Document:

Unassociated Document

    

    DOT
VN, INC.

    100%
CONVERTIBLE PROMISSORY NOTE

    

     

    
      	$2,884,658.16 	
              SAN DIEGO,
      CALIFORNIA 

            	
              APRIL 20,
      2009

            

    

    

    DOT VN, INC., a Delaware
corporation (the “Maker” or “Company”), hereby promises to pay to the
order of LEE JOHNSON,
(the “Holder”), an individual or his assigns the sum of Two Million Eight
Hundred Eighty-Four Thousand, Six Hundred Fifty-Eight Dollars and Sixteen
Cents  ($2,884,658.16), with interest
at the rate of eight (8%) per annum accruing from the date of this 100%
Convertible Note  (“Note”)  until paid in
full.  All outstanding principal and accrued and unpaid interest shall
become due October 16,
2009 (the “Due Date”).

    

    All
payments due and owing under this Note shall be subject to the terms and
conditions set forth herein.

    

    
      	
               
      

            	
              1.

            	
              Agreement.

            

    

    

    The Note
is issued in connection with certain Executive Employment Agreements between
Company and Holder, which are hereby incorporated by reference, in satisfaction
of (i) accrued salary and interest accrued from January 31, 2003 through June
30, 2007 and replaces that certain 100% Convertible Promissory Note dated August
14, 2008 and due March 31, 2009, which is deemed extinguished ($2,280,631.28)
and (ii) accrued salary and interest accruing since July 1, 2007 through April
17, 2009 ($604,026.88).

    

    
      	
               
      

            	
              2.

            	
              Register.

            

    

    

    The
Company shall keep at its principal office a register in which the Company shall
provide for the registration of the Holder of the Note or for the registration
of a transfer of the Note to a different Holder.

    

    
      	
               
      

            	
              3.

            	
              Loss Theft,
      Destruction or Mutilation of the
Note.

            

    

    

    Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Note and, in the case of any such loss, theft
or destruction, upon receipt of an indemnity bond in such reasonable amount as
the Company may determine (or if such Note is held by the original Holder, of an
unsecured indemnity agreement reasonably satisfactory to the Company) or, in the
case of any such mutilation, upon surrender and cancellation of such Note, the
Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Note, a new Note of like tenor and unpaid principal amount and dated
as of the date to which interest has been paid on the Note so lost, stolen,
destroyed or mutilated.

    

    
      	
               
      

            	
              4.

            	
              Registered
      Holder.

            

    

    

    The
Company may deem and treat the person in whose name any Note is registered as
the absolute owner and Holder of such Note for the purpose of receiving payment
of the principal of and interest on such Note and for the purpose of any
notices, waivers or consents thereunder, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the
contrary.  Payments with respect to any Note shall be made only to the
registered Holder thereof.

    

    
      	
               
      

            	
              5.

            	
              Surrender of the
      Note.

            

    

    

    The
Company may, as a condition of payment of all or any of the principal of, and
interest on, the Note, or its conversion, require Holder to present the Note for
notation of such payment and, if the Note be paid in full or converted at the
election of Holder as herein provided, require the surrender
hereof.

    

    
      
         

      

      
        Page -
1

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              6.

            	
              Conversion.

            

    

    

    At any
time prior to or at the Due Date, at the option of the Holder, all principal and
accrued interest due on this Note (the “Convertible Amount”) may be converted at
$0.30 per share of common stock (the “Conversion Price”). The Conversion Price
shall be adjusted downward in the event the Company issues common stock (or
securities exercisable for or convertible into or exchangeable for common stock)
at a price below the Conversion Price times Ninty percent (90%), to a price
equal to such issue price times One hundred Ten percent (110%).  The
preceding adjustments shall be effective immediately at the time of the issuance
of any security (or of any reduction in effective price of any security) on or
before the Due Date.  In addition, the Conversion Price shall be
appropriately adjusted in the case of stock splits, stock dividends,
recapitalizations and the like.  If, on or prior to the Due Date,
Holder has not elected  to convert this Note, all outstanding
principal and accrued and unpaid interest shall become due and
payable.

    

    
      	
               
      

            	
              7.

            	
              Mechanics of
      Conversion.

            

    

    

    Upon the
Company’s receipt of written notice of Holder’s election to convert the Note,
the principal amount of this Note plus any accrued interest shall be deemed
converted into such number of shares of the Company’s Common Stock as determined
pursuant to Section 6, and no further payments shall thereafter accrue or be
owing under the Note.  The entire balance due and owing under the Note
must be converted to Common Stock; no partial conversions will be
allowed.  Holder shall return this Note to the Company at the address
set forth below, or such other place as the Company may require in
writing.   Within ten (10) days after receipt of this Note, the
Company shall cause to be issued in the name of and delivered to Holder at the
address set forth above, or to such other address as to which Holder shall have
notified the Company in writing, a certificate and a warrant evidencing the
securities to which Holder is entitled.  No fractional securities will
be issued upon conversion of the Note.  If on conversion of the Note a
fraction of a security results, the Company shall round up the total number of
securities to be issued to Holder to the nearest whole number.

    

    
      	
               
      

            	
              8.

            	
              Notices.

            

    

    

    Any
notice required or desired to be given under this Agreement shall be in writing
and shall be deemed given when personally delivered, one business day after
deposit with a reputable overnight courier service for next business day
delivery, or three days after being sent by certified or registered mail postage
prepaid to the addresses set forth below, or such other address as to which one
party may have notified the other in such manner.

    
      

      
        
          
            	
                    If
      to Holder:

                  	
                    At
      the address shown on the Company’s records

                  
	 
      	 
      
	
                    If
      to the Company:

                  	
                    Dot
      VN, Inc.

