Document:

Exhibit
10.7

 

AGREEMENT
GOVERNING SEVERANCE OBLIGATIONS

AND

TERMINATION OF EMPLOYMENT

 

This Agreement is made and entered into by and between SSA Global
Technologies, Inc., N/A [insert subsidiary
name for non-US based executives] (collectively and singularly “SSA”)
and JOHN WALLES (“You”), and sets forth the terms and conditions governing SSA’s
severance obligations and termination of employment.

 

Whereas, You are currently employed by SSA in a key management and/or
operational role; and

 

Whereas, SSA desires
to clarify any current understanding with You with
respect to severance obligations of SSA in the event of your termination of
employment.

 

Now Therefore, for
good and valuable consideration receipt of which is hereby acknowledged, we
agree as follows:

 

In lieu of any claimed entitlement or other understanding, whether
verbal or written and whether arising by contract, statute, regulation or
otherwise, it is agreed that SSA’s obligation for severance and any other
compensation (excluding the treatment of any stock options or other incentive
rights as may be granted to you pursuant to SSA’s equity incentive plan), if
any, due to You in the event of the termination of your employment shall be
determined in accordance with the following:

 

1.              Severance Calculation.  SSA may terminate your employment at any time
with or without cause.  Subject to
Paragraph 4, below, if SSA terminates your employment for any reason other than
“For Cause” (as hereinafter defined), in which event SSA shall provide you with
no less than thirty (30) days prior written notice, or You terminate your
employment with Good Reason (as hereinafter defined), upon the effective date
of your termination of employment (“Termination Date”), You will be entitled to
the following:

 

(a)   Payment of any accrued but unpaid base
salary through the Termination Date and any unpaid bonus earned but not yet
paid with respect to any prior fiscal quarter; and

 

(b)   Continuation of payment of your base salary
for TWELVE (12) months; said payments to be made periodically in accordance
with SSA’s local payroll practices;

 

(c)   If applicable, continuation for a period of
FOUR (4) fiscal quarters (inclusive of the fiscal quarter applicable to your
actual Termination Date) of fifty percent (50%) of your quarterly base target
bonus (based on 100% achievement and exclusive of any multipliers); said
payments to be made on a quarterly basis in accordance with SSA’s local
practices; and

 

(d)   If applicable, a pro rata portion of your
annual target bonus (based on 100% achievement and exclusive of any
multipliers) for the fiscal year in which such termination occurs, determined
by multiplying fifty percent (50%) of your annual target bonus by a fraction
the numerator of which is the number of days in the fiscal year prior to the
Termination Date and the denominator of which is 365 (such amount to be paid to
you at the end of SSA’s then current fiscal year in accordance with SSA’s local
practice).

 

2.              Termination for Cause.  For termination of your employment by SSA
based on “For Cause,” if a cure is possible SSA shall provide You with two (2)
weeks notice of the events giving rise to a possible

 

 

“For Cause” termination and provide You with
the opportunity to cure the “cause.” A termination “For Cause” shall take effect
on the date notice is given, if the “cause” is incurable, or two (2) weeks
after notice if given, if the “cause” is curable but remains uncured at that
time.  For purposes of this Agreement, “For
Cause” means:

 

(a)   the willful and continued failure by You to
substantially to perform your duties and responsibilities;

 

(b)   a breach by You of
a written policy of SSA that has a material detrimental effect on the company;
or

 

(d)   any fraudulent,
unlawful, grossly negligent, dishonest or willful misconduct engaged in by You;

 

(e)   your refusal to
follow a reasonable, achievable and lawful directive of your manager;

 

(f)   the commission by
You of any felony crime involving moral turpitude or that impairs your ability
to perform your assigned functions and responsibilities; or

 

(g)   your improper and
material disclosure or use of SSA’s confidential information.

 

In the event your employment is terminated for cause, you shall be
entitled to no compensation or benefits other than those earned through the effective
date of your termination.

 

3.              Termination by You.  You may terminate your employment with SSA at
any time, with or without “Good Reason” (as defined below), upon no less than
ninety (90) days prior written notice to SSA. 
For purposes of this Agreement, “Good Reason” means any of the following
conditions, which condition(s) remain(s) in effect thirty (30) days after
written notice by You to the Chief Executive Officer
of SSA Global Technologies, Inc. of such conditions:

 

(i) Any decrease in your base
salary greater than thirty-three percent (33%) of your then most recent base
salary; it being agreed that the your base salary will only be reduced by up to
thirty-three percent (33%) as part of a general decrease in the base salary of
similarly affected employees and as part of a general cost reduction exercise;

 

(ii)          If applicable, any
decrease in the amount of total annual base bonus potential (exclusive of any
multipliers) awarded to You with respect to a fiscal year which decrease is
greater then thirty-three percent (33%) of your then most recent assigned base
bonus; it being agreed that the your base bonus will only be reduced by up to
thirty-three percent (33%) as part of a general decrease in the base salary of
similarly affected employees and as part of a general cost reduction
exercise.  In addition, it is agreed
that:  (a) any change by SSA in the
underlying determining factor(s) including, but not limited to, the reallocation
of percentages assigned to each determining factor used by SSA when calculating
any bonus; (b) any change by SSA in the application of multipliers to the base
bonus amount will, not constitute Good Reason; and/or (c) non-payment to You of
bonus compensation because of your failure to achieve reasonable performance
milestones will not constitute Good Reason; or

 

(iii) Any successor to SSA
Global Technologies, Inc. (or its business) fails in any acquisition of SSA
Global Technologies, Inc. (or its business), or any other reorganization or
Change in Control, as defined the SSA Global Technologies, Inc.’s equity
incentive plan) does not agree in writing to

 

2

 

assume, in full, all of the
obligations of SSA as set forth in this Agreement and any other offer letter,
Employment Agreement or other document previously entered into between SSA
Global Technologies, Inc. and your person, it being expressly understood that
this Agreement shall supersede any conflicting terms set forth elsewhere that
relate to termination of employment, severance obligations and any other
subject matter set forth herein.

 

In the event you voluntarily terminate your employment for any other
reason other than for Good Reason you shall be entitled to no compensation or
benefits other than those earned through the effective date of your
termination.

 

4.              Payment Contingencies.  Payment of any amounts to You hereunder is
contingent upon (except in cases of death): 
(i) your first entering into an agreement that releases SSA, its
subsidiaries, officers, directors and employees from actions, suits, claims,
proceedings and demands related to your period of employment and/or your
termination of employment; (ii) SSA being permitted to offset any salary paid
to you during any notice period as provided for herein (or as otherwise agreed
upon by SSA in writing or, if applicable, as may be required pursuant to any
local law, regulation or statute) if You perform no services during such notice
period; (iii) your returning, in good condition, all property belonging to
SSA; and (iv) your remaining in compliance with his obligations of
confidentiality including, without limitation, your adherence to any
restrictions placed upon your subsequent employment opportunities pursuant to
separate agreement with SSA.  In
addition, You agree that to the extent permitted by
the local laws, the notice period(s) and severance payment obligations, as set
forth in this Agreement shall be in lieu of any other obligations, statutory or
otherwise, relating to your term of employment, notice obligations and/or
termination of employment.

