Document:

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                                                                     Exhibit 4.2

                                      THIRD

                              AMENDED AND RESTATED

                                     BY-LAWS

                                       of

                                 PRANDIUM, INC.

                             A Delaware Corporation

                             Effective July 2, 2002

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                                TABLE OF CONTENTS

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                                    ARTICLE I

                                     OFFICES

Section 1.1       Registered Office ......................................      1
Section 1.2       Other Offices ..........................................      1

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

Section 2.1       Place of Meetings ......................................      1
Section 2.2       Annual Meetings ........................................      1
Section 2.3       Nomination of Directors ................................      2
Section 2.4       Special Meetings .......................................      4
Section 2.5       Conduct of Meetings ....................................      4
Section 2.6       Notice .................................................      5
Section 2.7       Adjournments ...........................................      5
Section 2.8       Quorum .................................................      5
Section 2.9       Proxies ................................................      5
Section 2.10      Voting .................................................      6
Section 2.11      Consent of Stockholders in Lieu of Meeting .............      6
Section 2.12      List of Stockholders Entitled to Vote ..................      7
Section 2.13      Stock Ledger ...........................................      7
Section 2.14      Inspectors of Election .................................      7
Section 2.15      Record Date ............................................      8

                                  ARTICLE III

                                   DIRECTORS

Section 3.1       Number and Election of Directors .......................      9
Section 3.2       Vacancies ..............................................      9
Section 3.3       Duties and Powers ......................................      9
Section 3.4       Organization ...........................................      9
Section 3.5       Meetings ...............................................     10
Section 3.6       Quorum .................................................     10
Section 3.7       Actions of Board .......................................     10
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Section 3.8     Meetings by Means of Conference Telephone ................    10
Section 3.9     Committees ...............................................    11
Section 3.10    Compensation .............................................    11
Section 3.11    Interested Directors .....................................    11
Section 3.12    Board Representation .....................................    11

                                 ARTICLE IV

                                  OFFICERS

Section 4.1     General ..................................................    12
Section 4.2     Election .................................................    12
Section 4.3     Voting Securities Owned by the Corporation ...............    12
Section 4.4     Chairman of the Board of Directors .......................    13
Section 4.5     President ................................................    13
Section 4.6     Vice Presidents ..........................................    13
Section 4.7     Secretary ................................................    14
Section 4.8     Treasurer ................................................    14
Section 4.9     Assistant Secretaries ....................................    15
Section 4.10    Assistant Treasurers .....................................    15
Section 4.11    Other Officers ...........................................    15

                                 ARTICLE V

                                   STOCK

Section 5.1     Form of Certificates .....................................    15
Section 5.2     Signatures ...............................................    16
Section 5.3     Lost, Destroyed, Stolen or Mutilated Certificates ........    16
Section 5.4     Transfers ................................................    16
Section 5.5     Transfer and Registry Agents .............................    16
Section 5.6     Beneficial Owners ........................................    16

                                 ARTICLE VI

                                  NOTICES

Section 6.1     Notices ..................................................    17
Section 6.2     Waivers of Notice ........................................    17
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                                   ARTICLE VII

                               GENERAL PROVISIONS

Section 7.1    Dividends .........................................................   17
Section 7.2    Disbursements .....................................................   18
Section 7.3    Fiscal Year .......................................................   18
Section 7.4    Corporate Seal ....................................................   18

                                  ARTICLE VIII

                                 INDEMNIFICATION

Section 8.1    Power to Indemnify in Actions, Suits or Proceedings Other than
        Those by or in the Right of the Corporation ..............................   18
Section 8.2    Power to Indemnify in Actions, Suits or Proceedings by or in
        the Right of the Corporation .............................................   19
Section 8.3    Authorization of Indemnification ..................................   19
Section 8.4    Good Faith Defined ................................................   20
Section 8.5    Indemnification by a Court ........................................   20
Section 8.6    Expenses Payable in Advance .......................................   20
Section 8.7    Nonexclusivity of Indemnification and Advancement of Expenses .....   21
Section 8.8    Insurance .........................................................   21
Section 8.9    Certain Definitions ...............................................   21
Section 8.10   Survival of Indemnification and Advancement of Expenses ...........   22
Section 8.11   Limitation on Indemnification .....................................   22
Section 8.12   Indemnification of Employees and Agents ...........................   22

                                   ARTICLE IX

                                   AMENDMENTS

Section 9.1    Amendments ........................................................   20
Section 9.2    Entire Board of Directors .........................................   20
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                                      THIRD
                              AMENDED AND RESTATED
                                     BY-LAWS
                                       OF
                                 PRANDIUM, INC.
                     (hereinafter called the "Corporation")

                                    ARTICLE I

                                     OFFICES

         Section 1.1  Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.

         Section 1.2  Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

         Section 2.1  Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.

