Document:

Exhibit 10.1

 

AMENDED AND RESTATED 

 

STOCKHOLDERS RIGHTS AGREEMENT

 

This Amended and Restated
Stockholders Rights Agreement (this “Rights Agreement”) is made and
entered into as of October 15, 2005, by and between Diana Shipping Inc., a
Marshall Islands corporation (the “Company”), and Computershare Trust
Company, Inc., as Rights Agent (the “Rights Agent”).  This Rights Agreement amends and restates in
its entirety the stockholder rights agreement dated as of February 21,
2005 between the Company and the Rights Agent.

 

WHEREAS, the Board of
Directors of the Company (the “Board”) has (a) authorized and
declared a dividend of one right (the “Right”) for each share of the
Company’s common stock, par value $.01 per share (the “Common Stock”) held of
record as of the Close of Business (as hereinafter defined) on February 21,
2005 (the “Record Date”) and (b) has further authorized the
issuance of one Right in respect of each share of Common Stock that shall
become outstanding (i) at any time between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date (as such terms are hereinafter defined) or (ii) upon the exercise or
conversion, prior to the earlier of the Redemption Date or the Final Expiration
Date, of any option or other security exercisable for or convertible into
shares of Common Stock, which option or other such security is outstanding on
the Distribution Date; and

 

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

 

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

 

1.             Certain Definitions.

 

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

 

 

pursuant to a dividend or distribution paid or made by
the Company on the outstanding shares of Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding shares of Common
Stock), such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional shares of Common Stock of the
Company such Person does not beneficially own 15% or more of the shares of
Common Stock of the Company then outstanding. 
Notwithstanding the foregoing, (i) if the Company’s Board of
Directors determines in good faith that a Person who would otherwise be an “Acquiring
Person,” as defined herein, has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned
a percentage of the shares of Common Stock that would otherwise cause such
Person to be an “Acquiring Person,” as defined herein, or (B) such Person
was aware of the extent of the shares of Common Stock it beneficially owned but
had no actual knowledge of the consequences of such beneficial ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person divested or divests as promptly as practicable
a sufficient number of shares of Common Stock so that such Person would no
longer be an “Acquiring Person,” as defined herein, then such Person shall not
be deemed to be or to have become an “Acquiring Person” for any purposes of
this Agreement; and (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 15% or more of the shares of Common Stock outstanding, such
Person shall not be or become an “Acquiring Person,” as defined herein, unless
and until such time as such Person shall become the Beneficial Owner of
additional shares of Common Stock in an amount equal to 20% of the Company’s
outstanding common stock (calculated without including the shares of Common
Stock already held by such Person), other than pursuant to a grant under a
Company equity incentive plan, a dividend or distribution paid or made by the
Company on the outstanding shares of Common Stock in shares of Common Stock or
pursuant to a split or subdivision of the outstanding shares of Common Stock),
unless, upon becoming the Beneficial Owner of such additional shares of Common
Stock, such Person is not then the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding.

 

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

 

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

 

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

 

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

 

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates has (A) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities),

 

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or
upon the exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed pursuant to this subsection (ii)(A) to
be the Beneficial Owner of, or to beneficially own, (1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (2) securities which
a Person or any of such Person’s Affiliates or Associates may be deemed to have
the right to acquire pursuant to any merger or other acquisition agreement
between the Company and such Person (or one or more of its Affiliates or
Associates) if such agreement has been approved by the Board of Directors of
the Company prior to there being an Acquiring Person; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security under this subsection (ii)(B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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selected by the
Board of Directors of the Company.  If on
any such date no market maker is making a market in the Security, the fair
value of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. 
If the Preferred Shares are not publicly traded, the Current Per Share
Market Price of the Preferred Shares shall be conclusively deemed to be the
Current Per Share Market Price of the shares of Common Stock as determined
pursuant to this definition, as appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof,
multiplied by 1000.  If the Security is
not publicly held or so listed or traded, Current Per Share Market Price shall
mean the fair value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Final Expiration Date”
shall mean February 21, 2015.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.             Appointment of Rights Agent.  The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the shares of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable.

