEIVED _____________________ hereby sells, assigns and transfers
unto

        

     

    
      	
              (Please
      print name and address of transferee)

            
	
                  

            

    

    

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

     

    
      
        	
                Dated:  ____________________,
      ____

              	 
      	
                   

              
	 
      	 
      	
                Signature

              

      

    

    

    Signature
Medallion Guaranteed:

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    
      
        	
                Dated:  ____________________,
      ____

              	 
      	
                    

              
	 
      	 
      	
                Signature

              

      

    

    

    Signature
Medallion Guaranteed:

    NOTICE

     

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

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Exhibit
C

     

    SUMMARY
OF RIGHTS TO PURCHASE PREFERRED STOCK

     

    Distribution of
Rights:  Effective November 8, 2010, the Board of Directors
(the “Board”) of Towerstream Corporation, a Delaware corporation (the “Company”)
authorized and declared a dividend of one right (a “Right”) for each issued and
outstanding share of the Common Stock, par value $0.001 per share (the “Common
Stock”) of the Company.  The dividend is payable to the stockholders
of record on November 24, 2010 (the “Record Date”).  All Rights are
issued pursuant to, and will be subject to the terms and conditions of, the
Rights Agreement between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent, dated as of November 9, 2010.  The following
is a brief summary of the terms of the Rights.

     

    Each
Right, when exercisable, will entitle the registered holder thereof to purchase
from the Company one one-hundredth (1/100th) of a share of the Series A
Preferred Stock, par value $0.001 per share, of the Company (the “Preferred
Stock”) at a Purchase Price of $18.00 per one one-hundredth (1/100th) of a share
of Preferred Stock (the “Purchase Price”), subject to certain
adjustments.

     

    Exercise of
Rights:  The Rights will initially be represented by the
certificates evidencing the Common Stock and will not be exercisable, or
transferable apart from the Common Stock, until the earliest to occur of (i) the
close of business on the tenth day after the acquisition by a person or group of
affiliated or associated persons (other than an Exempt Person or, in certain
cases, a Permitted Holder) of beneficial ownership of 15% or more of the
outstanding Common Stock; provided, that if within said
ten-day period the Acquiring Person reduces his beneficial ownership to less
than 15%, then he shall be deemed not to be an Acquiring Person and the Stock
Acquisition Date (as defined below) shall be deemed not to have occurred; (ii)
the close of business on the tenth day after the commencement of a tender or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of affiliated or associated persons of 15% or
more of the outstanding Common Stock; provided, that if within said
ten day period the person withdraws the tender or exchange offer, then such
offer shall be deemed not to have been made; and (iii) the close of business on
the tenth day after the date on which the Board declares any person or group of
affiliated or associated persons which beneficially owns 10% or more of the
outstanding Common Stock to be an “Adverse Person” (as described below) (the
earliest of these dates is referred to as the “Distribution
Date”).  Under the Rights Agreement, any person or group described in
items (i) or (iii) above is referred to as an “Acquiring Person,” and the date
upon which a person or group first becomes an Acquiring Person is referred to as
the “Stock Acquisition Date.”

     

    An
“Adverse Person” is any person or group of affiliated or associated persons
(other than an Exempt Person and a Permitted Holder) beneficially owning 10% or
more of the outstanding Common Stock, if the Board determines (i) that the
person or group is holding the shares of Common Stock in order to cause the
Company to repurchase their Common Stock or to take any other actions intended
to provide them with short-term financial gain, in circumstances where the Board
determines that the actions to be taken are not in the best long-term interests
of the Company or its stockholders, or (ii) that beneficial ownership of the
Common Stock by the person or group is causing or reasonably likely to cause a
material adverse impact on the business or prospects of the
Company.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    An
“Exempt Person” is defined as the Company, a subsidiary of the Company, and an
employee benefit plan of the Company, or any of its subsidiaries.