         Section 2.2  Annual Meetings. The Annual Meetings of Stockholders for
the election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.

         No business may be transacted at an Annual Meeting of Stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (c) otherwise properly brought before
the annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 2.2 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 2.2.

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         In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.

         To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than ninety (90) days nor more than one hundred and twenty (120) days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such date,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
In the case of the 2003 Annual Meeting, to be timely, a stockholder's notice to
the Secretary must be delivered to or mailed and received at the principal
executive offices of the Corporation a reasonable time before the Corporation
begins to print and mail its proxy materials, as determined by the Board of
Directors.

         To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, (iv) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.

         No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 2.2; provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 2.2 shall be deemed to preclude discussion
by any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.

         Section 2.3  Nomination of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of the Corporation, except as may be otherwise provided in the
Certificate of Incorporation with respect to the right of holders of preferred
stock of the Corporation to nominate and elect a specified number of directors
in certain circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders, or at any special
meeting of stockholders called for the purpose of electing

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directors, (a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (b) by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of the notice provided
for in this Section 2.3 and on the record date for the determination of
stockholders entitled to vote at such meeting and (ii) who complies with the
notice procedures set forth in this Section 2.3.

         In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.

         To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than ninety (90) days nor more
than one hundred and twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within thirty
(30) days before or after such date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public disclosure of the date of
the special meeting was made, whichever first occurs. In the case of the 2003
Annual Meeting, to be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Corporation a reasonable time before the Corporation begins to print and mail
its proxy materials, as determined by the Board of Directors.

         To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to

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Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director if
elected.

         No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 2.3. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.

         Section 2.4  Special Meetings. Unless otherwise required by law or by
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman of the Board of Directors, (ii) the President, (iii) any Vice
President, (iv) the Secretary or (v) any Assistant Secretary, and shall be
called by any such officer at the request in writing of (i) the Board of
Directors, (ii) a committee of the Board of Directors that has been duly
designated by the Board of Directors and whose powers and authority include the
power to call such meetings or (iii) stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting. At a
Special Meeting of the Stockholders, only such business shall be conducted as
shall be specified in the notice of meeting (or any supplement thereto).

         Section 2.5  Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.

         Section 2.6  Notice. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law,

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the written notice of any meeting shall be given not less than ten nor more than
sixty days before the date of the meeting to each stockholder entitled to vote
at such meeting.

         Section 2.7  Adjournments. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

         Section 2.8  Quorum. Except as otherwise required by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
in the manner provided by Section 2.7, until a quorum shall be present or
represented.

         Section 2.9  Proxies. Any stockholder entitled to vote may do so in
person or by his proxy appointed by an instrument in writing subscribed by such
stockholder or by his attorney thereunto authorized, delivered to the Secretary
of the meeting; provided, however, that no proxy shall be voted or acted upon
after three years from its date, unless said proxy provides for a longer period.
Without limiting the manner in which a stockholder may authorize another person
or persons to act for him as proxy, either of the following shall constitute a
valid means by which a stockholder may grant such authority:

                      (1)  A stockholder may execute a writing authorizing
    another person or persons to act for him as proxy. Execution may be
    accomplished by the stockholder or his authorized officer, director,
    employee or agent signing such writing or causing his signature to be
    affixed to such writing by any reasonable means, including, but not limited
    to, by facsimile signature.

                      (2)  A stockholder may authorize another person or persons
    to act for him as proxy by transmitting or authorizing the transmission of a
    telegram or other means of electronic transmission to the person who will be
    the holder of the proxy or to a proxy solicitation firm, proxy support
    service organization or like agent duly authorized by the person who will be
    the holder of the proxy to receive such transmission, provided that any such
    telegram or other means of electronic transmission must either set forth or
    be submitted with information from which it can be determined that the
    telegram or other electronic transmission was authorized by the stockholder.

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Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission authorizing another person or persons to act as proxy
for a stockholder may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used; provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.

         Section 2.10  Voting. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Certificate of
Incorporation or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
affirmative vote of the holders of a majority of the total number of votes of
the capital stock represented and entitled to vote on such question, voting as a
single class. Unless otherwise provided in the Certificate of Incorporation, and
subject to Section 2.12, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote on such question held by such stockholder. Such votes may
be cast in person or by proxy in accordance with Section 2.9. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in such officer's discretion, may require that any
votes cast at such meeting shall be cast by written ballot.

         Section 2.11  Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 2.11
to the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its registered
office in the state of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation as provided above in this section.

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         Section 2.12  List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting for a
period of at least ten days prior to the meeting, either on a reasonably
accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting, or, if not
provided via electronic network, during ordinary business hours at the principal
place of business of the Corporation. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.

         Section 2.13  Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 2.12 or the books of the Corporation,
or to vote in person or by proxy at any meeting of stockholders.