 

3.             Issuance of Rights Certificates.

 

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

 

(b)           On the Record Date or as soon as
practicable thereafter, the Company will send a copy of the Summary of Rights
by first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company’s transfer agent and registrar.  With respect to

 

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certificates for
shares of Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with the Summary of Rights.  Until the Distribution Date (or, if earlier,
the Expiration Date), the surrender for transfer of any certificate for shares
of Common Stock outstanding on the Record Date, with or without a copy of the
Summary of Rights, shall also constitute the transfer of the Rights associated
with the shares of Common Stock represented thereby.

 

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

 

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT
BETWEEN DIANA SHIPPING INC. AND COMPUTERSHARE TRUST COMPANY, INC., AS THE
RIGHTS AGENT, DATED AS OF FEBRUARY 21, 2005, (THE “RIGHTS AGREEMENT”), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF DIANA SHIPPING INC.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE.  DIANA SHIPPING INC. WILL MAIL TO THE HOLDER
OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR.  UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, MAY BECOME NULL AND VOID.

 

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

 

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

 

4.             Form of Rights Certificates.

 

(a)           The Rights Certificates (and the
forms of election to purchase shares of Common Stock and of assignment to be
printed on the reverse thereof) shall be substantially in the form of Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or 

 

8

 

regulation of any
stock exchange or a national market system, on which the Rights may from time
to time be listed or included, or to conform to usage.  Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date (or in the case of Rights issued with
respect to shares of Common Stock issued by the Company after the Record Date,
as of the date of issuance of such shares of Common Stock) and on their face
shall entitle the holders thereof to purchase such number of one- thousandths of
a Preferred Share as shall be set forth therein at the price set forth therein
(such exercise price per one one-thousandth of a Preferred Share being
hereinafter referred to as the “Exercise Price” and the aggregate
Exercise Price of all Preferred Shares issuable upon exercise of one Right
being hereinafter referred to as the “Total Exercise Price”), but the
number and type of securities purchasable upon the exercise of each Right and
the Exercise Price shall be subject to adjustment as provided herein.

 

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

 

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

 

5.             Countersignature and
Registration.

 

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

 

9

 

had not ceased to
be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

 

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

 

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

 

(a)           Subject to the provisions of Sections
7(e), 14 and 24 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may be transferred, split
up, combined or exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of one-thousandths of
a Preferred Share (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated
for such purpose.  Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.  Thereupon the
Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and
deliver to the person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.

 

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

 

10

 

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

 

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

 

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

 

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

 

11

 

other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate.

 

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

 

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

 

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

 

8.             Cancellation and Destruction of
Rights Certificates.  All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. 
The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any Rights

 

12

 

Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof.  The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.

 

9.             Reservation and Availability of
Preferred Shares.

 

(a)           The Company covenants and agrees that
it will use its best efforts to cause to be reserved and kept available out of
its authorized and unissued Preferred Shares not reserved for another purpose
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common
Stock and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.

 

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

 

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

 

(d)           The Company covenants and agrees that
it will take all such action as may be necessary to ensure that all Preferred
Shares (or other securities of the Company) delivered

 

13

 

upon exercise of
Rights shall, at the time of delivery of the certificates for such securities
(subject to payment of the Exercise Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.

 

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

 

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

 

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

 

(a)           (i) Notwithstanding
anything in this Agreement to the contrary, in the event the Company shall at
any time after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
(by reverse stock split or otherwise) into a smaller number of Preferred
Shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each

 

14

 

such event, except as otherwise provided in this Section 11 and Section 7(e) hereof:
(1) the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Exercise Price thereafter shall
equal the result obtained by dividing the Exercise Price in effect immediately
prior to such time by a fraction (the “Adjustment Fraction”), the
numerator of which shall be the total number of Preferred Shares (or shares of
capital stock issued in such reclassification of the Preferred Shares)
outstanding immediately following such time and the denominator of which shall
be the total number of Preferred Shares outstanding immediately prior to such
time; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of such
Right; and (2) the number of one-thousandths of a Preferred Share (or
share of such other capital stock) issuable upon the exercise of each Right
shall equal the number of one-thousandths of a Preferred Share (or share of
such other capital stock) as was issuable upon exercise of a Right immediately
prior to the occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i),
multiplied by the Adjustment Fraction; provided, however, that,
no such adjustment shall be made pursuant to this Section 11(a)(i) to
the extent that there shall have simultaneously occurred an event described in
clause (A), (B), (C) or (D) of Section 11(n) with a
proportionate adjustment being made thereunder. 
Each share of Common Stock that shall become outstanding after an
adjustment has been made pursuant to this Section 11(a)(i) shall have
associated with it the number of Rights, exercisable at the Exercise Price and
for the number of one-thousandths of a Preferred Share (or shares of such other
capital stock) as one share of Common Stock has associated with it immediately
following the adjustment made pursuant to this Section 11(a)(i).