                  
	 
      	
                    9449
      Balboa Ave., Suite 114

                  
	 
      	
                    San
      Diego, CA 92123

                  

          

           

        

      

    

    
      	
               
      

            	
              9.

            	
              Default.

            

    

    

    Upon an
Event of Default (as defined in the Agreement) that is not cured within any
applicable cure period set forth in the Agreement, and at the option of Holder,
or Holder’s successors or assigns, Holder may (i) accelerate all amounts due and
owing under this Note and demand payment immediately and/or (ii) declare the
right to exercise any and all remedies available to Holder under applicable
law.

    

    
      
         

      

      
        Page -
2

        
          

        

      

      
         

      

    

    
      	
              10.

            	
              Miscellaneous.

            

    

    

    (a)           Interest
hereunder shall be calculated based on eight percent (8%) per annum calculated
using a 360-day year composed of twelve 30-day months, payable in full, unless
otherwise converted to common stock in the Company, at maturity or
conversion.

    

    (b)           The
Company agrees that all Conversion Shares at the time of issuance will be fully
paid and non-assessable.  Maker shall pay upon demand any and all
expenses, including reasonable attorney fees, incurred or paid by Holder of this
Note without suit or action in attempting to collect funds due under this Note
or in connection with the issuance of the Conversion Shares.  In the
event an action is instituted to enforce or interpret any of the terms of this
Note, the prevailing party shall be entitled to recover its costs, including
reasonable attorney’s fees.

    

    (c)           All
parties to this Note hereby waive presentment, dishonor, notice of dishonor and
protest.  All parties hereto consent to, and Holder is hereby
expressly authorized to make, without notice, any and all renewals, extensions,
modifications or waivers of the time for or the terms of payment of any sum or
sums due hereunder, or under any documents or instruments relating to or
securing this Note, or of the performance of any covenants, conditions or
agreements hereof or thereof or the taking or release of collateral securing
this Note.  Any such action taken by Holder shall not discharge the
liability of any party to this Note.

    

    (d)           The
Company may prepay the amount due and owing under this Note.

    

    (e)           This
Note shall be governed by and construed in accordance with the laws of the State
of California without regard to conflict of law principles.

    

    (f)           All
payments due and owing under this Note shall be delivered to Holder at the
address set forth below unless Holder provides the Company with written notice
of a change of such instructions.

    

    (g)           Capitalized
terms used but not defined in this Note have the meanings assigned to them in
the Agreement.

    

    IN WITNESS WHEREOF, the parties execute
this Note as of this 20th day of
April, 2009.

    

    
      

      
        
          
            
              	“Company”
      and “Maker”	 	 	 “Holder”	 
	DOT
      VN, INC.	 	 	 	 
	 	 	 	 	 
	
                      /s/
      Thomas Johnson  

                    	 	 	
                      /s/
      Lee Johnson

                    	 
	
                      By:
      Thomas Johnson  

                    	 	 	
                      Lee
      Johnson

                    	 
	
                      Its:  Chief
      Executive Officer

                    	 	 	 	 

            

          

        

       

      Page -
3Unassociated Document

    

     

    Exhibit
4.1

     

    

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    and

     

    COMPUTERSHARE
TRUST COMPANY, N.A.

     

    as
Rights Agent

     

    

     

    

     

    

    
 

     

    PREFERRED
STOCK RIGHTS AGREEMENT

     

    Dated
as of April 21, 2009

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
OF CONTENTS

    Page

    
      	
              Section
      1.

            	
              Certain Definitions

            	
              1

            
	 	 	 
	
              Section
      2.

            	
              Appointment of Rights Agent

            	
              7

            
	 	 	 
	
              Section
      3.

            	
              Issuance of Rights
    Certificates

            	
              7

            
	 	 	 
	
              Section
      4.

            	
              Form of Rights Certificates

            	
              9

            
	 	 	 
	
              Section
      5.

            	
              Countersignature and
      Registration

            	
              9

            
	 	 	 
	
              Section
      6.

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

            	
              10

            
	 	 	 
	
              Section
      7.

            	
              Exercise of Rights; Exercise Price; Expiration
      Date of Rights

            	
              11

            
	 	 	 
	
              Section
      8.

            	
              Cancellation and Destruction of Rights
      Certificates

            	
              13

            
	 	 	 
	
              Section
      9.

            	
              Reservation and Availability of Preferred
      Shares

            	
              13

            
	 	 	 
	
              Section
      10.

            	
              Record Date

            	
              14

            
	 	 	 
	
              Section
      11.

            	
              Adjustment of Exercise Price, Number of Shares or
      Number of Rights

            	
              15

            
	 	 	 
	
              Section
      12.

            	
              Certificate of Adjusted Exercise Price or Number
      of Shares

            	
              21

            
	 	 	 
	
              Section
      13.

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

            	
              21

            
	 	 	 
	
              Section
      14.

            	
              Fractional Rights and Fractional
      Shares

            	
              25

            
	 	 	 
	
              Section
      15.

            	
              Rights of Action

            	
              26

            
	 	 	 
	
              Section
      16.

            	
              Agreement of Rights Holders

            	
              26

            
	 	 	 
	
              Section
      17.

            	
              Rights Certificate Holder Not Deemed a
      Stockholder

            	
              27

            
	 	 	 
	
              Section
      18.

            	
              Concerning the Rights Agent

            	
              27

            
	 	 	 
	
              Section
      19.

            	
              Merger or Consolidation or Change of Name of
      Rights Agent

            	
              28

            
	 	 	 
	
              Section
      20.

            	
              Duties of Rights Agent

            	
              28

            
	 	 	 
	
              Section
      21.

            	
              Change of Rights Agent

            	
              31

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      TABLE OF CONTENTS

      (Continued)

       

      Page

    

    
      	
              Section
      22.