         Section 2.14  Inspectors of Election. In advance of any meeting of
stockholders, the Board by resolution or the Chairman or President shall appoint
one or more inspectors of election to act at the meeting and make a written
report thereof. One or more other persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is present, ready and willing to act at a meeting of stockholders, the
Chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Unless otherwise required by law, inspectors may be officers, employees
or agents of the Corporation. Each inspector, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability. The
inspector shall have the duties prescribed by law and shall take charge of the
polls and, when the vote is completed, shall make a certificate of the result of
the vote taken and of such other facts as may be required by law.

         Section 2.15  Record Date.

         (a)  In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the

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meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

         (b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolutions taking such
prior action.

         (c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.

                                  ARTICLE III

                                    DIRECTORS

         Section 3.1  Number and Election of Directors. The Board of Directors
shall consist of not less than two nor more than seven members, the exact number
of which shall be determined from time to time by resolution adopted by the
Board of Directors. Except as provided in Section 3.2, directors shall be
elected by a plurality of the votes cast at the Annual Meetings of Stockholders,
and each director so elected shall hold office until such director's successor
is duly elected and qualified, or until such director's death, or until such
director's earlier resignation or removal. Any director may

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resign at any time upon written notice to the Corporation. Directors need not be
stockholders.

         Section 3.2  Vacancies. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.

         Section 3.3  Duties and Powers. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws required to be exercised or done by the stockholders.

         Section 3.4  Organization. At each meeting of the Board of Directors,
the Chairman of the Board of Directors, or, in such officer's absence, a
director chosen by a majority of the directors present, shall act as Chairman.
The Secretary of the Corporation shall act as Secretary at each meeting of the
Board of Directors. In case the Secretary shall be absent from any meeting of
the Board of Directors, an Assistant Secretary shall perform the duties of
Secretary at such meeting; and in the absence from any such meeting of the
Secretary and all the Assistant Secretaries, the Chairman of the meeting may
appoint any person to act as Secretary of the meeting.

         Section 3.5  Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held at such time
and at such place as may from time to time be determined by the Board of
Directors and, unless required by resolution of the Board of Directors, without
notice. Special meetings of the Board of Directors may be called by the Chairman
of the Board of Directors, the Vice Chairman, if there be one, or a majority of
the directors then in office. Notice thereof stating the place, date and hour of
the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by telephone, facsimile
or telegram on twenty-four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances.

         Section 3.6  Quorum. Except as may be otherwise required by law, the
Certificate of Incorporation or these By-Laws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.

                                       9

<PAGE>

         Section 3.7  Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

         Section 3.8  Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 3.8 shall
constitute presence in person at such meeting.

         Section 3.9  Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent permitted by law
and provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Each
committee shall keep regular minutes and report to the Board of Directors when
required.

         Section 3.10 Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary, or such other emoluments as the Board of Directors shall from time to
time determine. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

         Section 3.11 Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because such person's or their
votes

                                       10

<PAGE>

are counted for such purpose if (i) the material facts as to such person's or
their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to such person's or their relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.

         Section 3.12 Board Representation. The Corporation shall take all
actions necessary to comply with the Nominating Agreement, dated as of July 2,
2002, by and between the Corporation and MacKay Shields Financial Corporation so
long as such agreement is in effect.

                                   ARTICLE IV

                                    OFFICERS

         Section 4.1  General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these By-Laws. The officers of the Corporation
need not be stockholders of the Corporation nor, except in the case of the
Chairman of the Board of Directors, need such officers be directors of the
Corporation.

         Section 4.2  Election. The Board of Directors at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.

                                       11

<PAGE>

         Section 4.3  Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.

         Section 4.4  Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation unless the
Board of Directors designates the President as the Chief Executive Officer, and
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may be
authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman of the Board of
Directors shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.

         Section 4.5  President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, the President shall be the Chief Executive Officer of the
Corporation. The President shall also perform such other duties and may exercise
such other powers as from time to time may be assigned to such officer by these
By-Laws or by the Board of Directors.

         Section 4.6  Vice Presidents. At the request of the President or in the
President's absence or in the event of the President's inability or refusal to
act (and if there be no Chairman of the Board of Directors), the Vice President
or the Vice Presidents if there is more than one (in the order designated by the
Board of Directors) shall perform the duties of the President, and when so
acting, shall have all the powers of

                                       12

<PAGE>

and be subject to all the restrictions upon the President. Each Vice President
shall perform such other duties and have such other powers as the Board of
Directors from time to time may prescribe. If there be no Chairman of the Board
of Directors and no Vice President, the Board of Directors shall designate the
officer of the Corporation who, in the absence of the President or in the event
of the inability or refusal of the President to act, shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President.