 

5.              Treatment of Stock Options.  With respect to any stock options and/or
other forms of equity rights that may be granted to You in accordance with the
terms of SSA Global Technologies, Inc.’s equity incentive plan (including any
successor plan), the vesting of such options and rights together with the terms
and conditions governing the exercise of such options and rights shall be
determined solely in accordance with the terms of such plan(s).

 

6.              Other.  You and SSA agree that this Agreement shall
be interpreted in accordance with and governed by the laws of the State of
Illinois.  In addition, this Agreement
shall inure to the benefit of and be binding upon SSA and its successors and
assigns.  In view of the personal nature
of the services to be performed by You, You shall not have the right to assign
or transfer any of the rights, obligations of benefits under this Agreement
unless expressly provided for herein. 
This Agreement will be of no force and effect until acknowledged by the
local SSA subsidiary, if applicable (your employer), and thereafter
counter-signed by SSA Global Technologies, Inc.

 

By your signature below, You agree that this
Agreement:  (a) supercedes any prior
understanding, whether in writing or verbal, between your person and SSA with
respect to the subject matter hereof; and (b) is in lieu of and inclusive of
any common law or statutory claims that you have or may have with respect to
your termination of employment and the payment by SSA of severance payments,
howsoever classified.

 

	
  Agreed to By:

  	
  /s/ JOHN
  R. WALLES

  	
   

  
	
   

  	
  John Walles

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed to By:

  	
  /s/ KIRK
  J. ISAACSON      12/1/04

  	
   

  
	
   

  	
  SSA Global Technologies, Inc.

  Kirk J. Isaacson

  Executive Vice President & General
  Counsel

  	
   

  

 

3Exhibit 10.1

 

 

STOCKHOLDERS RIGHTS AGREEMENT

 

This Stockholders Rights
Agreement (this “Rights Agreement”) is made and entered into as of February        ,
2005, by and between Diana Shipping Inc., a Marshall Islands corporation (the “Company”),
and                         ,
as Rights Agent (the “Rights Agent”).

 

WHEREAS, the Board of
Directors of the Company (the “Board”) has (a) authorized and declared a
dividend of one right (the “Right”) for each share of the Company’s
common stock, par value $.01 per share (the “Common Stock”) held of record as
of the Close of Business (as hereinafter defined) on February      ,
2005 (the “Record Date”) and (b) has further authorized the issuance of
one Right in respect of each share of Common Stock that shall become outstanding
(i) at any time between the Record Date and the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined) or (ii) upon the exercise or conversion, prior to the
earlier of the Redemption Date or the Final Expiration Date, of any option or
other security exercisable for or convertible into shares of Common Stock,
which option or other such security is outstanding on the Distribution Date;
and

 

WHEREAS, each Right
represents the right of the holder thereof to purchase one one-thousandth of a
share of Series A Participating Preferred Stock (as such number may hereafter
be adjusted pursuant to the provisions hereof), upon the terms and subject to
the conditions set forth herein, having the rights, preferences and privileges
set forth in the Certificate of Designations of Series A Participating
Preferred Stock, attached hereto as Exhibit A.

 

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

 

1.                                       Certain Definitions.

 

“Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, but shall not include the Company, any
Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan. 
Notwithstanding the foregoing, no Person shall be deemed to be an
Acquiring Person as the result of an acquisition of shares of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that a Person who (i) becomes the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then outstanding by reason of
share purchases by the Company and (ii) then after such share purchases by the
Company, becomes the Beneficial Owner of any additional shares of Common Stock
of the Company (other than pursuant to a dividend or distribution paid or made
by the Company on the outstanding shares of Common Stock in shares of Common
Stock or pursuant to a split or subdivision of the outstanding shares of Common
Stock), such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional shares of Common Stock of the

 

 

Company such Person does
not beneficially own 15% or more of the shares of Common Stock of the Company
then outstanding.  Notwithstanding the
foregoing, (i) if the Company’s Board of Directors determines in good faith
that a Person who would otherwise be an “Acquiring Person,” as defined herein,
has become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of the shares of
Common Stock that would otherwise cause such Person to be an “Acquiring Person,”
as defined herein, or (B) such Person was aware of the extent of the shares of
Common Stock it beneficially owned but had no actual knowledge of the
consequences of such beneficial ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and if such Person
divested or divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an “Acquiring Person,” as
defined herein, then such Person shall not be deemed to be or to have become an
“Acquiring Person” for any purposes of this Agreement; and (ii) if, as of the
date hereof, any Person is the Beneficial Owner of 15% or more of the shares of
Common Stock outstanding, such Person shall not be or become an “Acquiring
Person,” as defined herein, unless and until such time as such Person shall
become the Beneficial Owner of additional shares of Common Stock (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding shares of Common Stock in shares of Common Stock or pursuant to a
split or subdivision of the outstanding shares of Common Stock), unless, upon
becoming the Beneficial Owner of such additional shares of Common Stock, such
Person is not then the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding.

 

“Adjustment fraction”
shall have the meaning set forth in Section 11(a)(i) hereof.

 

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

 

A Person shall be deemed
the “Beneficial Owner” of and shall be deemed to “Beneficially Own”
any securities:

 

(i)                                     which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act
and Rule 13d-3 thereunder (or any comparable or successor law or regulation);

 

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), 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 pursuant to this subsection (ii)(A) to be the
Beneficial Owner of, or to beneficially own, (1) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of
such

 

2

 

Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, or (2) securities which a Person or any of such Person’s
Affiliates or Associates may be deemed to have the right to acquire pursuant to
any merger or other acquisition agreement between the Company and such Person
(or one or more of its Affiliates or Associates) if such agreement has been
approved by the Board of Directors of the Company prior to there being an
Acquiring Person; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this subsection (ii)(B) if the agreement, arrangement or
understanding to vote such security (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 of the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or

 

(iii)                               which are beneficially
owned, directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to subsection (ii)(B) above) or disposing of
any securities of the Company; provided, however, that in no case
shall an officer or director of the Company be deemed (x) the Beneficial Owner
of any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of the
Company or any Subsidiary of the Company, other than the officer or director,
by reason of any influence that such officer or director may have over the
voting of the securities held in the plan.

 

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

 

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

 

3

 

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

 

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

 

“Company” shall
have the meaning set forth in the preamble, subject to the terms of Section 13(a)(iii)(C)
hereof.

