Document:

Exhibit

Exhibit 4.1

TAX ASSET PROTECTION RIGHTS AGREEMENT
dated as of September 21, 2016
between
CAMBIUM LEARNING GROUP, INC.
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Rights Agent

TABLE OF CONTENTS
	
			
	 
	 
	PAGES

	 
	 
	 

	SECTION 1.
	CERTAIN DEFINITIONS
	1

	SECTION 2.
	APPOINTMENT OF RIGHTS AGENT
	11

	SECTION 3.
	ISSUE OF RIGHTS AND RIGHT CERTIFICATES
	11

	SECTION 4.
	FORM OF RIGHT CERTIFICATES
	14

	SECTION 5.
	EXECUTION, COUNTERSIGNATURE AND REGISTRATION
	14

	SECTION 6.
	TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES; UNCERTIFICATED RIGHTS
	15

	SECTION 7.
	EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
	16

	SECTION 8.
	CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
	18

	SECTION 9.
	RESERVATION AND AVAILABILITY OF PREFERRED SHARES
	18

	SECTION 10.
	RECORD DATE
	19

	SECTION 11.
	ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
	19

	SECTION 12.
	CERTAIN ADJUSTMENTS
	25

	SECTION 13.
	CERTIFICATE OF ADJUSTMENT
	26

	SECTION 14.
	ADDITIONAL COVENANTS
	26

	SECTION 15.
	FRACTIONAL RIGHTS AND FRACTIONAL SHARES
	27

	SECTION 16.
	RIGHTS OF ACTION
	28

	SECTION 17.
	TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES
	29

	SECTION 18.
	RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
	29

	SECTION 19.
	CONCERNING THE RIGHTS AGENT
	29

	SECTION 20.
	MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
	30

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	SECTION 21.
	DUTIES OF RIGHTS AGENT
	30

	SECTION 22.
	CHANGE OF RIGHTS AGENT
	34

	SECTION 23.
	ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
	35

	SECTION 24.
	REDEMPTION AND TERMINATION
	35

	SECTION 25.
	NOTICES
	36

	SECTION 26.
	SUPPLEMENTS AND AMENDMENTS
	37

	SECTION 27.
	SUCCESSORS
	37

	SECTION 28.
	BENEFITS OF RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE BOARD, ETC
	37

	SECTION 29.
	SEVERABILITY
	38

	SECTION 30.
	GOVERNING LAW
	38

	SECTION 31.
	COUNTERPARTS; EFFECTIVENESS
	39

	SECTION 32.
	DESCRIPTIVE HEADINGS
	39

	SECTION 33.
	FORCE MAJEURE
	39

	SECTION 34.
	PROCESS TO SEEK EXEMPTION
	39

	SECTION 35.
	TAX BENEFITS REVIEW
	40

	SECTION 36.
	CONFIDENTIALITY
	40

	SECTION 37.
	CUSTOMER IDENTIFICATION PROGRAM
	40

Exhibits

Exhibit A:    Certificate of Designation
Exhibit B:    Form of Right Certificate
Exhibit C:    Summary of Rights