         Section 4.7  Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees of the
Board of Directors when required. The Secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors, the Chairman of the Board of Directors or President,
under whose supervision the Secretary shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.

         Section 4.8  Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under control of the Treasurer belonging to the Corporation.

         Section 4.9  Assistant Secretaries. Except as may be otherwise provided
in these By-Laws, Assistant Secretaries, if there be any, shall perform such

                                       13

<PAGE>

duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of the
Secretary's disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.

         Section 4.10 Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under control of the Assistant Treasurer belonging to
the Corporation.

         Section 4.11 Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.

                                   ARTICLE V

                                      STOCK

         Section 5.1  Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation, (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such holder of stock in the Corporation.

         Section 5.2  Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.

         Section 5.3  Lost, Destroyed, Stolen or Mutilated Certificates. The
Board of Directors may direct a new certificate to be issued in place of any
certificate

                                       14

<PAGE>

theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or such person's legal representative, to
advertise the same in such manner as the Board of Directors shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to (i) the
certificate alleged to have been lost, stolen or destroyed or (ii) the issuance
of such new certificate.

         Section 5.4  Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, properly endorsed for transfer
and payment of all necessary transfer taxes; provided, however, that such
surrender and endorsement or payment of taxes shall not be required in any case
in which the officers of the Corporation shall determine to waive such
requirement. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or Assistant Secretary of the Corporation or the transfer agent
thereof. No transfer of stock shall be valid as against the Corporation for any
purpose until it shall have been entered in the stock records of the Corporation
by an entry showing from and to whom transferred.

         Section 5.5  Transfer and Registry Agents. The Corporation may from
time to time maintain one or more transfer offices or agencies and registry
offices or agencies at such place or places as may be determined from time to
time by the Board of Directors.

         Section 5.6  Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.

                                   ARTICLE VI

                                     NOTICES

         Section 6.1  Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the

                                       15

<PAGE>

records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Written notice may also be given personally or by telegram,
facsimile, telex or cable.

         Section 6.2  Waivers of Notice. Whenever any notice is required by law,
the Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting, present by person or represented by proxy, shall constitute a waiver
of notice of such meeting, except where the person attends the meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.

                                  ARTICLE VII

                               GENERAL PROVISIONS

         Section 7.1  Dividends. Subject to the requirements of the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL") and the provisions of the Certificate of Incorporation,
dividends upon the capital stock of the Corporation may be declared by the Board
of Directors at any regular or special meeting of the Board of Directors (or any
action by written consent in lieu thereof in accordance with Section 3.8), and
may be paid in cash, in property, or in shares of the Corporation's capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for purchasing any of the shares
of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or
other securities or evidences of indebtedness of the Corporation, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any other proper purpose, and the Board of Directors may
modify or abolish any such reserve.

         Section 7.2  Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.

         Section 7.3  Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.

         Section 7.4  Corporate Seal. If the Corporation chooses to have a
corporate seal, the corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

                                       16

<PAGE>

                                  ARTICLE VIII

                                 INDEMNIFICATION

         Section 8.1  Power to Indemnify in Actions, Suits or Proceedings Other
than Those by or in the Right of the Corporation. Subject to Section 8.3, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that such
person is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director or officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe such person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that such person did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.

         Section 8.2  Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 8.3, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

         Section 8.3  Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the

                                       17

<PAGE>

director or officer is proper in the circumstances because such person has met
the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as
the case may be. Such determination shall be made, with respect to a person who
is a director or officer at the time of such determination, (i) by a majority
vote of the directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (ii) by a committee of such directors
designated by a majority vote of such directors, even though less than a quorum,
or (iii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iv) by the stockholders.
Such determination shall be made, with respect to former directors and officers,
by any person or persons having the authority to act on the matter on behalf of
the Corporation. To the extent, however, that a present or former director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.

         Section 8.4  Good Faith Defined. For purposes of any determination
under Section 8.3, a person shall be deemed to have acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe such person's conduct was
unlawful, if such person's action is based on the records or books of account of
the Corporation or another enterprise, or on information supplied to such person
by the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this Section 8.4
shall mean any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise of which such person is or was serving
at the request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 8.4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Section 8.1 or 8.2, as the case may
be.

         Section 8.5  Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 8.3, and notwithstanding the
absence of any determination thereunder, any director or officer may apply to
the Court of Chancery of the State of Delaware or any other court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 8.1 and 8.2. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standards of conduct set forth in
Section 8.1 or 8.2, as the case may be. Neither a contrary determination in the
specific case under Section 8.3 nor the absence of any determination thereunder
shall be a defense to such application or create a presumption that the director
or officer seeking indemnification has not met any

                                       18

<PAGE>

applicable standard of conduct. Notice of any application for indemnification
pursuant to this Section 8.5 shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.

         Section 8.6  Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized in this Article VIII.