 

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

 

15

 

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

 

16

 

hereof, that such action
shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares, to take any action to
obtain any required regulatory approval and/or to decide the appropriate form
of distribution to be made pursuant to such first sentence and to determine the
value thereof.  In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the Current Per Share Market Price of
the Common Stock on the Section 11(a)(ii) Trigger Date and the value
of any Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date.

 

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

 

(c)           In case the Company shall, at any
time after the date of this Agreement, fix a record date for the making of a
distribution to all holders of the Preferred Shares or of any

 

17

 

class or series of
Equivalent Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend, if any, or a dividend payable in Preferred Shares) or
subscription rights, options or warrants (excluding those referred to in Section 11(b)),
then, in each such case, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Per Share Market Price of a Preferred Share or an
Equivalent Share on such record date, less the fair market value per Preferred
Share or Equivalent Share (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share or Equivalent Share, as the case may be, and
the denominator of which shall be such Current Per Share Market Price of a
Preferred Share or Equivalent Share on such record date; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been fixed.

 

(d)           Notwithstanding anything to the
contrary, no adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments which by reason of
this Section 11(d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one hundred-thousandth of a Preferred Share,
as the case may be.  Notwithstanding the
first sentence of this Section 11(d), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from
the date of the transaction which requires such adjustment or (ii) the
Expiration Date.

 

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

 

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

 

(g)           Unless the Company shall have
exercised its election as provided in Section 11(h), upon each adjustment
of the Exercise Price as a result of the calculations made in

 

18

 

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

 

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

 

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

 

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

 

19

 

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

 

(l)            Notwithstanding anything in this Section 11
to the contrary, prior to the Distribution Date, the Company shall be entitled
to make such reductions in the Exercise Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its
sole discretion shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Shares or Common Stock, (ii) issuance
wholly for cash of any Preferred Shares or Common Stock at less than the
current market price, (iii) issuance wholly for cash of Preferred Shares
or Common Stock or securities which by their terms are convertible into or
exchangeable for Preferred or Common Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Shares or Common Stock shall
not be taxable to such stockholders.

 

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

 

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

 

20

 

upon exercise of
such Right; and (3) the number of one-thousandths of a Preferred Share (or
shares of such other capital stock) issuable upon the exercise of each Right
outstanding after such event shall equal the number of one- thousandths of a
Preferred Share (or shares of such other capital stock) as were issuable with
respect to one Right immediately prior to such event.  Each share of Common Stock that shall become
outstanding after an adjustment has been made pursuant to this Section 11(n)
shall have associated with it the number of Rights, exercisable at the Exercise
Price and for the number of one-thousandths of a Preferred Share (or shares of
such other capital stock) as one share of Common Stock has associated with it
immediately following the adjustment made pursuant to this Section 11(n).  If an event occurs which would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(n) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

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

 

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

 

(a)           In the event that, following a Shares
Acquisition Date, directly or indirectly:

 

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

 

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

 

(iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or one or more of its wholly owned Subsidiaries in one

 

21

 

or
more transactions, each of which individually (and together) complies with Section 11(m)
hereof),

 

then,
concurrent with and in each such case:

 

(a)           each holder of a Right (except as
provided in Section 7(e) hereof) shall thereafter have the right to
receive, upon the exercise thereof, at a price equal to the Total Exercise
Price applicable immediately prior to the occurrence of the Section 13
Event in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as hereinafter defined), free of any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by dividing such Total Exercise Price by 50% of
the Current Per Share Market Price of the shares of Common Stock of such
Principal Party on the date of consummation of such Section 13 Event, provided,
however, that the Exercise Price and the number of shares of Common
Stock of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11(e) hereof;

 

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

 

(c)           the term “Company” shall thereafter
be deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;

 

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

 

(e)           upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary

 

22

 

transaction in respect of
such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Total Exercise Price as
provided in this Section 13(a), such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had such
holder, at the time of such transaction, owned the shares of Common Stock of
the Principal Party receivable upon the exercise of such Right pursuant to this
Section 13(a), and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance with the terms
hereof for such cash, shares, rights, warrants and other property.