            	
              Issuance of New Rights
      Certificates

            	
              31

            
	 	 	 
	
              Section
      23.

            	
              Redemption

            	
              32

            
	 	 	 
	
              Section
      24.

            	
              Exchange

            	
              32

            
	 	 	 
	
              Section
      25.

            	
              Notice of Certain Events

            	
              34

            
	 	 	 
	
              Section
      26.

            	
              Notices

            	
              35

            
	 	 	 
	
              Section
      27.

            	
              Supplements and Amendments

            	
              35

            
	 	 	 
	
              Section
      28.

            	
              Successors

            	
              36

            
	 	 	 
	
              Section
      29.

            	
              Determinations and Actions by the Board of
      Directors, etc

            	
              36

            
	 	 	 
	
              Section
      30.

            	
              Benefits of this Agreement

            	
              36

            
	 	 	 
	
              Section
      31.

            	
              Severability

            	
              36

            
	 	 	 
	
              Section
      32.

            	
              Governing Law

            	
              37

            
	 	 	 
	
              Section
      33.

            	
              Counterparts

            	
              37

            
	 	 	 
	
              Section
      34.

            	
              Descriptive Headings

            	
              37

            
	 	 	 
	
              Section
      35.

            	
              Force Majeure

            	
              37

            

    

     

    EXHIBITS

     

    
      	Exhibit A     	
              Form of Certificate of
      Designation

            	
               

            
	 	 	 
	Exhibit B    	
              Form of Rights Certificate

            	
               

            
	 	 	 
	Exhibit C     	Summary of
      Rights	
               

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    PREFERRED
STOCK RIGHTS AGREEMENT

     

    

    This
Preferred Stock Rights Agreement is dated as of April 21, 2009, between AltiGen
Communications, Inc., a Delaware corporation, (the “Company”),
and Computershare Trust Company, N.A., a federally chartered trust company (the
“Rights
Agent”).

     

    On April
21, 2009, (the “Rights Dividend
Declaration Date”), the Board of Directors of the Company authorized and
declared a dividend of one Preferred Share Purchase Right (a “Right”)
for each Common Share (as hereinafter defined) of the Company outstanding as of
the Close of Business (as hereinafter defined) on May 7, 2009, (the “Record
Date”), each Right representing the right to purchase one one-thousandth
(0.001) of a share of Series A Participating Preferred Stock (as such
number may be adjusted pursuant to the provisions of this Agreement), having the
rights, preferences and privileges set forth in the form of Certificate of
Designations of Rights, Preferences and Privileges of Series A
Participating Preferred Stock attached hereto as Exhibit A, upon
the terms and subject to the conditions herein set forth, and further authorized
and directed the issuance of one Right (as such number may be adjusted pursuant
to the provisions of this Agreement) with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined), and in certain circumstances after the Distribution Date.

     

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

     

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

     

    (a)  “Acquiring
Person” shall mean any Person, who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 15% or more of
the Common Shares 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 Common Shares 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 Common Shares 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 Common Shares of the Company then outstanding;
provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional Common Shares of the Company
such Person does not beneficially own 15% or more of the Common Shares 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 pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently (including,
without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise cause
such Person to be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), or (B) such Person was aware of the
extent of the Common Shares 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
Common Shares so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an “Acquiring Person” for any
purposes of this Agreement including, without limitation Section 1(gg)
hereof; and (ii) if, as of the date hereof, any Person is the Beneficial
Owner of 15% or more of the Common Shares outstanding, such Person shall not be
or become an “Acquiring Person,” as defined pursuant to the foregoing provisions
of this paragraph (a), unless and until such time as such Person shall become
the Beneficial Owner of additional Common Shares (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Shares in Common Shares or pursuant to a split or subdivision of the outstanding
Common Shares), unless, upon becoming the Beneficial Owner of such additional
Common Shares, such Person is not then the Beneficial Owner of 15% or more of
the Common Shares then outstanding.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (c)  “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.

     

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

     

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

     

    (ii)  which
such Person or any of such Person’s Affiliates or Associates has (A) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed pursuant to this Section 1(d)(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 Section 1(d)(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

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (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 Section 1(d)(ii)(B)) 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.

     

    (e)  “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.

     

    (f)  “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.

     

    (g)  “Common
Shares” when used with reference to the Company shall mean the shares of
Common Stock of the Company, par value at $0.001 per share.  Common
Shares 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.

     

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

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (i)  “Company”
shall mean the Company as defined in the recitals hereto, subject to the terms
of Section 13(a)(iii)(C) hereof.

     

    (j)  “Current Per Share
Market Price” of any security (a “Security” for purposes of this
definition), for all computations other than those made pursuant to
Section 11(a)(iii) hereof, shall mean the average of the daily closing
prices per share of such Security for the thirty (30) consecutive Trading Days
immediately prior to such date, and for purposes of computations made pursuant
to Section 11(a)(iii) hereof, the Current Per Share Market Price of any
Security on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the ten (10) consecutive Trading Days
immediately prior to such date; provided, however, that in the
event that the Current Per Share Market Price of the Security is determined
during a period following the announcement by the issuer of such Security of
(i) a dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares or (ii) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of the applicable thirty (30) Trading Day or ten (10) Trading Day
period, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security.  The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
sale price or, if such last sale price is not reported, the average of the high
bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company.  If on any such
date no market maker is making a market in the Security, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used.  If the Preferred Shares are not publicly
traded, the Current Per Share Market Price of the Preferred Shares shall be
conclusively deemed to be (x) the Current Per Share Market Price of the Common
Shares as determined pursuant to this Section 1(j), as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof, multiplied by (y) 1,000.  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.