 

“Current Per Share
Market Price” of any security (a “Security” for purposes of this
definition), for all computations other than those made pursuant to Section 11(a)(iii)
hereof, shall mean the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the Current Per Share Market Price of any Security on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the ten (10) consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the Current Per Share Market Price of
the Security is determined during a period following the announcement by the
issuer of such Security of (i) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares
or (ii) any subdivision, combination or reclassification of such Security, and
prior to the expiration of the applicable thirty (30) Trading Day or ten (10)
Trading Day period, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share Market
Price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security.  The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last sale price
or, if such last sale price is not reported, the average of the high bid and
low asked prices in the over-the-counter market, as reported by Nasdaq or such
other system then in use, or, if on any such date the Security is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company.  If on any such date no market maker is making
a market in the Security, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used.  If the Preferred Shares are not
publicly traded, the Current Per Share Market Price of the Preferred Shares
shall be conclusively deemed to be the Current Per Share Market Price of the
shares of Common Stock as determined pursuant to this definition, as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof, multiplied by 1000.  If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value per

 

4

 

share as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.

 

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

 

“Distribution Date”
shall mean the earlier of (i) the Close of Business on the tenth day after the
Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or
(ii) the Close of Business on the tenth Business Day (or such later date as may
be determined by action of the Company’s Board of Directors) after the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if, assuming the
successful consummation thereof, such Person would be an Acquiring Person.

 

“Equivalent Shares”
shall mean Preferred Shares and any other class or series of capital stock of
the Company which is entitled to the same rights, privileges and preferences as
the Preferred Shares.

 

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

 

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

 

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

 

“Expiration Date”
shall mean the earliest to occur of: (i) the Close of Business on the Final
Expiration Date, (ii) the Redemption Date, or (iii) the time at which the Board
of Directors orders the exchange of the Rights as provided in Section 24
hereof.

 

“Final Expiration Date”
shall mean February       ,
2015.

 

“Nasdaq” shall
mean the National Association of Securities Dealers, Inc. Automated Quotations
System.

 

“Person” shall
mean any individual, firm, corporation or other entity, and shall include any
successor (by merger or otherwise) of such entity.

 

“Post-event Transferee”
shall have the meaning set forth in Section 7(e) hereof.

 

“Preferred Shares”
shall mean shares of Series A Participating Preferred Stock, $0.01 par value,
of the Company.

 

“Pre-event Transferee”
shall have the meaning set forth in Section 7(e) hereof.

 

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

 

5

 

“Record Date”
shall have the meaning set forth in the recitals at the beginning of this
Rights Agreement.

 

“Redemption Date”
shall have the meaning set forth in Section 23(a) hereof.

 

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

 

“Rights Agent”
shall mean             ,
or its successor or replacement as provided in Sections 19 and 21 hereof.

 

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

 

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

 

“Section 13 Event”
shall mean any event described in clause (i), (ii) or (iii) of Section 13(a)
hereof.

 

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

 

“Shares Acquisition
Date” shall mean the first date of public announcement (which, for purposes
of this definition, shall include, without limitation, a report filed pursuant
to Section 13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such; provided that, if such Person
is determined not to have become an Acquiring Person as defined herein, then no
Shares Acquisition Date shall be deemed to have occurred.

 

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

 

“Subsidiary” of
any Person shall mean any corporation or other entity of which an amount of
voting securities sufficient to elect a majority of the directors or Persons
having similar authority of such corporation or other entity is beneficially
owned, directly or indirectly, by such Person, or any corporation or other
entity otherwise controlled by such Person.

 

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

 

“Summary of Rights”
shall mean a summary of this Agreement substantially in the form attached
hereto as Exhibit C.

 

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

 

“Trading Day”
shall mean a day on which the principal national securities exchange on which a
referenced security is listed or admitted to trading is open for the
transaction of business or, if a referenced security is not listed or admitted
to trading on any national securities exchange, a Business Day.

 

6

 

A “Triggering Event”
shall be deemed to have occurred upon any Person, becoming an Acquiring Person.

 

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

 

3.                                       Issuance of Rights Certificates.

 

(a)                                  Until
the Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Sections 3(b) and 3(c) hereof) by the certificates for shares of Common
Stock registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common
Stock.  Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of
certificates for shares of Common Stock shall also constitute the surrender for
transfer of the Rights associated with the shares of Common Stock represented
thereby.  As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, postage-prepaid mail, to each
record holder of shares of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein.  In the event that an adjustment in the number
of Rights per share of Common Stock has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights.  As of the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates and may be transferred by the transfer of the Rights Certificates
as permitted hereby, separately and apart from any transfer of shares of Common
Stock, and the holders of such Rights Certificates as listed in the records of
the Company or any transfer agent or registrar for the Rights shall be the
record holders thereof.

 

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

 

7

 

(c)                                  Unless
the Board of Directors by resolution adopted at or before the time of the
issuance of any shares of Common Stock specifies to the contrary, Rights shall
be issued in respect of all shares of Common Stock that are issued after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date.  Certificates
representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear the following legend:

 

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT
BETWEEN DIANA SHIPPING INC. AND [    ],
AS THE RIGHTS AGENT, DATED AS OF FEBRUARY     , 2005,
(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
DIANA SHIPPING INC.  UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE.  DIANA SHIPPING INC. WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT
CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.  UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

 

With respect to such
certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the
shares of Common Stock represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the shares of
Common Stock represented thereby.

 

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

 

4.                                       Form of Rights Certificates.

 

(a)                                  The
Rights Certificates (and the forms of election to purchase shares of Common
Stock 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 Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or a national market system, on which
the Rights may from time to time be listed or included, or to conform to
usage.  Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date (or in the case of Rights issued with
respect to shares of Common Stock issued by the Company after the Record Date,
as of the date of issuance of such shares of Common Stock) and on their face
shall entitle the holders thereof to purchase such number of one- thousandths
of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth of a Preferred Share being
hereinafter referred to as the “Exercise Price” and

 

8

 

the aggregate Exercise
Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter referred to as the “Total Exercise Price”), but the number
and type of securities purchasable upon the exercise of each Right and the
Exercise Price shall be subject to adjustment as provided herein.

 

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

 

THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT

 

5.                                       Countersignature and Registration.

 

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

 

(b)                                 Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purposes, books for registration and transfer of the
Rights Certificates issued hereunder. 
Such books shall show the names and addresses of the respective

 

9

 

holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

 

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

 

(a)                                  Subject
to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Rights Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase
a like number of one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office
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 Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably
request.  Thereupon the Rights Agent
shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to
the person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested.  The
Company may require payment 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 Rights 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 Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate
if mutilated, the Company will make and deliver a new Rights Certificate of
like tenor to the Rights Agent for delivery to the registered holder in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.

 

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

 

(a)                                  Subject
to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
and prior to the Close of Business on the Expiration Date by surrender of the
Rights Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Exercise Price for
each one-thousandth of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets as the case may be) as to which the
Rights are exercised.