     

    A
“Permitted Holder” shall mean a Person who acquires beneficial ownership of the
Common Stock of the Company pursuant to a Permitted Acquisition; provided, however, a Permitted Holder
shall remain a Permitted Holder so long as the aggregate beneficial ownership of
Common Stock held by such Person does not exceed that number of shares of Common
Stock held by such Person immediately following the Permitted Acquisition
pursuant to which such Person became a Permitted Holder (reduced by the number
of shares of Common Stock from time to time disposed of by such Person) plus a
number of additional shares of Common Stock equal to 1% of the then outstanding
shares of Common Stock of the Company; provided, however, any shares of Common
Stock issued or issuable to a Permitted Holder pursuant to employee benefit
plans maintained by the Company for the benefit of its employees, directors and
consultants shall be disregarded and not counted for purposes of calculating the
limitations imposed by the immediately preceding sentence.

     

    “Permitted
Acquisition” shall mean an acquisition of shares of Common Stock by a Person in
a transaction or series of transactions which has been previously approved by a
majority of the Board of Directors.

     

    The
Rights (unless sooner redeemed) will first become exercisable on the
Distribution Date, at which time the Company will distribute separate Right
Certificates representing the Rights to its then current stockholders, and it is
expected that the Rights could then begin trading separately from the Common
Stock.  The Rights will expire on November 8, 2020 (the “Final
Expiration Date”), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company.

     

    Anti-Takeover
Provisions:  Following the Distribution Date, the Rights would
give holders (other than the Acquiring Person, its affiliates and transferees)
the right to purchase from the Company, for the Purchase Price, that number of
one one-hundredth (1/100th) of a share of Preferred Stock (or, in certain
circumstances, Common Stock, cash, property or other securities of the Company)
having a market value of twice the Purchase Price of the
Right.  Notwithstanding any of the foregoing, following the Stock
Acquisition Date, 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.

     

    Further,
in a merger, consolidation or sale or transfer of 50% or more of the
consolidated assets or earning power of the Company, each Right will be
converted into the right to purchase, for the Purchase Price, that number of
shares of common stock of the surviving entity or (in certain circumstances) its
parent corporation, which at the time of such transaction will have a market
value of twice the Purchase Price of the Right.

     

    Following
the Distribution Date, exercisable Rights may be exercised, at the option of the
holder thereof, without the payment of the Purchase Price in cash.  In
any such case, the number of securities which such person would otherwise be
entitled to receive upon the exercise of such Rights will be reduced by the
amount of the Purchase Price.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Preferred
Stock purchasable upon exercise of the Rights will not be
redeemable.  Each one one-hundredth (1/100th) of a share of Preferred
Stock will be entitled to participating dividends per one one-hundredth
(1/100th) of a share equal to dividends which may from time to time be declared
on a share of Common Stock.  In the event of liquidation, the
Preferred Stock holders will be entitled to a preferential liquidation
payment.  These rights are protected by customary anti-dilution
provisions.

     

    Redemption of
Rights:  At any time prior to the earlier to occur of (i) the
close of business on the tenth day following the Stock Acquisition Date and (ii)
the close of business on the Final Expiration Date, the Board may redeem the
outstanding Rights at a price of $0.001 per Right, and may amend the Rights
Agreement in any and all respects and particulars.  If during said
ten-day period the Acquiring Person reduces his beneficial ownership to less
than 15%, the Rights will again be redeemable.  Subsequent to ten days
following the Stock Acquisition Date, the Rights are not redeemable and the
Board may amend the Rights Agreement only to eliminate ambiguities or to provide
additional benefits to the holders of the Rights (other than any Acquiring
Person).

     

    Voting or Dividend
Rights:  Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.

     

    Effect of
Rights:  The Rights have certain anti-takeover
effects.  The Rights may cause substantial dilution to a person or
group that attempts to acquire the Company on terms not approved by the
Board.  The Rights should not interfere with any merger or other
business combination approved by the Board prior to the time that holders of the
Rights become entitled to exercise their Rights for Common Stock (or common
stock of the surviving entity in a merger with the Company), since until that
time the Rights may be redeemed by the Board at $0.001 per Right.

     

    Amendment:  Any of
the provisions of the Rights Agreement may be amended by the Board prior to the
Distribution Date.  After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board in order to cure any ambiguity, to
make changes which do not adversely affect the interests of holders of Rights or
to shorten or lengthen any time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.

     

    Rights Agreement:  A
copy of the Rights Agreement is being filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K dated on or about
November 10, 2010.  A copy of the Rights Agreement is available free
of charge from the Company.  This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by
reference.

    
      
         

      

      
        3

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