     

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

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (l)  “Distribution
Date” shall mean the earlier of (i) the Close of Business on the
tenth (10th) day
(or such later date as may be determined by action of the Company’s Board of
Directors) after the Shares Acquisition Date (or, if the tenth (10th) 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
(10th)
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.

     

    (m)  “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. 

     

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

     

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

     

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

     

    (q)  “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.

     

    (r)  “Final Expiration
Date” shall mean May 7, 2019.

     

    (s)  “Nasdaq”
shall mean The Nasdaq Stock Market, Inc.

     

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

     

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

     

    (v)  “Preferred
Shares” shall mean shares of Series A Participating Preferred Stock,
par value $0.001 per share, of the Company.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (bb)  “Rights
Agent” shall mean (i) the Rights Agent, as defined in the recitals
hereto, (ii) its successor or replacement as provided in Sections 19
and 21 hereof or (iii) any additional Person appointed pursuant to
Section 2 hereof. 

     

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

     

    (dd)  “Rights Dividend
Declaration Date” shall have the meaning set forth in the recitals at the
beginning of this Agreement. 

     

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

     

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

     

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

     

    (hh)  “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) of 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 pursuant to
Section 1(a) hereof, then no Shares Acquisition Date shall be deemed to
have occurred by virtue of such event. 

     

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

     

    (jj)  “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. 

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (nn)  “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. 

     

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

     

    Section 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 Common Shares) 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, upon ten (10) days’ prior written
notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
co-Rights Agent.

     

    Section
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 Common
Shares 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 Common
Shares.  Until the earlier of the Distribution Date or the Expiration
Date, the surrender for transfer of certificates for Common Shares shall also
constitute the surrender for transfer of the Rights associated with the Common
Shares 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 Common Shares 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 Common Share so held, subject to
adjustment as provided herein.  In the event that an adjustment in the
number of Rights per Common Share 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 (in accordance with Section 14(a) hereof).  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 Common Shares,
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 Common Shares as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company’s transfer
agent and registrar.  With respect to certificates for Common Shares
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.

     

    
      
        
        

      

      
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    (c)  Unless
the Board of Directors by resolution adopted at or before the time of the
issuance of any Common Shares 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) specifies to
the contrary, Rights shall be issued in respect of all Common Shares that are so
issued, and Certificates representing such Common Shares 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 RIGHTS AGREEMENT BETWEEN ALTIGEN COMMUNICATIONS, INC. AND
COMPUTERSHARE TRUST COMPANY, N.A., AS THE RIGHTS AGENT, DATED AS OF APRIL 21,
2009 (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
ALTIGEN COMMUNICATIONS, 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. THE COMPANY 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 AS
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 AND
MAY NOT THEREAFTER BE EXERCISED OR TRANSFERRED.

     

    With
respect to such certificates containing the foregoing legend, until the earlier
of the Distribution Date or the Expiration Date, the Rights associated with the
Common Shares 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 Common Shares
represented thereby.

     

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

     

    
      
        
        

      

      
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    Section
4.  Form of
Rights Certificates.

    (a)  The
Rights Certificates (and the forms of election to purchase Common Shares 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 are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or a
national market system, on which the Rights may from time to time be listed or
included, or to conform to usage.  Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or in the case of Rights
issued with respect to Common Shares issued by the Company after the Record
Date, as of the date of issuance of such Common Shares) and on their face shall
entitle the holders thereof to purchase such number of one-thousandths (0.001)
of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth (0.001) 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 Post-Event Transferee, (iii) 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, 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.

     

    Section
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  countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless
countersigned.  In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates on behalf of the
Company had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an
officer.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (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.

     

    Section
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 (0.001) 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 from the
registered holder of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (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.

     

    Section
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 (0.001) 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 (0.001) of a Preferred Share issuable
pursuant to the exercise of a Right shall initially be $4.00, 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 (0.001) 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 (0.001) 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 (0.001) 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 depository agent,
requisition from the depository agent depository receipts representing such
number of one-thousandths (0.001) 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 depository agent) and the Company hereby directs the depository 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 depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Rights Certificate.  The payment of the
Exercise Price (as such amount may be reduced (including to zero) pursuant to
Section 11(a)(iii) hereof) and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights Certificate in accordance
with Section 9(e) hereof, may be made in cash or by certified bank check,
cashier’s check or bank draft payable to the order of the Company.  In
the event that the Company is obligated to issue securities of the Company other
than Preferred Shares, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (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 subsection 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.

     

    
      
        
        

      

      
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    Section
8.  Cancellation and Destruction
of Rights Certificates. 
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement.  The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.  The
Rights Agent shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate evidencing the
destruction thereof to the Company.

     

    Section
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 Common Shares and/or
other securities), the number of Preferred Shares (and, following the occurrence
of the Triggering Event, Common Shares 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, Common Shares 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 stating, 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 and remains effective.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

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

     

    (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 depository 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 depository 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.

     

    Section
10.  Record
Date. 
Each Person in whose name any certificate for a number of one-thousandths
(0.001) 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 thereby on, 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.

     

    
      
        
        

      

      
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    Section
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)
Anything in this Agreement to the contrary notwithstanding, in the event that
the Company shall at any time after the date of this Agreement (A) declare
a dividend on the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares (by reverse stock split or otherwise) into a
smaller number of Preferred Shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event,
except as otherwise provided in this Section 11 and Section 7(e)
hereof: (1) the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Exercise Price thereafter shall
equal the result obtained by dividing the Exercise Price in effect immediately
prior to such time by a fraction (the  “Adjustment
Fraction”), the numerator of which shall be the total number of Preferred
Shares (or shares of capital stock issued in such reclassification of the
Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares 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
(0.001) 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
(0.001) 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 Common Share 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 (0.001)
of a Preferred Share (or shares of such other capital stock) as one Common Share
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 that 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 (0.001) of a Preferred Share, such number of Common Shares of
the Company as shall equal the quotient obtained by dividing (A) the
product obtained by multiplying (1) the Exercise Price in effect immediately
prior to the occurrence of the Triggering Event by (2) the number of
one-thousandths (0.001) 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, by
(B) fifty percent (50%) of the Current Per Share Market Price for Common
Shares on the date of occurrence of the Triggering Event; provided, however, that the
Exercise Price and the number of Common Shares 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 Common Shares of the Company after the occurrence of the
Triggering Event.