 

10

 

(b)                                 The
Exercise Price for each one-thousandth of a Preferred Share issuable pursuant
to the exercise of a Right shall initially be twenty-five Dollars ($25), shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)                                  Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Exercise
Price for the number of one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) to
be purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Rights Certificate in accordance with Section 9(e)
hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is the transfer agent for the Preferred
Shares) a certificate or certificates for the number of one-thousandths of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests or
(B) if the Company shall have elected to deposit the total number of
one-thousandths of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one-thousandths of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) as are to be purchased (in which case certificates
for the Preferred Shares (or, following a Triggering Event, other securities,
cash or other assets as the case may be) represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (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 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Rights Certificate.  The payment of the Exercise Price (as such
amount may be reduced (including to zero) pursuant to Section 11(a)(iii)
hereof) and an amount equal to any applicable transfer tax required to be paid
by the holder of such Rights Certificate in accordance with Section 9(e)
hereof, may be made in cash or by certified bank check, cashier’s check or bank
draft payable to the order of the Company. 
In the event that the Company is obligated to issue securities of the
Company other than Preferred Shares, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.

 

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

 

11

 

(e)                                  Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such (a “Post-Event Transferee”), (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Company’s 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(e) (a “Pre-Event
Transferee”) or (iv) any subsequent transferee receiving transferred Rights
from a Post-Event Transferee or a Pre-Event Transferee, either directly or
through one or more intermediate transferees, shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise.  The Company
shall use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or to any other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or any
of such Acquiring Person’s Affiliates, Associates or transferees hereunder.

 

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

 

8.                                       Cancellation and Destruction of Rights
Certificates.  All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or 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 Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. 
The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

 

9.                                       Reservation and Availability of Preferred Shares.

 

(a)                                  The
Company covenants and agrees that it will use its best efforts to cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
not reserved

 

12

 

for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common
Stock and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.

 

(b)                                 If
the Company shall hereafter list any of its Preferred Shares on a national
securities exchange, then so long as the Preferred Shares (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that
it is reasonably likely that the Rights will be exercised), all shares reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.

 

(c)                                  The
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Triggering Event in
which the consideration to be delivered by the Company upon exercise of the
Rights is described in Section 11(a)(ii) or Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for such securities and (B) the date of expiration of
the Rights.  The Company may temporarily
suspend, for a period not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. 
Upon any such suspension, the Company shall issue a public announcement
and notify the Rights Agent that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and notification to the
Rights Agent at such time as the suspension is no longer in effect.  The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the
Rights.  Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall
have been obtained, or an exemption therefrom shall be available, and until a
registration statement has been declared effective.

 

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

 

(e)                                  The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights Certificates or of
any Preferred Shares (or other securities of the Company) upon the exercise of
Rights.  The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of

 

13

 

Rights Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares (or other securities of the Company) in a
name other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares (or other securities
of the Company) upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company’s
satisfaction that no such tax is due.

 

10.                                 Record Date.  Each Person in whose name any
certificate for a number of one-thousandths of a Preferred Share (or other
securities of the Company) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of Preferred Shares (or
other securities of the Company) represented thereon, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Total Exercise Price with
respect to which the Rights have been exercised (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
are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of the Company are open.  Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a holder of Preferred Shares (or other securities of the Company) for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.

 

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

 

(a)                                  (i)
Notwithstanding anything in this Agreement to the contrary, in the event the
Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares (by
reverse stock split or otherwise) into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event, except as otherwise provided in this Section 11
and Section 7(e) hereof: (1) the Exercise Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Exercise Price
thereafter shall equal the result obtained by dividing the Exercise Price in
effect immediately prior to such time by a fraction (the “Adjustment
Fraction”), the numerator of which shall be the total number of Preferred
Shares (or shares of capital stock issued in such reclassification of the
Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares

 

14

 

outstanding immediately prior to such time; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of such Right; and (2) the number of
one-thousandths of a Preferred Share (or share of such other capital stock) issuable
upon the exercise of each Right shall equal the number of one-thousandths of a
Preferred Share (or share of such other capital stock) as was issuable upon
exercise of a Right immediately prior to the occurrence of the event described
in clauses (A)-(D) of this Section 11(a)(i), multiplied by the Adjustment
Fraction; provided, however, that, no such adjustment shall be
made pursuant to this Section 11(a)(i) to the extent that there shall have
simultaneously occurred an event described in clause (A), (B), (C) or (D) of Section 11(n)
with a proportionate adjustment being made thereunder.  Each share of Common Stock that shall become
outstanding after an adjustment has been made pursuant to this Section 11(a)(i)
shall have associated with it the number of Rights, exercisable at the Exercise
Price and for the number of one-thousandths of a Preferred Share (or shares of
such other capital stock) as one share of Common Stock has associated with it
immediately following the adjustment made pursuant to this Section 11(a)(i).

 

(ii) Subject to Section 24
of this Agreement, in the event a Triggering Event shall have occurred, then
promptly following such Triggering Event each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to
receive for each Right, upon exercise thereof in accordance with the terms of
this Agreement and payment of the Exercise Price in effect immediately prior to
the occurrence of the Triggering Event, in lieu of a number of one-thousandths
of a Preferred Share, such number of shares of Common Stock of the Company as
shall equal the result obtained by multiplying the Exercise Price in effect
immediately prior to the occurrence of the Triggering Event by the number of
one-thousandths of a Preferred Share for which a Right was exercisable (or
would have been exercisable if the Distribution Date had occurred) immediately
prior to the first occurrence of a Triggering Event, and dividing that product
by 50% of the Current Per Share Market Price for shares of Common Stock on the
date of occurrence of the Triggering Event; provided, however,
that the Exercise Price and the number of shares of Common Stock of the Company
so receivable upon exercise of a Right shall be subject to further adjustment
as appropriate in accordance with Section 11(e) hereof to reflect any
events occurring in respect of the shares of Common Stock of the Company after
the occurrence of the Triggering Event.

 

(iii) In lieu of issuing
shares of Common Stock in accordance with Section 11(a)(ii) hereof, the
Company may, if the Company’s Board of Directors determines that such action is
necessary or appropriate and not contrary to the interest of holders of Rights
and, in the event that the number of shares of Common Stock which are
authorized by the Company’s Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights, or if any
necessary regulatory approval for such issuance has not been

 

15

 

obtained by the Company,
the Company shall: (A) determine the excess of (1) the value of the shares of
Common Stock issuable upon the exercise of a Right (the “Current Value”)
over (2) the Exercise Price (such excess, the “Spread”) and (B) with
respect to each Right, make adequate provision to substitute for such shares of
Common Stock, upon exercise of the Rights, (1) cash, (2) a reduction in the
Exercise Price, (3) other equity securities of the Company (including, without
limitation, shares or units of shares of any series of preferred stock which
the Company’s Board of Directors has deemed to have the same value as Common
Stock (such shares or units of shares of preferred stock are herein called “Common
Stock Equivalents”)), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance,
(4) debt securities of the Company, except to the extent that the Company has
not obtained any necessary stockholder or regulatory approval for such
issuance, (5) other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Company’s Board of Directors based upon the advice of a
nationally recognized investment banking firm selected by the Company’s Board
of Directors; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a
Triggering Event and (y) the date on which the Company’s right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred
to herein as the “Section 11(a)(ii) Trigger Date”), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, Common Stock (to the
extent available), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread.  If the Company’s Board of
Directors shall determine in good faith that it is likely that sufficient
additional Common Stock could be authorized for issuance upon exercise in full
of the Rights or that any necessary regulatory approval for such issuance will
be obtained, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or take action to obtain such
regulatory approval (such period, as it may be extended, the “Substitution
Period”).  To the extent that the
Company determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof.  In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time
as the

 

16

 

suspension is no longer
in effect.  For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the Current Per Share Market Price of
the Common Stock on the Section 11(a)(ii) Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date.