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TAX ASSET PROTECTION RIGHTS AGREEMENT
TAX ASSET PROTECTION RIGHTS AGREEMENT dated as of September 21, 2016 (this “Agreement”), between CAMBIUM LEARNING GROUP, INC., a Delaware corporation (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Rights Agent (the “Rights Agent”).
RECITALS
WHEREAS, (i) the Company has generated NOLs and other Tax Benefits (as such terms are hereinafter defined) for United States Federal income tax purposes; (ii) such NOLs and other Tax Benefits may potentially provide valuable tax benefits to the Company; (iii) the Company desires to avoid an “ownership change” within the meaning of Section 382 and the Treasury Regulations (as such terms are hereinafter defined) promulgated thereunder, and thereby preserve the ability to utilize fully such NOLs and other Tax Benefits; and (iv) in furtherance of such objectives, the Company desires to enter into this Agreement; and
WHEREAS, the Board of Directors of the Company (the “Board”) authorized and declared a dividend distribution of one right (a “Right”) in respect of each share of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”) outstanding at the Close of Business (as hereinafter defined) on October 7, 2016 (the “Record Date”), and further authorized and directed the issuance of one Right (as such number may hereafter be adjusted pursuant to the provisions of this Agreement) with respect to each share of Common Stock that shall become outstanding (whether originally issued or delivered from the Company’s treasury) between the Record Date and the earliest of the Distribution Date, the Redemption Date or the Expiration Date (as such terms are hereinafter defined); provided, however, that Rights may be issued with respect to shares of Common Stock that shall become outstanding after the Distribution Date (whether originally issued or delivered from the Company’s treasury) and prior to the earlier of the Redemption Date or the Expiration Date only in accordance with the provisions of Section 23.  Each Right shall initially represent the right to purchase one one-thousandth (1/1,000th) of a share of Series A Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Shares”), having the powers, rights and preferences set forth in the Certificate of Designation attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

SECTION 1.  Certain Definitions.  For purposes of this Agreement, the following terms have the meanings indicated:
“Acquiring Person” shall mean any Person who or which, alone or together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 4.99% or more of the Common Shares then outstanding, but not including (a) the Company, any Subsidiary of the Company, any employee benefit or compensation plan of the Company or of any of its Subsidiaries or any Person organized, appointed or established by the Company and holding Common Shares for or pursuant to the terms of any such employee benefit or compensation plan, (b) any Grandfathered Person, unless such Grandfathered Person becomes the Beneficial Owner of a percentage of Common Shares then outstanding exceeding such Grandfathered Person’s Grandfathered Percentage by 0.5% or more of the outstanding Common Shares or (c) any Exempt Person; provided, however, that no Person who or which, alone or together with all Affiliates and Associates of such Person, has become and is the Beneficial Owner of 4.99% or more (or in the case of a Grandfathered Person, has exceeded and is exceeding such Grandfathered Person’s Grandfathered Percentage by 0.5% or more) of the Common Shares at the time outstanding, will be deemed to have become an Acquiring Person solely as the result of (i) a change in the aggregate number of Common Shares outstanding since the last date on which such Person acquired Beneficial Ownership of any Common Shares, including pursuant to a dividend or distribution of shares by the Company made on a pro rata basis to all holders of Common Shares or the issuance of shares by the Company pursuant to a split or subdivision of the outstanding Common Shares; (ii) equity compensation awards granted to such Person by the Company or as a result of an adjustment to the number of Common Shares represented by such equity compensation award pursuant to the terms thereof, unless and until such time, in the case of clause (i) and clause (ii), as such Person or one or more of its Affiliates or Associates thereafter acquires Beneficial Ownership of one additional Common Share (other than any Common Shares acquired as described in clause (i) or (ii) above); or (iii) the acquisition by such Person or one or more of its Affiliates or Associates of Beneficial Ownership of additional Common Shares if the Board determines that such acquisition was made in good faith without the knowledge by such Person or one or more of its Affiliates or Associates that such Person would thereby become an Acquiring Person (including because (A) such Person was unaware that it Beneficially Owned a percentage of then-outstanding Common Shares that would otherwise cause such Person, together with all Affiliates and Associates of such Person, to become an “Acquiring Person” or (B) such Person was aware of the extent of its Beneficial Ownership but was unaware of the consequences of such Beneficial Ownership under this Agreement), which determination of the Board shall be conclusive and binding on such Person, the Rights Agent, the holders of the Rights and all other Persons.
Notwithstanding clause (iii) of the proviso in the prior sentence, unless the Board determines pursuant to the definition of “Exempt Person” that an Inadvertent Acquiror is an Exempt Person, if any Person that is not an Acquiring Person due to such clause (iii) does not reduce its, together with all of its Affiliates’ and Associates’, percentage of Beneficial Ownership of Common Shares to less than 4.99% (or in the case of a Grandfathered Person, to less than 0.5% in excess of its Grandfathered Percentage) by the Close of Business on the tenth (10th) calendar day after notice from the Company (the date of notice being the first day) that such Person’s Beneficial Ownership of Common Shares would make it an Acquiring Person, such Person shall, at the end of such ten 