     

    
      
        
        

      

      
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    (iii)  In
lieu of issuing Common Shares 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 Common Shares 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
Common Shares 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 Common Shares, 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 Shares (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, that 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 Shares (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 Shares could be authorized for issuance upon exercise in full
of the Rights or that any necessary regulatory approval for such issuance will
be obtained, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares or take
action to obtain such regulatory approval (such period, as it may be extended,
the “Substitution
Period”).  To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares, to take any action to obtain any required regulatory approval
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof.  In the event
of any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect.  For purposes of this Section 11(a)(iii), the value of
the Common Shares shall be the Current Per Share Market Price of the Common
Shares 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 Shares on
such date.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (c)  In
case the Company shall, at any time after the date of this Agreement, fix a
record date for the making of a distribution to all holders of the Preferred
Shares or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend, if any, or a dividend
payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), then, in each such case,
the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Per Share Market
Price of a Preferred Share or an Equivalent Share on such record date, less the
fair market value 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)  Anything
herein to the contrary notwithstanding, no adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) of 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 (0.0001) of a Common Share
or other share or one hundred-thousandth (0.00001) 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
Section 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. 

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    (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 (0.001) of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.

     

    (g)  Unless
the Company shall have exercised its election as provided in Section 11(h),
upon each adjustment of the Exercise Price as a result of the calculations made
in Section 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Preferred Shares (calculated to the
nearest one hundred-thousandth (0.00001) 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 (0.001) 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
(0.00001)) 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 any 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 (0.001) of a Preferred Share and the number of
one-thousandths (0.001) of a Preferred Share which were expressed in the initial
Rights Certificates issued hereunder.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    (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 (0.001)
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 (0.001) of a Preferred Share
at such adjusted Exercise Price.

     

    (k)  In
any case in which this Section 11 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the number of
one-thousandths (0.001) 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 (0.001) 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)  Anything
in this Section 11 to the contrary notwithstanding, 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 or Common Shares, (ii) issuance wholly for
cash of any Preferred or Common Shares at less than the current market price,
(iii) issuance wholly for cash of Preferred or Common Shares or securities
which by their terms are convertible into or exchangeable for Preferred or
Common Shares, (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 or Common Shares 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.

     

    
      
        
        

      

      
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    (n)  In
the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares (by reverse stock split or otherwise) into a smaller
number of Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) hereof: (1) each
Common Share (or shares of capital stock issued in such reclassification of the
Common Shares) outstanding immediately following such time shall have associated
with it the number of Rights as were associated with one Common Share
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 Common Shares outstanding immediately prior to the event
described in clauses (A)-(D) above, and the denominator of which shall be the
total number of Common Shares outstanding immediately after such event; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (3) the number of one-thousandths
(0.001) 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 (0.001) 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 Common Share 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 (0.001) of a Preferred Share (or shares of
such other capital stock) as one Common Share 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.

     

    Section
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.

     

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

     

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

     

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

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

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

     

    then,
concurrent with and in each such case,

     

    (A)  each
holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the Total Exercise Price applicable immediately prior to the occurrence of
the Section 13 Event in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradeable Common Shares 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
an amount equal to fifty percent (50%) of the Current Per Share Market Price of
the Common Shares of such Principal Party on the date of consummation of such
Section 13 Event, provided, however, that the
Exercise Price and the number of Common Shares 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 Shares) 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 Common Shares thereafter deliverable upon the exercise of
the Rights; and

     

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

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    (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 income 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 Common Shares are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Shares 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 Common Shares 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 Section 13(a)
hereof, the Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such transaction or
transactions, or, if more than one Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so
transferred, or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;
provided that
in any such case described in the foregoing clause (b)(i) or (b)(ii), if the
Common Shares 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 Common Shares 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
Shares of which are and have been so registered, the term “Principal Party”
shall refer to whichever of such Persons is the issuer of Common Shares 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.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    (c)  The
Company shall not consummate any Section 13 Event unless the Principal
Party shall have a sufficient number of authorized Common Shares 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 Common Shares of such Principal
Party upon exercise of outstanding Rights have been waived, that there are no
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights and that such transaction shall not result in a default by such Principal
Party under this Agreement, and further providing that, as soon as practicable
after the date of such Section 13 Event, such Principal Party
will:

     

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

     

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

     

    (iii)  deliver
to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on
Form 10 (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, Common Shares 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, Common Shares 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 Common Shares 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.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    (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. 

     

    Section
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
the second sentence of Section 1(j) hereof.

     

    (b)  The
Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth (0.001) 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 (0.001) of a Preferred
Share).  Interests in fractions of Preferred Shares in integral
multiples of one one-thousandth (0.001) of a Preferred Share may, at the
election of the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depository selected by it; provided, that such
agreement shall provide that the holders of such depository receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depository
receipts.  In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth (0.001) 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 (x) one thousand multiplied by (y) the closing price of a Common
Share (as determined pursuant to the second sentence of Section 1(j)
hereof) for the Trading Day immediately prior to the date of such
exercise.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    (c)  The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares upon the
exercise or exchange of Rights.  In lieu of such fractional Common
Shares, 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 Common
Share.  For purposes of this Section 14(c), the current market
value of a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 1(j) 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 (0.001) of a
Preferred Share) upon exercise of a Right.