 

(b)                                 In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling such holders (for a period expiring within
forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Shares) less than the then Current Per Share Market Price of the
Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of Preferred
Shares and Equivalent Shares (if any) outstanding on such record date, plus the
number of Preferred Shares or Equivalent Shares, as the case may be, which the
aggregate offering price of the total number of Preferred Shares or Equivalent
Shares, as the case may be, to be offered or issued (and/or the aggregate
initial conversion price of the convertible securities to be offered or issued)
would purchase at such current market price, and the denominator of which shall
be the number of Preferred Shares and Equivalent Shares (if any) outstanding on
such record date, plus the number of additional Preferred Shares or Equivalent
Shares, as the case may be, to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.  In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Company’s
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights.  Preferred Shares and
Equivalent Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Exercise Price shall be adjusted to
be the Exercise Price which would then be in effect if such record date had not
been fixed.

 

(c)                                  In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the making of a distribution to all holders of the Preferred
Shares or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any,
or a dividend payable in Preferred Shares) or subscription rights, options or
warrants (excluding those referred to in Section 11(b)), then, in each
such case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current Per
Share Market Price of a Preferred Share or an Equivalent Share on such record
date, less the fair market value

 

17

 

per Preferred Share or
Equivalent Share (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable to a
Preferred Share or Equivalent Share, as the case may be, and the denominator of
which shall be such Current Per Share Market Price of a Preferred Share or
Equivalent Share on such record date; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. 
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 Exercise
Price shall be adjusted to be the Exercise Price which would have been in
effect if such record date had not been fixed.

 

(d)                                 Notwithstanding
anything to the contrary, no adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Exercise 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 ten-thousandth of a share
of Common Stock or other share or one hundred-thousandth of a Preferred Share, as
the case may be.  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 (3) years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.

 

(e)                                  If
as a result of an adjustment made pursuant to Section 11(a) or 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any Right and, if
required, the Exercise 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 Shares contained in Sections 11(a),
11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.

 

(f)                                    All
Rights originally issued by the Company subsequent to any adjustment made to
the Exercise Price hereunder shall evidence the right to purchase, at the
adjusted Exercise Price, the number of one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.

 

(g)                                 Unless
the Company shall have exercised its election as provided in Section 11(h),
upon each adjustment of the Exercise Price as a result of the calculations made
in Section 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Preferred Shares (calculated to the
nearest one hundred-thousandth of a share) obtained by (i) multiplying (x) the
number of Preferred Shares covered by a Right immediately prior to this
adjustment, by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.

 

18

 

(h)                                 The
Company may elect on or after the date of any adjustment of the Exercise Price
as a result of the calculations made in Section 11(b) or (c) to adjust the
number of Rights, in substitution for any adjustment in the number of Preferred
Shares 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-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. 
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the Exercise Price in
effect immediately after adjustment of the Exercise 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 Exercise Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later
than the date of the public announcement. 
If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(h), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Exercise
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

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

 

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

 

(k)                                  In
any case in which this Section 11 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the number of one-thousandths
of a Preferred Share and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of one-thousandths
of a Preferred Share and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to

 

19

 

such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder’s right to receive such
additional shares (fractional or otherwise) upon the occurrence of the event
requiring such adjustment.

 

(l)                                     Notwithstanding
anything in this Section 11 to the contrary, prior to the Distribution
Date, the Company shall be entitled to make such reductions in the Exercise
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
Shares or Common Stock, (ii) issuance wholly for cash of any Preferred Shares
or Common Stock at less than the current market price, (iii) issuance wholly
for cash of Preferred Shares or Common Stock or securities which by their terms
are convertible into or exchangeable for Preferred or Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Shares or Common
Stock shall not be taxable to such stockholders.

 

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

 

(n)                                 In
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Common Stock payable in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock, (C) combine the outstanding
Common Stock (by reverse stock split or otherwise) into a smaller number of
shares of Common Stock, or (D) issue any shares of its capital stock in a
reclassification of the shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event,
except as otherwise provided in this Section 11(a) and Section 7(e)
hereof: (1) each share of Common Stock (or shares of capital stock issued in
such reclassification of the Common Stock) outstanding immediately following
such time shall have associated with it the number of Rights as were associated
with one share of Common Stock immediately prior to the occurrence of the event
described in clauses (A)-(D) above; (2) the Exercise Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
Exercise Price thereafter shall equal the result obtained by multiplying the
Exercise Price in effect immediately prior to such time by a fraction, the numerator
of which shall be the total number of shares of Common Stock outstanding
immediately prior to the event described in clauses (A)-(D) above, and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such event; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of such Right; and (3) the number of one-thousandths
of a Preferred Share (or shares of such other capital stock) issuable upon the
exercise of each Right outstanding after such event shall equal the number of
one- thousandths of a Preferred Share (or shares of such other capital stock)
as were issuable with respect to one Right immediately prior to such
event.  Each share of Common Stock that
shall become outstanding after an adjustment has been made pursuant to this Section 11(n)
shall have associated with it the number of Rights, exercisable at the Exercise
Price and for the number of one-thousandths of a Preferred Share (or shares of
such

 

20

 

other capital stock) as
one share of Common Stock has associated with it immediately following the adjustment
made pursuant to this Section 11(n). 
If an event occurs which would require an adjustment under both this Section 11(n)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.

 

12.                                 Certificate of Adjusted Exercise Price or Number
of Shares.  Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with Section 26
hereof.  Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or give such
notice shall not affect the validity of such adjustment or the force or effect
of the requirement for such adjustment. 
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.