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calendar day period, become an Acquiring Person (and such clause (iii) shall no longer apply to such Person).  If any Person that is not an Acquiring Person due to such clause (iii) and the requirements of the prior sentence shall again become the Beneficial Owner of 4.99% or more (or in the case of a Grandfathered Person, a percentage of Common Shares then outstanding exceeding such Grandfathered Person’s Grandfathered Percentage by 0.5% or more) of the Common Shares then outstanding, such Person shall be deemed an “Acquiring Person”, subject to the exceptions set forth in this definition.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” solely as a result of an Exempt Transaction.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” solely as the result of an acquisition of Common Shares by the Company which, by reducing the number of Common Shares outstanding, increases the proportion of the Common Shares beneficially owned by such Person to 4.99% or more (or in the case of a Grandfathered Person, has exceeded and is exceeding such Grandfathered Person’s Grandfathered Percentage by 0.5% or more) of the Common Shares at the time outstanding unless and until such time as such Person or one or more of its Affiliates or Associates thereafter acquires Beneficial Ownership of one additional Common Share unless, upon becoming the Beneficial Owner of such additional Common Share, such Person is not then the Beneficial Owner of 4.99% or more (or in the case of a Grandfathered Person, of a percentage of Common Shares then outstanding exceeding such Grandfathered Person’s Grandfathered Percentage by 0.5% or more) of the Common Shares at the time outstanding.
“Affiliate” and “Associate”, when used with reference to any Person, 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, and to the extent not included within the foregoing, shall also include, with respect to any Person, any other Person whose Common Shares would be deemed to be constructively owned by such first Person, owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with shares owned by such first Person, pursuant to the provisions of the Code, or any successor or replacement provision, and the Treasury Regulations promulgated thereunder; provided, however, that a Person will not be deemed to be an Affiliate or Associate of another Person solely because either or both Persons are or were directors of the Company.
“Agreement” shall have the meaning set forth in the Preamble to this Agreement.
A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “beneficially own”, and shall be deemed to have “Beneficial Ownership” of, any securities which such Person directly owns or would be deemed to indirectly or constructively own, or which otherwise would be aggregated with securities owned by such Person, pursuant to Section 382 of the Code, or any successor or replacement provision, and the Treasury Regulations promulgated thereunder.
“Board” shall have the meaning set forth in the Recitals to this Agreement.
“Book Value,” when used with reference to Common Shares issued by any Person, shall mean the amount of equity of such Person applicable to each Common Share, determined (a) in 

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accordance with United States generally accepted accounting principles in effect on the date as of which such Book Value is to be determined, (b) using all the consolidated assets and all the consolidated liabilities of such Person on the date as of which such Book Value is to be determined, except that no value shall be included in such assets for goodwill arising from consummation of a business combination (including, without limitation, a Business Combination), and (c) after giving effect to (i) the exercise of all rights, options and warrants to purchase such Common Shares (other than the Rights), and the conversion of all securities convertible into such Common Shares, at an exercise or conversion price, per Common Share, which is less than such Book Value before giving effect to such exercise or conversion (whether or not exercisability or convertibility is conditioned upon occurrence of a future event), (ii) all dividends and other distributions on the capital stock of such Person declared prior to the date as of which such Book Value is to be determined and to be paid or made after such date, and (iii) any other agreement, arrangement or understanding (written or oral), or transaction or other action contemplated prior to the date as of which such Book Value is to be determined that would have the effect of thereafter reducing such Book Value.
“Business Combination” shall have the meaning set forth in Section 11(c)(i).
“Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in the City of New York are authorized or obligated by law or executive order to close.
“Certificate of Designation” shall mean the Certificate of Designation of the Preferred Shares, a copy of which is attached hereto as Exhibit A.
“Close of Business” on any given date shall mean 5:00 p.m., New York City time, on such date; provided, however, that, if such date is not a Business Day, “Close of Business” shall mean 5:00 p.m., New York City time, on the next succeeding Business Day.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Common Shares,” when used with reference to the Company prior to a Business Combination, shall mean the shares of Common Stock or any other shares of capital stock of the Company into which the Common Stock shall be reclassified or changed and any other interest that would be treated as “stock” of the Company for purposes of Section 382 (including Treasury Regulation Section 1.382-2T(f)(18)) in this Section 1 and all other provisions of this Agreement in which such meaning is necessary in order to ensure that this Agreement is effective in carrying out its stated purpose and intent of preserving the Company’s NOLs and other Tax Benefits.  “Common Shares,” when used with reference to any Person other than the Company prior to a Business Combination, shall mean shares of capital stock of such Person (if such Person is a corporation) of any class or series, or units of equity interests in such Person (if such Person is not a corporation) of any class or series, the terms of which do not limit (as a maximum amount and not merely in proportional terms) the amount of dividends or income payable or distributable on such class or series or the amount of assets distributable on such class or series upon any voluntary or involuntary liquidation, dissolution or winding up of such Person and do not provide that such class or series is subject to redemption at the option of such Person, or any shares of capital stock or units of equity interests into which the foregoing shall be reclassified or changed, and if there shall be more than 