 

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

 

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

 

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

 

(ii) in
the case of any transaction described in clause (iii) of Section13(a) hereof,
the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if
more than one Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred and
each such portion would, were it not for the other equal portions, constitute
the greatest portion of

 

23

 

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

 

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

 

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

 

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

 

24

 

(or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on Nasdaq; and

 

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

 

In the event that at any
time after the occurrence of a Triggering Event some or all of the Rights shall
not have been exercised at the time of a transaction described in this Section 13,
the Rights which have not theretofore been exercised shall thereafter be
exercisable in the manner described in Section 13(a) (without taking
into account any prior adjustment required by Section 11(a)(ii)).

 

(d)           In case the “Principal Party” for
purposes of Section 13(b) hereof has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to Section 13 hereof), in connection with, or
as a consequence of, the consummation of a Section 13 Event, shares of
Common Stock or Equivalent Shares of such Principal Party at less than the then
Current Per Share Market Price thereof or securities exercisable for, or
convertible into, shares of Common Stock or Equivalent Shares of such Principal
Party at less than such then Current Per Share Market Price, or (ii) providing
for any special payment, tax or similar provision in connection with the
issuance of the shares of Common Stock of such Principal Party pursuant to the
provisions of Section 13 hereof, then, in such event, the Company hereby
agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with or as a consequence of, the consummation of the proposed transaction.

 

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

 

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

 

25

 

14.           Fractional Rights and Fractional
Shares.

 

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

 

(b)           The Company shall not be required to
issue fractions of Preferred Shares (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions that are integral multiples of one one-thousandth of a
Preferred Share).  Interests in fractions
of Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. 
In lieu of fractional Preferred Shares that are not integral multiples
of one one-thousandth of a Preferred Share, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a Preferred Share.  For
purposes of this Section 14(b), the current market value of a Preferred
Share shall be one thousand times the closing price of a share of Common Stock
(as determined pursuant to the terms hereof) for the Trading Day immediately
prior to the date of such exercise.

 

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

 

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

 

15.           Rights of Action.  All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the shares of Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the shares of Common
Stock), may, in his or her own behalf and for his or her own benefit, enforce,

 

26

 

and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his or her right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.

 

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

 

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

 

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

 

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

 

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

 

18.           The Rights Agent.

 

(a)           The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The

 

27

 

Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.  In no event will
the Rights Agent be liable for special, indirect, incidental or consequential
loss or damage of any kind whatsoever, even if the Rights Agent has been
advised of the possibility of such loss or damage.

 

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

 

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

 

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

 

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

 

28

 

complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such written advice or
opinion.

 

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

 

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

 

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

 

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

 

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

 

(g)           The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers

 

29

 

for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those instructions.  Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days
after the date any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.

 

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

 

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

 

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

 

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

 

21.           Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days’ written notice mailed to the Company and to each transfer
agent of the Preferred Shares and the Common Stock by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days’ written notice, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Shares and the Common Stock by

 

30

 

registered or certified mail, and to the holders of the Rights
Certificates by first-class mail.  If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after receiving written notice of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his or her Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United States or of any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust or stockholder services
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100 million.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Shares and
the Common Stock, and mail a written notice thereof to the registered holders
of the Rights Certificates.  Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.

 

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

 

31

 

23.           Redemption.

 

(a)           The Company may, at its option and
with the approval of the Board of Directors, at any time prior to the Close of
Business on the earlier of (i) the Shares Acquisition Date and (ii) the
Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being herein referred to as the “Redemption
Price”) and the Company may, at its option, pay the Redemption Price either
in shares of Common Stock (based on the Current Per Share Market Price thereof
at the time of redemption) or cash.  Such
redemption of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish.  The date on
which the Board of Directors elects to make the redemption effective shall be
referred to as the “Redemption Date”.

 

(b)           Immediately upon the action of the
Board of Directors of the Company ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price.  The
Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give or any defect in, any such notice
shall not affect the validity of such redemption.  Within ten (10) days after the action of
the Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock.  Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.  Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of shares of Common Stock prior to the Distribution Date.