     

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

     

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

     

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

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    (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;

     

    (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 Shares 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 Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary; and

     

    (d)  notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory, or administrative agency or commission, or any statute, rule,
regulation , or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance or such obligation;
provided
however, the Company must use its best efforts to have any such
injunction, order, decree, or ruling lifted or otherwise overturned as promptly
as practicable.

     

    Section
17.  Rights
Certificate Holder Not Deemed a Stockholder. 
No holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose 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 specifically provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.

     

    Section
18.  Concerning the Rights
Agent. 

     

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

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    (b)  The
Rights Agent shall be protected and shall incur no liability for, or in respect
of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares 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.

     

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

     

    (a)  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.

     

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

     

    Section
20.  Duties
of Rights Agent. 
The Rights Agent undertakes 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 opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

    (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 gross negligence, bad faith or willful
misconduct. 

     

    (d)  The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this 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. 

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

     

    (g)  The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.  Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be
effective.  The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five (5) Business Days after the date on which 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.

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    Section
21.  Change
of Rights Agent. 
The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days’ notice in writing mailed
to the Company and to each transfer agent of the Preferred Shares and the Common
Shares by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail.  In the event the transfer agency
relationship between the Company and the Rights Agent terminates, the Rights
Agent will be deemed to have resigned automatically and be discharged from its
duties under this Agreement as of the effective date of such termination, and
the Company shall be responsible for sending any notice required under this
Section 21. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.  If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.  If
the Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his 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.  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 Shares, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates.  Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

     

    Section
22.  Issuance of New Rights
Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by 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
Common Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to Common
Shares 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-

        
          

        

      

      
        
        

      

    

     

    Section
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 fifth day
following the Shares Acquisition Date (or such later date as may be determined
by action of the Company’s Board of Directors and publicly announced by the
Company) and (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $0.001 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 Common Shares (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 Shares.  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 Common Shares prior to the Distribution
Date.

     

    Section
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
Common Shares at an exchange ratio of one Common Share 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 Shares
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 Shares 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 Common Shares 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 Common Shares 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 Common Shares 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 Common Shares 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 Common Shares 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 Common Shares 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, Common Shares 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 Common
Shares on the date of the occurrence of the event described above in subsection
(a), multiplied by the number of Common Shares 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 Common Shares 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.

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

     

    (d)  The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares.  In
lieu of such fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Common Share (as determined pursuant to
the second sentence of Section 1(j) hereof).

     

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

     

    (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 Common Shares 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.

     

    Section
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.

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

     

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

     

    AltiGen
Communications, Inc.

    4555
Cushing Parkway

    Fremont,
California 94538

    Attention:
Chief Financial Officer

     

    with a
copy to:

    Wilson
Sonsini Goodrich & Rosati

    Professional
Corporation

    650 Page
Mill Road

    Palo
Alto, California 94304-1050

    Attention:  Anthony
Jeffries

     

    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 overnight delivery service or
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:

     

    Computershare Trust Company,
N.A.

    250 Royall Street

    Canton, Massachusetts 02021

    Attention: Client Services

     

    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.

     

    Section
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.  Notwithstanding
anything in this Agreement to the contrary, the Rights Agent may, but shall not
be required to, execute any supplement or amendment which adversely affects its
own rights, duties, or obligations under this Agreement. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

     

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

     

    Section
29.  Determinations and Actions
by the Board of Directors, etc. 
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act.  The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or the Company, or as may be necessary
or advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to 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) with respect to claims specifically arising from the
Agreement, not subject the Board to any liability to the holders of the
Rights.

     

    Section
30.  Benefits of this
Agreement. 
Nothing in this Agreement shall be construed to give to any Person other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim pursuant to 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 Common Shares).

     

    Section
31.  Severability. 
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board 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.

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

     

    Section
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 the State of Delaware and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such
State.

     

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

     

    Section
34.  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.

     

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

     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      
        	“COMPANY”  	ALTIGEN COMMUNICATIONS,
      INC.	 
	 	 	 	 
	 	
                By:
      

              	 	 
	 	 	 	 
	 	Name:    	 	 
	 	 	 	 
	 	Title:      	 	 
	 	 	 	 

      

    

     

    
      
        
          	

                  “RIGHTS
      AGENT”

                	

                  COMPUTERSHARE
      TRUST COMPANY, N.A.

                	 
	 	 	 	 
	 	
                  By:
      

                	 	 
	 	 	 	 
	 	Name:    	 	 
	 	 	 	 
	 	Title:      	 	 
	 	 	 	 

        

      

                                           

      
        
          
          

        

        
          -38-

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
A

     

    CERTIFICATE
OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A PARTICIPATING
PREFERRED STOCK OF

    ALTIGEN
COMMUNICATIONS, INC.

     

    The
undersigned, Gilbert Hu, does hereby certify:

     

    1.  That
he/she is duly elected and acting Chief Executive Officer of AltiGen
Communications, Inc., a Delaware corporation (the “Corporation”).

     

    2.  That
pursuant to the authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors of the Corporation on April 21, 2009 adopted the following
resolutions creating a series of ________ shares of Preferred Stock designated
as Series A Participating Preferred Stock:

     

    “RESOLVED,
that pursuant to the authority vested in the Board of Directors of the
corporation by the Amended and Restated Certificate of Incorporation, the Board
of Directors does hereby provide for the issue of a series of Preferred Stock of
the Corporation and does hereby fix and herein state and express the
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
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 $0.001 per share, and the number of shares
constituting such series shall be 150,000.