 

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

 

(a)                                  In
the event that, following a Triggering Event, directly or indirectly:

 

(i)
the Company shall consolidate with, or merge with and into, any other Person
(other than a wholly-owned Subsidiary of the Company in a transaction the
principal purpose of which is to change the state of incorporation of the
Company and which complies with Section 11(m) hereof);

 

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

 

(iii)
the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which individually (and together) complies
with Section 11(m) hereof),

 

then,
concurrent with and in each such case:

 

(a)  each holder of a Right (except as provided in
Section 7(e) hereof) shall thereafter have the right to receive, upon the
exercise thereof, at a price equal to the Total Exercise Price applicable
immediately prior to the occurrence of the

 

21

 

Section 13 Event in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable shares of Common
Stock of the Principal Party (as hereinafter defined), free of any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by dividing such Total Exercise Price by 50% of
the Current Per Share Market Price of the shares of Common Stock of such
Principal Party on the date of consummation of such Section 13 Event, provided,
however, that the Exercise Price and the number of shares of Common
Stock of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(e)
hereof;

 

(b)  such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;

 

(c)  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 only to such Principal Party
following the first occurrence of a Section 13 Event;

 

(d)  such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Stock) in connection with the consummation of any such transaction as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and

 

(e)  upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Total Exercise Price as provided in this Section 13(a), such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had such holder, at the time of such transaction, owned the shares
of Common Stock of the Principal Party receivable upon the exercise of such
Right pursuant to this Section 13(a), and such Principal Party

 

22

 

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.

 

(f)  For purposes hereof, the “earning power” of
the Company and its Subsidiaries shall be determined in good faith by the
Company’s Board of Directors on the basis of the operating earnings of each
business operated by the Company and its Subsidiaries during the three fiscal
years preceding the date of such determination (or, in the case of any business
not operated by the Company or any Subsidiary during three full fiscal years
preceding such date, during the period such business was operated by the
Company or any Subsidiary).

 

(b)  For purposes of this Agreement, the term “Principal
Party” shall mean:

 

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

 

(ii)
in the case of any transaction described in clause (iii) of Section13(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 more than one Person that is a party to such transaction
or transactions receives the same portion of the assets or earning power so
transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so
transferred, or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
shares 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 (b)(ii), if the shares of Common Stock of
such Person are not at such time or have not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act,
then (1) if such Person is a direct or indirect Subsidiary of another Person
the shares of Common Stock of which are and have been so registered, the term “Principal
Party” shall refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of

 

23

 

more
than one Person, the Common Stock of which are and have been so registered, the
term “Principal Party” shall refer to whichever of such Persons is the issuer
of shares of Common Stock having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such
Person bears to the total of such interests.

 

(c)                                  The
Company shall not consummate any Section 13 Event unless the Principal
Party shall have a sufficient number of authorized shares of Common Stock that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon
consummation of such Section 13 Event, assume this Agreement in accordance
with Sections 13(a) and 13(b) hereof, that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of such
Principal Party upon exercise of outstanding Rights have been waived, that
there are no 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 and that such transaction shall not result in a
default by such Principal Party under this Agreement, and further providing
that, as soon as practicable after the date of such Section 13 Event, such
Principal Party will:

 

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

 

(ii)
use its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national securities
exchange or to meet the eligibility requirements for quotation on Nasdaq and
list (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on Nasdaq; and

 

(iii)
deliver to holders of the Rights historical financial statements for such
Principal Party which comply in all respects with the requirements for
registration on Form F-1 (or any successor form) under the Exchange Act.

 

In the event that at any
time after the occurrence of a Triggering Event some or all of the Rights shall
not have been exercised at the time of a transaction described in this Section 13,
the Rights

 

24

 

which have not
theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior adjustment
required by Section 11(a)(ii)).

 

(d)                                 In
case the “Principal Party” for purposes of Section 13(b) hereof has
provision in any of its authorized securities or in its certificate of
incorporation or by-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to Section 13 hereof), in
connection with, or as a consequence of, the consummation of a Section 13
Event, shares of Common Stock or Equivalent Shares of such Principal Party at
less than the then Current Per Share Market Price thereof or securities
exercisable for, or convertible into, shares of Common Stock or Equivalent
Shares of such Principal Party at less than such then Current Per Share Market
Price, or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the shares of Common Stock of such Principal
Party pursuant to the provisions of Section 13 hereof, 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.

 

(e)                                  The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, effect or permit to occur any Section 13 Event, if (i)
at the time or immediately after such Section 13 Event there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Section 13 Event, the stockholders of the
Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(b) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or (iii)
the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.

 

(f)                                    The
provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers.

 

14.                                 Fractional Rights and Fractional Shares.

 

(a)                                  The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights.  In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right.  For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable, as determined pursuant to
this Agreement.

 

25

 

(b)                                 The
Company shall not be required to issue fractions of Preferred Shares (other
than fractions that are integral multiples of one one-thousandth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions that are integral multiples
of one one-thousandth of a Preferred Share). 
Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by 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 Shares represented by such depositary receipts.  In lieu of fractional Preferred Shares that
are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to 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 a Preferred Share.  For purposes of this Section 14(b), the
current market value of a Preferred Share shall be one thousand times the
closing price of a share of Common Stock (as determined pursuant to the terms
hereof) for the Trading Day immediately prior to the date of such exercise.

 

(c)                                  The
Company shall not be required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of Common Stock
upon the exercise or exchange of Rights. 
In lieu of such fractional shares of Common Stock, the Company shall 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 a share of Common Stock.  For purposes of this Section 14(c), the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the terms hereof) for the
Trading Day immediately prior to the date of such exercise.

 

(d)                                 The
holder of a Right by the acceptance of the Right expressly waives his or her
right to receive any fractional Rights or any fractional shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred
Share) upon exercise of a Right.

 

15.                                 Rights of Action.  All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the shares of Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the shares of Common
Stock), may, in his or her own behalf and for his or her 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 or her right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.

 

26

 

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

 

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

 

(b)                                 after
the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the 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 forms and
certificates fully executed; and

 

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

 

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

 

18.                                 The Rights Agent.

 

(a)                                  The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. 
The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.  In no event will the Rights Agent be liable
for special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of
such loss or damage.

 

27

 

(b)                                 The
Rights Agent shall be protected and shall incur no liability for, or in respect
of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or shares of Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.

 

19.                                 Merger or Consolidation or Change of Name of
Rights Agent.  Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. 
In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights 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 Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.  In
case at any time the name of the Rights Agent shall be changed and at such time
any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

 

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

 

(a)                                  The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the written advice or 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 written advice
or opinion.

 

(b)                                 Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
Current Per Share 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

 

28

 

prescribed) may be deemed
to be conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

 

(c)                                  The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own negligence, bad faith or willful misconduct.

 

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

 

(e)                                  The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall
it be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any Preferred Shares 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 Agreement.

 

(g)                                 The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Secretary or any Assistant 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 by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.  Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date

 

29

 

specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

 

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

 

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

 

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

 

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

 

21.                                 Change of Rights Agent.  The
Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days’ written notice mailed to
the Company and to each transfer agent of the Preferred Shares and the Common
Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail.  The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days’ written notice, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Preferred Shares
and the Common Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. 
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent.  If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after receiving written notice of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights

 

30

 

Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $100
million.  After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose.  Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Shares and the Common Stock, and mail a written notice
thereof to the registered holders of the Rights Certificates.  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

 

22.                                 Issuance of New Rights Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price and the number or kind
or class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company outstanding at the
date hereof or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued and this sentence shall be null and void ab initio
if, and to the extent that, such issuance or this sentence would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options’ or employee plans’ or
arrangements’ failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.