 

24.           Exchange.

 

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

 

32

 

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

 

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

 

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

 

33

 

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

 

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

 

25.           Notice of Certain Events.

 

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

 

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

 

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

 

Diana Shipping Inc.

Pendelis 16

175 64 Palaio Faliro

Athens,
Greece

Attention: Ioannis Zafirakis

 

with a copy to:

 

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Attention: Gary J. Wolfe

 

34

 

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

 

Computer Share Trust Company, Inc.

350 Indiana Street, Suite 800

Golden, Colorado 80401

 

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

 

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

 

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

 

29.           Determinations and Actions by the
Board of Directors, etc.  For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act.  The
Board of Directors of the Company shall have the

 

35

 

exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board, or the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the
Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights Certificates and
all other parties and (y) not subject the Board to any liability to the holders
of the Rights.

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

	
   

  	
  DIANA SHIPPING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anastassis Margaronis

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE TRUST COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

37

 

Exhibit A

 

CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES AND PRIVILEGES OF

SERIES A PARTICIPATING PREFERRED STOCK OF DIANA SHIPPING INC.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.               Dividends and Distributions.

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

Section 5.               Certain Restrictions.

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

Section 11.             Amendment.  The Articles of Incorporation of the Company
shall not be further amended in any manner which would materially alter or
change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority of the outstanding shares of Series A
Participating Preferred Stock, voting separately as a class.

 

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

 

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

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

41

 

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

 

Executed
in Athens, Greece on February 21, 2005.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Anastassis
  Margaronis

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ioannis Zafirakis 

  
	
   

  	
  Secretary

  

 

42

 

Exhibit B

 

 

[FORM OF
RIGHTS CERTIFICATE]

 

43

 

Exhibit C

 

 

SUMMARY OF RIGHTS

 

	
  Distribution and
  Transfer of Rights:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Distribution Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Preferred Stock
  Purchaseable Upon Exercise of Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Flip-in:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Flip-over:

  	
   

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

  

 

44

 

	
  Exchange Provision:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Redemption of Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Expiration of Rights:

  	
   

  	
  The rights expire on
  the earliest of (1) February 21, 2015 or (2) the exchange or
  redemption of the rights as described above.

  
	
   

  	
   

  	
   

  
	
  Amendment of Terms of
  Rights:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Voting Rights:

  	
   

  	
  The rights will not
  have any voting rights.

  
	
   

  	
   

  	
   

  
	
  Anti-dilution
  Provisions:

  	
   

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

  

 

45EX 4.1

    
Exhibit
      4.1

    

    STOCK
      FOR SERVICES COMPENSATION PLAN 2005

    

    Power-Save
      Energy Corp.

    a
      COLORADO corporation

    

    The
      Board of Directors
      of
Power-Save
      Energy Corp.
      hereby
      adopts the following plan for compensation of service providers with common
      stock in lieu of cash. This Plan is adopted as of this date of October 1,
      2005.

    

    1.
      Purposes of the Plan.
      This
      Corporation requires the services of its officers and consultants to assist
      in
      the transition from development stage to operational stage of its corporate
      business, and further in the early operational stage with a view to achieving
      profitability; however, this Corporation does not enjoy the ability to provide
      cash compensation for all of its needs. It may be necessary, appropriate and
      desirable, from time to time, to offer shares of common stock to officers and
      services providers, either initially, to secure necessary services, or later,
      to
      settle employee salaries, invoices and billings with stock in lieu of cash.
      It
      may be necessary, appropriate and desirable, from time to time, to offer shares
      of common stock to services providers, as incentives to provide
      services.

    

    2.
      Definitions.
      As used
      herein, the following definitions shall apply: 

    

    (a)
      "The
      Act", and the "1933 Act", means the Securities Act of 1933.

    

    (b)
      "Administrator" means the Board of Directors, or any of its Committees as shall
      be designated by the Board to administer the Plan, in accordance with Section
      4
      of the Plan. 

    

    (c)
      "Applicable Laws" means the requirements relating to the administration of
      stock
      option plans under United States Federal and state corporate laws, Federal
      and
      state securities laws, the Internal Revenue Code or Rules of any stock exchange
      or quotation system on which the Common Stock of the issuer is listed or quoted
      and the applicable laws of any foreign country or jurisdiction where Options
      or
      Stock Purchase Rights are, or will be, granted under the Plan. 