     

    Section
2.  Proportional
Adjustment.  In the event that the Corporation shall at any
time after the issuance of any share or shares of Series A Participating
Preferred Stock (i) declare any dividend on Common Stock of the Corporation
(“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 Corporation 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 of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of January, 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
Corporation 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 first following 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 of Directors 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 Corporation.

     

    (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 Corporation.

     

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

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    Section
5.  Certain
Restrictions.

     

    (a)  The
Corporation 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 Corporation shall
not

     

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

     

    (ii)  declare
or pay dividends on, or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A 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
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A 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 of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective Series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective Series or classes.

     

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

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Section
6.  Reacquired
Shares.  Any shares of Series A Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof.  All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein and in the Amended and Restated Certificate of Incorporation,
as then amended.

     

    Section
7.  Liquidation, Dissolution or
Winding Up.  Upon any liquidation, dissolution or winding up of
the Corporation, 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 Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case 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 Corporation’s Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.

     

    Section
11.  Amendment.  The
Amended and Restated Certificate of Incorporation of the Corporation 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 series.

     

    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.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    RESOLVED
FURTHER, that the President, Chief Executive Officer or any Vice President and
the Secretary or any Assistant Secretary of this corporation 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 Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing
resolution.”

     

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

     

    Executed
at Fremont, California on April 21, 2009.

     

    
      
        	 	 	 
	 	 	 	 
	 	
                By:
      

              	/s/
      Gilbert Hu        	 
	 	 	Gilbert
      Hu	 
	 	 	Chief
      Executive Officer	 
	 	 	 	 

      

       

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    FORM
OF RIGHTS CERTIFICATE

     

    Certificate
No. R- _________ Rights

     

    NOT
EXERCISABLE AFTER THE EARLIER OF (i) MAY 7, 2019, (ii) THE DATE
TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE
PREFERRED STOCK RIGHTS PURSUANT TO THE PREFERRED STOCK RIGHTS AGREEMENT (THE
“RIGHTS
AGREEMENT”).  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.]*

     

    RIGHTS
CERTIFICATE

     

    ALTIGEN
COMMUNICATIONS, INC.

     

    This
certifies that ______________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Preferred Stock Rights Agreement dated as of April 21, 2009, (the “Rights
Agreement”), between AltiGen Communications, Inc., a Delaware corporation
(the “Company”),
and Computershare Trust Company, N.A., (the “Rights
Agent”), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
New York time, on May 7, 2019 at the office of the Rights Agent designated for
such purpose, or at the office of its successor as Rights Agent, one
one-thousandth (0.001) of a fully paid and non-assessable share of Series A
Participating Preferred Stock, par value $0.001 per share (the “Preferred
Shares”), of the Company, at an Exercise Price of $4.00 per
one-thousandth (0.001) of a Preferred Share (the “Exercise
Price”), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly
executed.  The number of Rights evidenced by this Rights Certificate
(and the number of one-thousandths (0.001) of a Preferred Share which may be
purchased upon exercise hereof) set forth above are the number and Exercise
Price as of May 7, 2009 based on the Preferred Shares as constituted at such
date.  As provided in the Rights Agreement, the Exercise Price and the
number and kind of Preferred Shares or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain
events.

     

     

      
        
* The
portion of the legend in bracket shall be inserted only if applicable and shall
replace the preceding sentence.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights
Agreement.  Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.

     

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate (i) may be redeemed by the Company, at its option, at a
redemption price of $0.001 per Right or (ii) may be exchanged by the
Company in whole or in part for Common Shares, substantially equivalent rights
or other consideration as determined by the Company.

     

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

     

    No
fractional portion of less than one one-thousandth (0.001) of a Preferred Share
will be issued upon the exercise of any Right or Rights evidenced hereby but in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

     

    No holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

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

     

    WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.  Dated as of  _______________, _____.

    

     

    
      
        	ATTEST:         	 	ALTIGEN
      COMMUNICATIONS, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                By:      

              	 	 
	Secretary	 	 	 	 
	 	 	Its:         	
                 

              	 
	

                Countersigned:

                 

                COMPUTERSHARE
      TRUST COMPANY, N. A.

                as
      Rights Agent

              	 	 	 	 
	 	 	 	 	 	 
	By:     	 
      	 	 	 	 
	Its:       	 
      	 	 	 	 

      

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
       

    

    Form
of Reverse Side of Rights Certificate

     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Rights Certificate)

     

    FOR VALUE
RECEIVED _______________
hereby sells, assigns and transfers unto

     

      
        

      

    

    (Please
print name and address of transferee)

     

    
      
        
this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

    

     

    Dated:
_______________, ____

     

    
      
        	
                 

              	 	 
      
	 	 	Signature
	 	 	 
	 	 	 

      

Signature
Guaranteed:

     

    Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    CERTIFICATE

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    Dated:
_______________, ____

     

    
      
        	
                 

              	 	 
      
	 	 	Signature
	 	 	 
	 	 	 

      

    

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Form
of Reverse Side of Rights Certificate -- continued

     

    FORM OF ELECTION TO
PURCHASE

     

    (To be
executed if holder desires to

    exercise
the Rights Certificate)

     

    To:___________________________

     

    The
undersigned hereby irrevocably elects to exercise _________________________
Rights represented by this Rights Certificate to purchase the number of
one-thousandths (0.001) of a Preferred Share issuable upon the exercise of such
Rights and requests that certificates for such number of one-thousandths (0.001)
of a Preferred Share issued in the name of:

     

    Please
insert social security

    or other
identifying number

     

    
      
        

      

    

    (Please
print name and address)

     

      
        

      

    

    If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

     

    Please
insert social security

    or other
identifying number

     

    
      
        

      

    

    (Please
print name and address)

     

    
      

    

     

    Dated:
_______________, ____

     

    
      
        	
                 

              	 	 
      
	 	 	Signature
	 	 	 
	 	 	 

      

    

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    CERTIFICATE

    

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

    (1)  the
Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);

     

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

     

    Dated:
_______________, ____

     

    
      
        	
                 

              	 	 
      
	 	 	Signature
	 	 	 
	 	 	 

      

    

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Form
of Reverse Side of Rights Certificate -- continued

     

    NOTICE

     

    The
signature in the foregoing Form of Assignment and Form of Election to Purchaser,
as the case may be, must conform to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or any
change whatsoever.