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one class or series of such shares of capital stock or units of equity interests of such Person, then “Common Shares” of such Person shall mean the class or series of capital stock of such Person or units of equity interests in such Person having voting power (being the power under ordinary circumstances (and not merely upon the happening of a contingency) to vote in the election of directors of such Person (if such Person is a corporation) or to participate in the management and control of such Person (if such Person is not a corporation)), or in the case of multiple classes or series having voting power, having the greatest voting power.
“Common Stock” shall have the meaning set forth in the Recitals to this Agreement.
“Company” shall have the meaning set forth in the Preamble to this Agreement; provided, however, that if there is a Business Combination, “Company” shall have the meaning set forth in Section 11(c)(iii).
The term “control” with respect to any Person shall mean the power to direct the management and policies of such Person, directly or indirectly, by or through stock ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other Persons by or through stock ownership, agency or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.
“Customer Identification Program” shall have the meaning set forth in Section 37.
“Derivative Interest” shall mean any derivative securities (as defined under Rule 16a-1 under the Exchange Act) that increase in value as the value of the underlying equity increases, including, but not limited to, a long convertible security, a long call option and a short put option position, in each case, regardless of whether (x) such interest conveys any voting rights in such security, (y) such interest is required to be, or is capable of being, settled through delivery of such security or (z) transactions hedge the economic effect of such interest.
“Distribution Date” shall mean the Close of Business on the earlier of (a) ten (10) calendar days after the Share Acquisition Date and (b) such date, if any, as may be designated by the Board following the commencement of, or the first public disclosure of an intent to commence, a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit or compensation plan of the Company or of any of its Subsidiaries, or any Person organized, appointed or established by the Company and holding Common Shares for or pursuant to the terms of any such employee benefit or compensation plan) for outstanding Common Shares, if upon consummation of such tender or exchange offer such Person could reasonably be expected to be the Beneficial Owner of 4.99% or more of the outstanding Common Shares.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any comparable or successor law or act) as in effect on the date in question, unless otherwise specifically provided.
“Exchange Consideration” shall have the meaning set forth in Section 11(b)(i).