         Section 8.7  Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation or any By-Law, agreement,
contract, vote of stockholders or disinterested directors or pursuant to the
direction (howsoever embodied) of any court of competent jurisdiction or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Section 8.1 and 8.2
shall be made to the fullest extent permitted by law. The provisions of this
Article VIII shall not be deemed to preclude the indemnification of any person
who is not specified in Section 8.1 or 8.2 but whom the Corporation has the
power or obligation to indemnify under the provisions of the GCL, or otherwise.

         Section 8.8  Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.

         Section 8.9  Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as

                                       19

<PAGE>

such person would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII, references
to "fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director or officer with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VIII.

         Section 8.10 Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

         Section 8.11 Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 8.5
hereof), the Corporation shall not be obligated to indemnify any director or
officer (or such person's heirs, executors or personal or legal representatives)
or advance expenses in connection with a proceeding (or part thereof) initiated
by such person unless such proceeding (or part thereof) was authorized or
consented to by the Board of Directors of the Corporation.

         Section 8.12 Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.

                                   ARTICLE IX

                                   AMENDMENTS

         Section 9.1  Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.

         Section 9.2  Entire Board of Directors. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.

                                       20<PAGE>

                                                                     Exhibit 4.1

                                  K.Swiss Inc.

                            1999 STOCK INCENTIVE PLAN
               (Amended and Restated effective February 13, 2002,
           as Approved by Stockholders May 23, 2002 and as Adjusted to
            Reflect a 2-for-1 Stock Split Distributed June 21, 2002)

Section 1.    PURPOSE OF PLAN

         This Amended and Restated 1999 Stock Incentive Plan (this "Plan") of
K-Swiss Inc., a Delaware corporation (the "Company"), is intended to serve as an
incentive to, and to encourage stock ownership by certain employees and
non-employee directors, so that they may acquire or increase their proprietary
interests in the success of the Company and to encourage them to remain in the
Company's service.

Section 2.    PERSONS ELIGIBLE UNDER PLAN

         Any employee, consultant or director of the Company or any of its
subsidiaries or affiliates (an "Eligible Person") shall be eligible to be
considered for the grant of Awards (as hereinafter defined) hereunder. Any
director of the Company who is not an employee (a "Non-Employee Director") shall
be eligible to be considered for the grant of Non-Employee Director Options (as
hereinafter defined) pursuant to Section 10 hereof, but shall not otherwise
participate in this Plan. For purposes of this Plan, the Chairman of the Board's
status as a Non-Employee Director shall be determined by the Board of Directors
of the Company (the "Board").

Section 3.    AWARDS

         (A)  The Board or the Committee (as hereinafter defined) is authorized
under this Plan to approve any type of arrangement with an Eligible Person that
is not inconsistent with the provisions of this Plan and that, by its terms,
involves or might involve the issuance of (1) shares of Class A Common Stock,
par value $0.01 per share, of the Company or of any other class of security of
the Company which is convertible into shares of the Company's Class A Common
Stock (the "Shares") or (2) a right or interest with an exercise or conversion
privilege at a price related to the Shares or with a value derived from the
value of the Shares, which right or interest may, but need not, constitute a
"Derivative Security," as such term is defined in Rule 16a-l promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such
Rule may be amended from time to time. The entering into of any such arrangement
is referred to herein as the "grant" of an "Award."

         (B)  Awards are not restricted to any specified form or structure and
may include, without limitation, grants, sales or bonuses of stock, restricted
stock, stock options, reload stock options, stock purchase warrants, other
rights to acquire stock, securities convertible into or redeemable for stock,
stock appreciation rights, limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance shares, and an Award may
consist of one such security or benefit, or two or more of them in tandem or in
the alternative. The terms upon which an Award is granted shall be evidenced by
a written agreement executed by the Company and the Eligible Person to whom such
Award is granted.

         (C)  Subject to paragraph (D)(2) below, Awards may be granted, and
Shares may be issued pursuant to an Award, for any lawful consideration as
determined by the Board or the Committee, including, without limitation,
services rendered by the Eligible Person.

         (D)  Subject to the provisions of this Plan, the Board or the Committee
shall determine all of the terms and conditions of each Award granted under this
Plan, which terms and conditions may (but need not) include, among other things:

              (1)  provisions permitting any holder of an Award to pay the
         purchase price of the Shares or other property issuable pursuant to
         such Award, and/or such holder's tax withholding obligation with
         respect to such issuance, in whole or in part, by any one or more of
         the following means:

<PAGE>

                   (a)  the delivery of cash;

                   (b)  the delivery of other property;

                   (c)  the delivery of previously owned shares of capital stock
              of the Company (including "pyramiding");

                   (d)  a reduction in the amount of Shares or other property
              otherwise issuable pursuant to such Award; or

                   (e)  the delivery of a promissory note of the holder or of a
              third party.