     

    In the
event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed and signed, the
Company and the Rights Agent may deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

     

    STOCKHOLDER
RIGHTS PLAN

    ALTIGEN
COMMUNICATIONS, INC.

     

    Summary
of Rights

     

    
      	
              Distribution
      and

              Transfer
      of Rights;

              Rights
      Certificate:

            	
              The
      Board of Directors has declared a dividend of one Right for each share of
      Common Stock of AltiGen Communications, Inc. (the “Company”)
      outstanding.  Prior to the Distribution Date referred to below,
      the Rights will be evidenced by and trade with the certificates for the
      Common Stock.  After the Distribution Date, the Company will
      mail Rights certificates to the Company’s stockholders and the Rights will
      become transferable apart from the Common Stock.

            
	 	 
	
              Distribution
      Date:

            	
              Rights
      will separate from the Common Stock and become exercisable following
      (a) the tenth day (or such later date as may be determined by the
      Company’s Board of Directors) after a person or group acquires beneficial
      ownership of 15% or more of the Company’s Common Stock or (b) the
      tenth business day (or such later date as may be determined by the
      Company’s Board of Directors) after a person or group announces a tender
      or exchange offer, the consummation of which would result in ownership by
      a person or group of 15% or more of the Company’s Common
      Stock.

            
	 	 
	
              Preferred
      Stock

              Purchasable
      Upon

              Exercise
      of Rights:

            	
              After
      the Distribution Date, each Right will entitle the holder to purchase for
      $4.00 (the “Exercise
      Price”), one thousandth (0.001) of a share of the Company’s
      Preferred Stock with economic terms similar to that of one share of the
      Company’s Common Stock.

            
	 	 
	
              Flip-In:

            	
              If
      an acquirer (an “Acquiring
      Person”) obtains 15% or more of the Company’s Common Stock, then
      each Right (other than Rights owned by an Acquiring Person or its
      affiliates) will entitle the holder thereof to purchase, for the Exercise
      Price, a number of shares of the Company’s Common Stock having a
      then-current market value of twice the Exercise Price.

            
	 	 
	
              Flip-Over:

            	
              If,
      after an Acquiring Person obtains 15% or more of the Company’s Common
      Stock, (a) the Company merges into another entity, (b) an
      acquiring entity merges into the Company or (c) the Company sells
      more than 50% of the Company’s assets or earning power, then
      each Right (other than Rights owned by an Acquiring Person or its
      affiliates) will entitle the holder thereof to purchase, for the Exercise
      Price, a number of shares of Common Stock of the person engaging in the
      transaction having a then current market value of twice the Exercise
      Price.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 
	
              Exchange
      Provision:

            	
              At
      any time after the date on which an Acquiring Person obtains 15% or more
      of the Company’s Common Stock and prior to the acquisition by the
      Acquiring Person of 50% of the outstanding Common Stock, the Board of
      Directors of the Company may exchange the Rights (other than Rights owned
      by the Acquiring Person or its affiliates), in whole or in part, for
      shares of Common Stock of the Company at an exchange ratio of one share of
      Common Stock per Right (subject to adjustment).

            
	 	 
	
              Redemption
      of the

              Rights:

            	
              Rights
      will be redeemable at the Company’s option for $0.001 per Right at any
      time on or prior to the fifth day (or such later date as may be determined
      by the Company’s Board of Directors) after public announcement that a
      Person has acquired beneficial ownership of 15% or more of the Company’s
      Common Stock (the “Shares
      Acquisition Date”).

            
	 	 
	
              Expiration
      of the

              Rights:

            	
              The
      Rights expire on the earliest of (a) May 7, 2019 or (b) exchange
      or redemption of the Rights as described above.

            
	 	 
	
              Amendment
      of

              Terms
      of Rights:

            	
              The
      terms of the Rights and the Rights Agreement may be amended in any respect
      without the consent of the Rights holders on or prior to the Distribution
      Date; thereafter, the terms of the Rights and the Rights Agreement may be
      amended without the consent of the Rights holders in order to cure any
      ambiguities or to make changes which do not adversely affect the interests
      of Rights holders (other than the Acquiring Person).

            
	 	 
	
              Voting
      Rights:

            	
              Rights
      will not have any voting rights.

            
	 	 
	
              Anti-Dilution

              Provisions:

            	
              Rights
      will have the benefit of certain customary anti-dilution
      provisions.

            
	 	 
	
              Taxes:

            	
              The
      Rights distribution should not be taxable for federal income tax
      purposes.  However, following an event which renders the Rights
      exercisable or upon redemption of the Rights, stockholders may recognize
      taxable income.

            
	 	 

    

     

    The
foregoing is a summary of certain principal terms of the Stockholder Rights Plan
only and is qualified in its entirety by reference to the Preferred Stock Rights
Agreement dated as of April 21, 2009 between the Company and Computershare Trust
Company, N.A. as Rights Agent (the “Rights
Agreement”).  The Rights Agreement may be amended from time to
time.  A copy of the Rights Agreement was filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated April 23, 2009.  A copy of the Rights Agreement is
available free of charge from the Company.

     

    
      
        
        

      

      
        -2-

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