 

23.                                 Redemption.

 

(a)                                  The
Company may, at its option and with the approval of the Board of Directors, at
any time prior to the Close of Business on the earlier of (i) the Shares Acquisition
Date and (ii) the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being

 

31

 

herein referred to as the
“Redemption Price”) and the Company may, at its option, pay the
Redemption Price either in shares of Common Stock (based on the Current Per
Share Market Price thereof at the time of redemption) or cash.  Such redemption of the Rights by the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.  The date on which the Board of Directors
elects to make the redemption effective shall be referred to as the “Redemption
Date”.

 

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.  The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to
give or any defect in, any such notice shall not affect the validity of such
redemption.  Within ten (10) 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 that specifically set forth in this Section 23 or
in Section 24 hereof, and other than in connection with the purchase of
shares of Common Stock prior to the Distribution Date.

 

24.                                 Exchange.

 

(a)                                  Subject
to applicable laws, rules and regulations, and subject to subsection 24(c)
below, the Company may, at its option, by action of the Board of Directors, at
any time after the occurrence of a Triggering Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Stock then outstanding.

 

(b)                                 Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection 24(a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio.  The Company shall give public notice of any
such exchange; provided, however, that the failure to

 

32

 

give, or any defect in,
such notice shall not affect the validity of such exchange.  The Company shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent.  Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of exchange
will state the method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged.  Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.

 

(c)                                  In
the event that there shall not be sufficient shares of Common Stock issued but
not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with Section 24(a), the Company shall either
take such action as may be necessary to authorize additional shares of Common
Stock for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay
cash in an amount equal to the Current Value (as hereinafter defined), in lieu
of issuing shares of Common Stock in exchange therefor, or (ii) issue debt or
equity securities or a combination thereof, having a value equal to the Current
Value, in lieu of issuing shares of Common Stock in exchange for each such
Right, where the value of such securities shall be determined by a nationally
recognized investment banking firm selected by majority vote of the Board of
Directors, or (iii) deliver any combination of cash, property, shares of Common
Stock and/or other securities having a value equal to the Current Value in
exchange for each Right.  For purposes of
this Section 24(c) only, the Current Value shall mean the product of the
Current Per Share Market Price of shares of Common Stock on the date of the
occurrence of the event described above in subparagraph (a), multiplied by the
number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available.  To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c),
the Board of Directors may temporarily suspend the exercisability of the Rights
for a period of up to sixty (60) days following the date on which the event
described in Section 24(a) shall have occurred, in order to seek any
authorization of additional shares of Common Stock and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof.  In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.

 

(d)                                 The
Company shall not be required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of Common
Stock.  In lieu of such fractional shares
of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined pursuant
to the terms hereof).

 

(e)                                  The
Company may, at its option, by majority vote of the Board of Directors, at any
time before any Person has become an Acquiring Person, exchange all or part of
the then outstanding Rights for rights of substantially equivalent value, as
determined reasonably and with good faith by the Board of Directors, based upon
the advice of one or more nationally recognized investment banking firms.

 

33

 

(f)                                    Immediately
upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection 24(e) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of rights in exchange therefor as has been determined by
the Board of Directors in accordance with subsection 24(e) above.  The Company shall 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 shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the transfer agent for the shares of Common
Stock of the Company.  Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of the Rights
will be effected.

 

25.                                 Notice of Certain Events.

 

(a)                                  In
case the Company shall propose to effect or permit to occur any Triggering
Event or Section 13 Event, the Company shall give notice thereof to each
holder of Rights in accordance with Section 26 hereof at least twenty (20)
days prior to occurrence of such Triggering Event or such Section 13
Event.

 

(b)                                 In
case any Triggering Event or Section 13 Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.

 

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

 

Diana Shipping Inc.

Pendelis 16

175 64 Palaio Faliro

Athens,
Greece

Attention: Ioannis Zafirakis

 

with a copy to:

 

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Attention: Edward Horton

 

Subject to the provisions
of Section 21 hereof, any notice or demand authorized by this Agreement to
be given or made by the Company or by the holder of any Rights Certificate to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:

 

34

 

[Rights Agent]

[     ]

[      ]

 

Notices or demands
authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate 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.

 

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

 

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

 

29.                                 Determinations and Actions by the Board of
Directors, etc.  For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act.  The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions,
calculations, interpretations

 

35

 

and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights Certificates and all other parties and (y) not subject the Board to
any liability to the holders of the Rights.

 

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

 

31.                                 Severability.  If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close of Business on
the tenth day following the date of such determination by the Board of
Directors.

 

32.                                 Governing Law.  This Agreement and each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of New York and for all purposes shall be governed by and
construed in accordance with the laws of such jurisdiction applicable to
contracts to be made and performed entirely within such jurisdiction.

 

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

 

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

 

36

 

IN WITNESS WHEREOF, the
parties have executed this Stockholder Rights Agreement as of the date first
written above.

 

	
   

  	
  DIANA
  SHIPPING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Anastassis
  Margaronis

  
	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [RIGHTS
  AGENT]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

37

 

Exhibit A

 

CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK OF DIANA SHIPPING INC.

 

The undersigned, Mr.
Anastassis Margaronis and Mr. Ioannis Zafirakis do hereby certify: 

 

1.                                       That
they are the duly elected and acting President and Secretary, respectively, of
Diana Shipping Inc., a Marshall Islands corporation (the “Company”). 

 

2.                                       That
pursuant to the authority conferred by the Company’s Amended and Restated
Articles of Incorporation, the Company’s Board of Directors on February 21,
2005 adopted the following resolution designating and prescribing the relative
rights, preferences and limitations of the Company’s Series A Participating
Preferred Stock: 

 

RESOLVED,
that pursuant to the authority vested in the Board of Directors (the “Board”)
of the Company by the Articles of Incorporation, the Board does hereby
establish a series of preferred stock, par value $0.01 per share, and the
designation and certain powers, preferences and other special rights of the
shares of such series, and certain qualifications, limitations and restrictions
thereon, are hereby fixed as follows: 

 

Section 1.                                            Designation
and Amount.  The shares of such
series shall be designated as “Series A Participating Preferred Stock”.  The Series A Participating Preferred Stock
shall have a par value of $0.01 per share, and the number of shares
constituting such series shall initially be 1,000,000, which number the Board
may from time to time increase or decrease (but not below the number then
outstanding).