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“Exempt Person” shall mean any Person, alone or together with all Affiliates and Associates of such Person, whose Beneficial Ownership of 4.99% or more of the then outstanding Common Shares, as determined by the Board in its sole discretion, or a duly constituted committee of Independent Directors, in its sole discretion, including a determination pursuant to Section 34, (a) would not jeopardize or endanger the availability to the Company of its NOLs or other Tax Benefits, taking into account such facts and circumstances as the Board (or any such committee) reasonably deems relevant, or (b) is otherwise in the best interests of the Company; provided, however, that the Board, or a duly constituted committee of Independent Directors, makes such determination either (x) before the time such Person otherwise would have become an Acquiring Person, or (y) after the time such Person otherwise would have become an Acquiring Person if the Board, or a duly constituted committee of Independent Directors, has determined that such Person is an Inadvertent Acquiror; provided, further, that such Person will cease to be an “Exempt Person” if the Board, in its sole discretion, or a duly constituted committee of Independent Directors, in its sole discretion, makes a contrary determination regarding the effect of such Person’s Beneficial Ownership (together with all Affiliates and Associates of such Person) with respect to the availability to the Company of its NOLs or other Tax Benefits, taking into account such facts and circumstances as the Board (or any such committee) reasonably deems relevant.  In granting an exemption under this definition, the Board, or a duly constituted committee of Independent Directors, may require any Person who would otherwise be an Acquiring Person to make certain representations, undertakings or covenants or to agree that any violation or attempted violation of such representations, undertakings or covenants will result in such consequences and be subject to such conditions as the Board, or a duly constituted committee of Independent Directors, may determine in its sole discretion, including that any such violation shall result in such Person becoming an Acquiring Person.  Notwithstanding anything to the contrary contained herein, Veronis Suhler Stevenson (“VSS”) and its Subsidiaries and Affiliates shall be “Exempt Persons” for all purposes under this Agreement. 
“Exempt Transaction” shall mean any transaction that the Board determines, or a duly constituted committee of Independent Directors determines, is exempt from this Agreement, which determination shall be made in the sole discretion of the Board (or any such committee) prior to the date of such transaction, including if the Board (or any such committee) determines that (a) neither the Beneficial Ownership of Common Shares by any Person, directly or indirectly, as a result of such transaction nor any other aspect of such transaction would jeopardize or endanger the availability to the Company of the NOLs or other Tax Benefits, taking into account such facts and circumstances as the Board (or any such committee) reasonably deems relevant, or (b) such transaction is otherwise in the best interests of the Company.  In granting an exemption under this definition, the Board, or a duly constituted committee of Independent Directors, may require any Person who would otherwise be an Acquiring Person to make certain representations, undertakings or covenants or to agree that any violation or attempted violation of such representations, undertakings or covenants will result in such consequences and be subject to such conditions as the Board, or a duly constituted committee of Independent Directors, may determine in its sole discretion, including that any such violation shall result in such Person becoming an Acquiring Person.
“Exemption Request” shall have the meaning set forth in Section 34.

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“Expiration Date” shall mean the earliest of: (i) the Final Expiration Date or such earlier date as of which the Board determines that this Agreement is no longer necessary for the preservation of Tax Benefits; (ii) the Close of Business on the effective date of the repeal of Section 382 if the Board determines that this Agreement is no longer necessary or desirable for the preservation of NOLs or other Tax Benefits; (iii) the time at which all exercisable Rights are exchanged as provided in Section 11(b); and (iv) the Close of Business on the first day of a taxable year of the Company with respect to which the Board determines that no NOLs or other Tax Benefits may be carried forward.
“Final Expiration Date” shall mean the Close of Business on September 21, 2019.
“include”, “includes” and “including” shall be deemed to be followed by the words “without limitation.”
“Grandfathered Percentage” shall mean, with respect to any Grandfathered Person, the percentage of the outstanding Common Shares that such Grandfathered Person, together with all Affiliates and Associates of such Grandfathered Person, Beneficially Owns as of the Close of Business on the date hereof; provided that, in the event any Grandfathered Person shall sell, transfer, or otherwise dispose of any outstanding Common Shares after the Close of Business on the date hereof, the Grandfathered Percentage shall, subsequent to such sale, transfer or disposition, mean, with respect to such Grandfathered Person, the lesser of (a) the Grandfathered Percentage as in effect immediately prior to such sale, transfer or disposition or (b) the percentage of outstanding Common Shares that such Grandfathered Person, together with all Affiliates and Associates of such Grandfathered Person, Beneficially Owns immediately following such sale, transfer or disposition.
“Grandfathered Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, is, as of the Close of Business on the date hereof, the Beneficial Owner (as disclosed in public filings with the Securities and Exchange Commission on the Close of Business on the date hereof) of 4.99% or more of the Common Shares then outstanding.  Notwithstanding anything to the contrary provided in this Agreement, any Grandfathered Person who after the Close of Business on the date hereof becomes the Beneficial Owner of less than 4.99% of the Common Shares then outstanding shall cease to be a Grandfathered Person and thereafter shall be subject to all of the provisions of this Agreement in the same manner as any Person who or which is not and was never a Grandfathered Person; provided, however, that an Exempt Person shall not be a Grandfathered Person. 
“Inadvertent Acquiror” shall mean any Person who would be an Acquiring Person but for clause (iii) of the proviso in the definition of “Acquiring Person.”
“Independent Director” shall mean an independent director as defined in the Nasdaq Marketplace Rules.
“Major Part,” when used with reference to the assets of the Company and its Subsidiaries as of any date, shall mean assets (a) having a fair market value aggregating 50% or more of the total fair market value of all the assets of the Company and its Subsidiaries (taken as a whole) as of the date in question, (b) accounting for 50% or more of the total value (net of depreciation and 