    

    (d)
      "Board" means the Board of Directors of the Company. 

    

    (e)
      "Code" means the Internal Revenue Code of 1986, as amended. 

    

    (f)
      "Common Stock" means the common stock of the Company. 

    

    (g)
      "Company" means Power-Save
      Energy Corp.
      a
      Colorado Corporation. 

    

    (h)
      "Consultant" means any person, including attorneys, who: (1) advise the issuer
      on business strategy; (2) arranges a bank credit for the issuer; (3) who is
      retained to perform management functions traditionally performed by an employee;
      (4) an attorney who serves as counsel to the issuer, unless the participation
      involves a securities offering as part of promotional scheme of the issuer’s
      securities; (5) assists the issuer in identifying acquisition targets; (6)
      assists the issuer in structuring mergers or other acquisitions in which
      securities are issued as consideration, unless the acquisition involves a
      promotional scheme of the issuer’s securities. 

    

    (i)
      "Director" means a member of the Board.

    

    (j)
      "Employee" means any person, including Officers and Directors, employed by
      the
      Company or any Parent or Subsidiary of the Company. A Service Provider shall
      not
      cease to be an Employee in the case of (i) any leave of absence approved by
      the
      Company or (ii) transfers between locations of the Company or between the
      Company, its Parent, any Subsidiary, or any successor. 

    

    (k)
      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        EX
          - 1- 4.1

        
          

        

      

      
        
        

      

    

    
 

    (i)
      "Fair
      Market Value" means, as of any date, the value of Common Stock determined as
      follows: 

    

    (i)
      If
      the Common Stock is listed on any established stock exchange or a national
      market system, including without limitation the Nasdaq National Market or The
      Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
      be the closing sales price for such stock (or the closing bid, if no sales
      were
      reported) as quoted on such exchange or system for the last market trading
      day
      prior to the time of determination, as reported in The Wall Street Journal
      or
      such other source as the Administrator deems reliable; 

    

    (ii)
      If
      the Common Stock is regularly quoted by a recognized securities dealer but
      selling prices are not reported, the Fair Market Value of a Share of Common
      Stock shall be the mean between the high bid and low asked prices for the Common
      Stock on the last market trading day prior to the day of determination, as
      reported in The Wall Street Journal or such other source as the Administrator
      deems reliable; or 

    

    (iii)
      In
      the absence of an established market for the Common Stock, the Fair Market
      Value
      shall be determined in good faith by the Administrator.

    

    (j)
      "Issuer" means Power-Save
      Energy Corp.
      a
      Colorado Corporation.

    

    (l)
      "Reporting Company" means either one with a class of securities registered
      under
      Sections 12(b) or 12(g), and also includes a company which reports in accordance
      with Section 15(d) of the Securities Exchange Act of 1934, and further, in
      any
      case, that such company is current in its annual and quarterly filing
      requirements, and is not at such time subject to Comments by the Staff of the
      Commission with respect to any such filing, or to any Registration
      Statement.

    

    (m)
      "Non-Reporting Company" means one which is not a Reporting Company as defined
      hereinabove.

    

    (n)
      "Officer" means a person who is an officer of the Company within the meaning
      of
      Section 16 of the Exchange Act and the rules and regulations promulgated there
      under. 

    

    (o)
      "Parent" means a "parent corporation," whether now or hereafter existing, as
      defined in Section 424(e) of the Code. 

    

    (p)
      "Plan" means this Stock for Services Plan. 

    

    (q)
      "Restricted Stock" means shares of stock acquired pursuant to a Restricted
      Stock
      Agreement, voluntarily, or Restricted Securities as defined by Rule 144(a),
      Reg.
      230.144(a).

     

    (r)
      "Service Provider" means an Employee, Officer, Director or Consultant of the
      Issuer, its parent or subsidiary. 

    

    (s)
      "Share" means a share of the Common Stock.

    

    (t)
      "Subsidiary" means a "subsidiary corporation", whether now or hereafter
      existing, owned or controlled by issuer. defined in Section 424(f) of the Code.
      