              (2)  provisions specifying the exercise or settlement price for
         any Award, or specifying the method by which such price is determined;
         provided, that the exercise or settlement price of any Award that is an
         option to acquire a Share or a right to appreciation with respect to a
         Share or a similar Award, and that is intended to qualify as
         "performance-based compensation" for purposes of Section 162(m) of the
         Internal Revenue Code of 1986, as amended (the "Code"), shall be not
         less than the fair market value of a Share on the date such Award is
         granted;

              (3)  provisions relating to the exercisability and/or vesting of
         Awards, lapse and non-lapse restrictions upon the Shares obtained or
         obtainable under Awards or under this Plan and the termination,
         expiration and/or forfeiture of Awards;

              (4)  provisions conditioning or accelerating the grant of an Award
         or the receipt of benefits pursuant to such Award upon the occurrence
         of specified events, including, without limitation, the achievement of
         performance goals, the exercise or settlement of a previous Award, the
         satisfaction of an event or condition within the control of the
         recipient of the Award or within the control of others, a change of
         control of the Company, an acquisition of a specified percentage of the
         voting power of the Company, the dissolution or liquidation of the
         Company, a sale of substantially all of the property and assets of the
         Company or an event of the type described in Section 7 hereof;

              (5)  provisions required in order for such Award to qualify (a) as
         an incentive stock option under Section 422 of the Code (an "Incentive
         Stock Option"), (b) as "performance based compensation" under Section
         162(m) of the Code, and/or (c) for an exemption from Section 16 of the
         Exchange Act; and/or

              (6)  provisions restricting the transferability of Awards or
         Shares issued under Awards.

Section 4.    STOCK SUBJECT TO PLAN

         (A)  The aggregate number of Shares that may be issued pursuant to all
Incentive Stock Options granted under this Plan shall not exceed 1,800,000, as
amended and restated, subject to adjustment as provided in Section 7 hereof.

         (B)  At any time, the aggregate number of Shares issued and issuable
pursuant to all Awards (including all Incentive Stock Options and Awards that
constitute a right or interest with an exercise or conversion privilege at a
price related to the Shares or with a value derived from the value of Shares)
granted under this Plan shall not exceed 1,800,000, as amended and restated,
subject to adjustment as provided in Section 7 hereof.

         (C)  The aggregate number of Shares subject to Awards granted during
any calendar year to any one Eligible Person (including the number of shares
involved in Awards having a value derived from the value of Shares) shall not
exceed 600,000, subject to adjustment as provided in Section 7 hereof.

<PAGE>

     (D)   For purposes of Section 4(B) hereof, the aggregate number of Shares
issued and issuable pursuant to Awards granted under this Plan shall at any time
be deemed to be equal to the sum of the following:

           (i)   the number of Shares that were issued prior to such time
     pursuant to Awards granted under this Plan, other than Shares that were
     subsequently reacquired by the Company pursuant to the terms and conditions
     of such Awards and with respect to which the holder thereof received no
     benefits of ownership such as dividends; plus

           (ii)  the number of Shares that were otherwise issuable prior to such
     time pursuant to Awards granted under this Plan, but that were withheld by
     the Company as payment of the purchase price of the Shares issued pursuant
     to such Awards or as payment of the recipient's tax withholding obligation
     with respect to such issuance; plus

           (iii) the maximum number of Shares that are or may be issuable at or
     after such time pursuant to Awards granted under this Plan prior to such
     time.

Section 5. NATURE AND DURATION OF PLAN

     (A)   This Plan is intended to constitute an unfunded arrangement for a
select group of management or other key employees and consultants.

     (B)   Any Awards granted under this Plan shall be granted within ten years
from the Effective Date of this Plan (as provided in Section 9) (the "Expiration
Date"). Although Shares may be issued after the Expiration Date pursuant to
Awards made prior to such date, no Shares shall be issued under this Plan after
the tenth anniversary of the Expiration Date.

Section 6. ADMINISTRATION OF PLAN

     (A)   This Plan shall be administered by the Board or a committee of the
Board (the "Committee") consisting of two or more directors, each of whom is (i)
a "Non-Employee Director" (as such term is defined in Rule 16b-3 promulgated
under the Exchange Act), and (ii) with respect to any Award intended to qualify
for the "performance-based compensation" exception of Section 162(m) of the
Code, is an "outside director" within the meaning of Section 162(m) of the Code.
The Board shall have the discretion to appoint, add, remove or replace members
of the Committee, and shall have the sole authority to fill vacancies on the
Committee.