 

Section 2.                                            Proportional
Adjustment.  In the event the Company
shall at any time after the issuance of any share or shares of Series A
Participating Preferred Stock (i) declare any dividend on the common stock of
the Company par value $0.01 per share (the “Common Stock”) payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Company shall simultaneously effect a proportional
adjustment to the number of outstanding shares of Series A Participating
Preferred Stock. 

 

Section 3.                                            Dividends
and Distributions.  

 

(a)                                  Subject
to the prior and superior right of the holders of any shares of any series of
preferred stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive when, as
and if declared by the Board out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of January,

 

38

 

April, July and October 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 Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock. 

 

(b)                                 The
Company shall declare a dividend or distribution on the Series A Participating
Preferred Stock as provided in paragraph (a) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock). 

 

(c)                                  Dividends
shall begin to accrue on outstanding shares of Series A Participating Preferred
Stock from the Quarterly Dividend Payment Date immediately preceding the date
of issue of such shares of Series A Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding.  The Board may fix a
record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof. 

 

Section 4.                                            Voting
Rights.  The holders of shares of
Series A Participating Preferred Stock shall have the following voting rights: 

 

(d)                                 Each
share of Series A Participating Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the stockholders
of the Company . 

 

(e)                                  Except
as otherwise provided herein or by law, the holders of shares of Series A
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders
of the Company . 

 

(f)                                    Except
as required by law, holders of Series A Participating Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the 

 

39

 

extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action. 

 

Section 5.                                            Certain
Restrictions. 

 

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

 

(b)                                 Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Participating Preferred Stock as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not (i) declare or
pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock; (ii) declare or pay dividends on, make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with Series A Participating
Preferred Stock, except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled; (iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating Preferred
Stock; (iv) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board) to all holders of such shares upon such terms as the Board, 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. 

 

(c)                                  The
Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company
could, under paragraph (a) of this Section 5, purchase or otherwise
acquire such shares at such time and in such manner. 

 

Section 6.                                            Reacquired
Shares.  Any shares of Series A
Participating Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof.  All such shares
shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board, subject to the 

 

40

 

conditions and
restrictions on issuance set forth herein and, in the Articles of Incorporation,
as then amended. 

 

Section 7.                                            Liquidation,
Dissolution or Winding Up.  Upon any
liquidation, dissolution or winding up of the Company , the holders of
shares of Series A Participating Preferred Stock shall be entitled to receive
an aggregate amount per share equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock plus an amount equal
to any accrued and unpaid dividends on such shares of Series A Participating
Preferred Stock.

 

Section 8.                                            Consolidation,
Merger, etc.  In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. 

 

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

 

Section 10.                                      Ranking.  The Series A Participating Preferred Stock
shall rank junior to all other series of the Company’s preferred stock as to
the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise. 

 

Section 11.                                      Amendment.  The Articles of Incorporation of the Company
shall not be further amended in any manner which would materially alter or
change the powers, preference or special rights of the Series A Participating
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 Participating
Preferred Stock, voting separately as a class. 

 

Section 12.                                      Fractional
Shares.  Series A Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder’s fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Participating Preferred Stock. 

 

RESOLVED
FURTHER, that the President or any Vice President and the Secretary or any
Assistant Secretary of this Company be, and they hereby are, authorized and
directed to prepare and file a Certificate of Designation of Rights,
Preferences and Privileges in accordance with the foregoing resolution and the
provisions of Marshall Islands law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution.” 

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

41

 

We
further declare under penalty of perjury that the matters set forth in the
foregoing Certificate of Designation are true and correct of our own knowledge.

 

Executed
at
                  
on       , 2005.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Anastassis
  Margaronis

  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ioannis
  Zafirakis

  Secretary

  	
   

  

 

 

Exhibit B

 

[FORM
OF RIGHTS CERTIFICATE]

 

43

 

Exhibit C

 

SUMMARY
OF RIGHTS

 

	
  Distribution and
  Transfer of Rights:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Distribution Date:

  	
   

  	
  The rights will
  separate from the common stock and become exercisable after (1) a person or
  group acquires ownership of 15% or more of the company’s common stock or (2)
  the 10th business day (or such later date as determined by the company’s
  board of directors) after a person or group announces a tender or exchange
  offer which would result in that person or group holding 15% or more of the
  company’s common stock.

  
	
   

  	
   

  	
   

  
	
  Preferred Stock
  Purchaseable Upon Exercise of Rights:

  	
   

  	
  On the Distribution
  Date, each holder of a right will be entitled to purchase for $25 (the
  “Exercise Price”) a fraction (1/1000th) of one share of the company’s
  preferred stock which has similar economic terms as one share of common
  stock.

  
	
   

  	
   

  	
   

  
	
  Flip-in:

  	
   

  	
  If an acquiring person
  (an “Acquiring Person”) acquires more than 15% of the company’s common stock
  then each holder of a right (except that acquiring person) will be entitled
  to buy at the Exercise Price, a number of shares of the company’s common
  stock which has a market value of twice the Exercise Price.

  
	
   

  	
   

  	
   

  
	
  Flip-over:

  	
   

  	
  If after an Acquiring
  Person acquires more than 15% of the company’s common stock, the company
  merges into another company (either as the surviving corporation or as the
  disappearing entity) or the company sells more than 50% of its assets or
  earning power, then each holder of a right (except for those owned by the
  acquirer) will be entitled to purchase at the Exercise Price, a number of
  shares of common stock of the surviving entity which has a then current market
  value of twice the Exercise Price.

  

 

44

 

	
  Exchange Provision:

  	
   

  	
  Any time after the date
  an Acquiring Person obtains more than 15% of the company’s common stock and
  before that Acquiring Person acquires more than 50% of the company’s
  outstanding common stock, the company may exchange each right owned by all
  other rights holders, in whole or in part, for one share of the company’s
  common stock.

  
	
   

  	
   

  	
   

  
	
  Redemption of Rights:

  	
   

  	
  The company can redeem
  the rights at any time prior to a public announcement that a person has
  acquired ownership of 15% or more of the company’s common stock.

  
	
   

  	
   

  	
   

  
	
  Expiration of Rights:

  	
   

  	
  The rights expire on
  the earliest of (1) February    , 2015 or (2) the
  exchange or redemption of the rights as described above.

  
	
   

  	
   

  	
   

  
	
  Amendment of Terms of
  Rights:

  	
   

  	
  The terms of the rights
  and the Stockholder Rights Plan may be amended without the consent of the
  rights holders at any time on or prior to the Distribution Date. After the
  Distribution Date, the terms of the rights and the Stockholder Rights Plan
  may be amended to make changes, which do not adversely affect the rights of
  the rights holders (other than the Acquiring Person).

  
	
   

  	
   

  	
   

  
	
  Voting Rights:

  	
   

  	
  The rights will not
  have any voting rights.

  
	
   

  	
   

  	
   

  
	
  Anti-dilution
  Provisions:

  	
   

  	
  The rights will have
  the benefit of certain customary anti-dilution protections

  

 

45

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