    

    3.
      Stock Subject to the Plan. The
      stock
      subject to this Plan is Class A Common Stock.

    

    4.
      The Plan.
      Accordingly, the Administrator may recommend to the Board, and the Board may
      compensate actual Service Providers with stock, by agreement and in accordance
      with applicable law, in lieu of cash, and in accordance with the following
      provisions of this Plan, and all applicable law, and this Plan is adopted as
      corporate policy, until and unless amended or rescinded by the
      Board.

    

    
      	 	
              (a)
                Non-Reporting Issuer.
                If
                at the time of any proposed issuance pursuant to this Plan, Corporation
                be
                a non-reporting company, the Board of Directors shall offer shares
                only
                pursuant to Section 4(2) of the 1933 Act, as Restricted Securities
                and New
                Investment Shares, as defined by Rule 144(a). Offers or issuances
                pursuant
                to the exemption of Rule 701 (Reg.230.701)) are not within the scope
                of
                this Plan.

            

    

     

    
      
        
        

      

      
        EX
          - 2- 4.1

        
          

        

      

      
        
        

      

    

    
 

    (b)
      Reporting Issuer.
      If at
      the time of any proposed issuance pursuant to this Plan, this Corporation be
      a
      reporting company, the Administrator may elect to offer shares pursuant to
      Registration under the Securities Act of 1933, or pursuant to Section 4(2)
      of
      the 1933 Act, or other applicable exemption from registration, with such
      restriction on resale as required by applicable law or rule of the Commission,
      or such greater restriction as may be agreed to by the parties.

    

    
      	 	
              (c)
                1933 Act Registration.
                In
                the event that shares are offered or issued pursuant to 1933 Act
                Registration, using From S-8 (or its equivalent as the Commission
                may from
                time to time provide, all requirements for the use of such form and
                procedure shall be observed and complied with; principally, among
                others:
                (i) The Corporation shall be a reporting company; (ii) Shares shall
                be
                offered and/or issued only to natural persons; and (iii) Capital
                formation
                or fund raising activities shall not be included in the concept of
                actual
                services provided, within this
                Plan.

            

    

    

    
      	 	
              (d)
                Valuation of Shares.
                If
                a real and liquid market exists for the issuance of shares, on any
                public
                trading medium or exchange, the shares shall be valued in reasonable
                relation to the market price at which the shares could be sold. If
                no
                public market exists for the shares offered or issued, or if only
                a
                technical but inactive or illiquid market exits, the reasonable value
                of
                the shares shall be determined by actual commercial conditions for
                private
                transactions in shares that cannot be resold in brokerage
                transactions.

            

    

    

    
      	 	
              (e)
                Full Compliance.
                Nothing contained herein shall authorize, and notwithstanding anything
                contained herein shall be deemed to authorize, anything other than
                full
                compliance with all applicable laws and regulations, as in force
                and
                effect at the time of any offer or issuance of
                securities.

            

    

    

    
      	 	
              (f)
                Non-Qualified Plan.
                This Plan is not intended to qualify for any special tax treatment
                under
                the Code. Shares issued pursuant to this Plan shall be the equivalent
                of
                payment in cash for services, at their fair market
                value.

            

    

    

    
      	 	
              (g)
                Services Invoiced.
                Services to be compensated by issuance of stock shall be specifically
                invoice and proper records of such services maintained in the corporate
                records. Future services for stock may be compensated according to
                a
                written agreement. 

            

    

    

    
      	 	
              (h)
                Voluntary Restriction.
                In
                any case, whether the Issuer be reporting or non-reporting, shares
                may
                offered pursuant to Restrictive Stock Agreement. Such voluntary or
                agreed
                restrictions may be greater than those imposed by applicable
                law.

            

    

    

    4.
      Administration of the Plan. The
      Plan
      shall be administered by the Board or such Committee as the Board may constitute
      or designate for such purposes. The Plan may be administered by different
      Committees with respect to different groups of Service Providers; provided
      that
      no shares shall be issued pursuant to this plan, and no Registration of shares
      shall be made pursuant to this Plan, with the final or ultimate action and
      direction of the Board. 

    

    Execution.
      This
      Plan
      is now signed by all of the Directors of this Corporation, on behalf of the
      Corporation, attesting to the adoption of this Plan.

    

    Power-Save
      Energy Corp.

    Dated:
      October 1, 2005 

    /s/Michael
      Forster

    
      Michael
        Forster

      president/director

       

      
        
           

        

        
          EX
            - 3- 4.1

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