     (B)   Subject to the provisions of this Plan, the Board or the Committee
shall be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan with respect to the Awards over
which the Board or such Committee has authority, including, without limitation,
the following:

           (1)   adopt, amend and rescind rules and regulations relating to this
     Plan;

           (2)   determine which persons are Eligible Persons and to which of
     such Eligible Persons, if any, and when Awards shall be granted hereunder;

           (3)   grant Awards to Eligible Persons and determine the terms and
     conditions thereof, including the number of Shares subject thereto and the
     circumstances under which Awards become exercisable or vested or are
     forfeited or expire, which terms may but need not be conditioned upon the
     passage of time, continued employment, the satisfaction of performance
     criteria, the occurrence of certain events (including events which the
     Board or the Committee determine constitute a change of control), or other
     factors;

           (4)   determine whether, and the extent to which adjustments are
     required pursuant to Section 7 hereof;

<PAGE>

           (5) interpret and construe any terms and conditions of, and define
     any terms used in, this Plan, any rules and regulations under this Plan
     and/or any Award granted under this Plan; and

           (6) determine the terms and conditions of the Non-Employee Director
     Options that are granted hereunder, other than the terms and conditions
     specified in Section 10 hereof.

     (C)   All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon any Eligible Person to whom an Award has been
granted and to any other person holding an Award.

     (D)   The Committee may, in the terms of an Award or otherwise, temporarily
suspend the exercisability of an Award and/or the issuance of Shares under an
Award if the Committee determines that securities law or other considerations so
warrant.

Section 7. ADJUSTMENTS

     If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Board or the Committee may make appropriate and
proportionate adjustments in (A) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to Awards
theretofore granted under this Plan and the exercise or settlement price of such
Awards, (B) the aggregate number and type of shares or other securities that may
be issued pursuant to all Awards thereafter granted under this Plan, (C) the
aggregate number of Shares that may be issued pursuant to Incentive Stock
Options that may be granted under this Plan, and (D) the aggregate number of
Shares that may be subject to Awards granted during any calendar year to any one
Eligible Person; provided, however, that notwithstanding the foregoing, no
adjustment shall be made pursuant to this Section 7 to the extent that it would
(and the adjustment shall be modified appropriately so that it does not) (1)
cause an Award intended to qualify for the "performance based compensation"
exception under Section 162(m) of the Code to not so qualify, or (2) without the
consent of the Company and the holder of the Incentive Stock Option, cause an
Award intended to qualify as an Incentive Stock Option to not so qualify.

Section 8. AMENDMENT AND TERMINATION OF PLAN

     The Board may amend, alter or discontinue this Plan or any agreement
evidencing an Award made under this Plan, but no amendment or alteration shall
be made which would impair the rights of any Award holder, without such holder's
consent, under any Award theretofore granted; provided, that no such consent
shall be required if the Board or the Committee determines in its sole
discretion and prior to the date of any change of control (as defined, if
applicable, in the agreement evidencing such Award) that such amendment or
alteration is not reasonably likely to significantly diminish the benefits
provided under such Award, or that any such diminution has been adequately
compensated.

Section 9. EFFECTIVE DATE OF PLAN

     The 1999 Stock Incentive Plan originally became effective on April 12,
1999. The amendments to the 1999 Stock Incentive Plan reflected in this Amended
and Restated 1999 Stock Incentive Plan shall be effective as of February 13,
2002; provided, however, that no Class A Shares may be issued under this Amended
and Restated 1999 Stock Incentive Plan until it has been approved, directly or
indirectly, by (a) the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled to `vote at a
meeting duly held in accordance with the laws of the State of Delaware or (b)
the written consent of the holders of a majority of the securities of the
Company entitled to vote.

<PAGE>

Section 10. NON-EMPLOYEE DIRECTOR OPTIONS

     (A)  The Board or the Committee is authorized under this Plan to grant each
Non-Employee Director an option (a "Non-Employee Director Option") to purchase
up to 4,000 Shares during a calendar year, subject to adjustment as provided in
Section 7 hereof.

     (B)  Each Non-Employee Director Option granted under this Plan shall expire
upon the first to occur of the following:

          (1) Twenty-four (24) months after the date upon which the optionee
     shall cease to be a director of the Company; or

          (2) The tenth anniversary of the Date of Grant of such Non-Employee
     Director Option.

     (C)  Each Non-Employee Director Option shall have an exercise price equal
to the greater of (1) the aggregate fair market value on the Date of Grant of
such option of the Shares subject thereto or (2) the aggregate par value of such
Shares on such date.

     (D)  All outstanding Non-Employee Director Options theretofore granted
under this Plan shall become fully exercisable upon the first to occur of the
following:

          (1) the date of stockholder approval of a reorganization, merger or
     consolidation of the Company as a result of which the outstanding
     securities of the class then subject to this Plan are exchanged for or
     converted into cash, property and/or securities not issued by the Company
     or by a company whose common equity holders immediately after such
     transaction consist only of persons who are holders of the common equity of
     the Company immediately before such transaction;

          (2) the first date upon which the directors of the Company who were
     nominated by the Board for election as directors shall cease to constitute
     a majority of the authorized number of directors of the Company;

          (3) the dissolution or liquidation of the Company; or

          (4) the sale of all or substantially all of the property and assets of
     the Company.

Section 11. EXTRAORDINARY CORPORATE TRANSACTIONS.

     (A)  The Committee may provide, either at the time an Award is granted or
thereafter, that a Change in Control shall have such effect as specified by the
Committee, or no effect, as the Committee in its sole discretion may provide.
Without limiting the foregoing, the Committee may but need not provide, either
at the time an Award is granted or thereafter, that if a Change in Control
occurs, then effective as of a date selected by the Committee, the Committee
(which for purposes of the Change in Controls described in (iii) and (v) of
Section 11(B) shall be the Committee as constituted prior to the occurrence of
such Change in Control) acting in its sole discretion without the consent or
approval of any Eligible Person, will effect one or more of the following
alternatives or combination of alternatives with respect to any or all
outstanding Awards (which alternatives may be conditional on the occurrence of
such of the Change in Control specified in clause (i) through (v) of Section
11(B) which gives rise to the Change in Control and which may vary among
individual Eligible Persons):

          (1) in the case of a Change in Control specified in clauses (i), (ii)
     or (iv) of Section 11(B), accelerate the time at which Awards then
     outstanding may be exercised in full for a limited period of time on or
     before a specified date (which will permit the Eligible Person to
     participate with the Class A Common Stock received upon exercise of such
     Award in the event of a Change in Control specified in clauses (i), (ii) or
     (iv), as the case may be) fixed by the Committee, after which specified
     date all unexercised options and all rights of Eligible Persons thereunder
     shall terminate;

<PAGE>

          (2) accelerate the time at which Awards then outstanding may be
     exercised so that such Awards shall be exercisable in full for their then
     remaining term and shall be subject to assumption and/or adjustment
     pursuant to Section 7; or

          (3) require the mandatory surrender to the Company of outstanding
     Awards held by such Eligible Person (irrespective of whether such Awards
     are then exercisable under the provisions of this Plan) as of a date,
     before or not later than sixty days after such Change in Control, specified
     by the Committee, and in such event the Committee shall thereupon cancel
     such Awards and the Company shall pay to each Eligible Person an amount of
     cash equal to the excess of the fair market value of the aggregate shares
     subject to such Award over the aggregate Award price of such shares.

     Notwithstanding the foregoing, with the consent of the Eligible Person, the
Committee may in lieu of the foregoing make such provision with respect of any
Change in Control as it deems appropriate.

     (B)  For purposes of this Plan and Awards granted under this Plan, the term
"Change in Control" shall mean (i) any merger or consolidation in which the
Company shall not be the surviving entity (or survives only as a subsidiary of
another entity whose shareholders did not own all or substantially all of the
Company's Common Stock immediately prior to such transaction), (ii) the sale of
all or substantially all of the Company's assets to any other person or entity
(other than a wholly-owned subsidiary), (iii) the acquisition of beneficial
ownership or control of (including, without limitation, power to vote) more than
50% of the outstanding shares of Common Stock by any person or entity (including
a "group" as defined by or under Section 13(d)(3) of the Exchange Act), (iv) the
dissolution or liquidation of the Company, (v) a contested election of
directors, as a result of which or in connection with which the persons who were
directors of the Company before such election or their nominees cease to
constitute a majority of the Board, or (vi) any other event specified by the
Committee, regardless of whether at the time an Award is granted or thereafter.

Section 12. COMPLIANCE WITH OTHER LAWS AND REGULATIONS

     This Plan, the grant and exercise of Awards thereunder, and the obligation
of the Company to sell and deliver shares under such Awards, shall be subject to
all applicable federal and state laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for shares of
Class A Common Stock prior to the completion of any registration or
qualification of the Shares under any federal or state law or issuance of any
ruling or regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable.

Section 13. NO RIGHT TO COMPANY EMPLOYMENT

     Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual's employment at any time. The agreement evidencing an Award may
contain such provisions as the Committee may approve with respect to the effect
of approved leaves of absence.

Section 14. LIABILITY OF COMPANY

     The Company and any affiliate which is in existence or hereafter comes into
existence shall not be liable to an Eligible Person or other persons as to:

     (A)  The non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; and

     (B)  Any tax consequence expected, but not realized, by any Eligible Person
or other person due to the issuance, exercise, settlement, cancellation or other
transaction involving any Award granted hereunder.

<PAGE>

Section 15. GOVERNING LAW

     This Plan and any Awards and agreements hereunder shall be interpreted and
construed in accordance with the laws of the State of Delaware and applicable
federal law.

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