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amortization) of all the assets of the Company and its Subsidiaries (taken as a whole) as would be shown on a consolidated or combined balance sheet of the Company and its Subsidiaries as of the date in question, prepared in accordance with United States generally accepted accounting principles then in effect, or (c) accounting for 50% or more of the total amount of earnings before interest, taxes, depreciation and amortization or of the revenues of the Company and its Subsidiaries (taken as a whole) as would be shown on, or derived from, a consolidated or combined statement of income or net earnings of the Company and its Subsidiaries for the period of 12 months ending on the last day of the Company’s monthly accounting period next preceding the date in question, prepared in accordance with United States generally accepted accounting principles then in effect.
“Market Value,” when used with reference to Common Shares or Preferred Shares on any date, shall mean the average of the daily closing prices, per share, of such Common Shares or Preferred Shares, as applicable, for the period which is the shorter of (a) 30 consecutive Trading Days ending on the Trading Day immediately prior to the date in question or (b) the number of consecutive Trading Days beginning on the Trading Day immediately after the date of the first public announcement of the event requiring a determination of the Market Value of Common Shares or Preferred Shares, as applicable, and ending on the Trading Day immediately prior to the record date of such event.  The closing price for each Trading Day shall be the closing price quoted on the composite tape for securities listed on the Nasdaq Capital Market, or, if such securities are not quoted on such composite tape, on the principal United States securities exchange registered under the Exchange Act (or any recognized foreign stock exchange) on which such securities are listed, or, if such securities are not listed on any such exchange, the closing price (or, if no sale takes place on such Trading Day, the average of the closing bid and asked prices on such Trading Day) as quoted on any reputable quotations system specified by the Board, or if no such quotations are available, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such securities selected by the Board, or if on any such Trading Day no market maker is making a market in such securities, the closing price of such securities on such Trading Day shall be deemed to be the fair value of such securities as determined in good faith by the Board (whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent, the holders of Rights and all other Persons); provided, however, that if a Trading Day occurs during a period following an announcement of any action of the type described in Section 12(a) that would require an adjustment thereunder by the issuer of the securities the closing price of which is to be determined, then, and in each such case, the closing price of such securities shall be appropriately adjusted to reflect the effect of such action on the market price of such securities; and provided further, however, that for the purpose of determining the closing price of the Preferred Shares for any Trading Day on which there is no market maker for the Preferred Shares, the closing price on such Trading Day shall be deemed to be the Formula Number (as defined in the Certificate of Designation) multiplied by the closing price of the Common Shares on such Trading Day.
“NOLs” shall mean the Company’s net operating loss carryforwards.
“Person” shall mean an individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity, or a group of Persons making a “coordinated acquisition” of shares or otherwise treated as an entity within the meaning 

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of Section 1.382-3(a)(1) of the Treasury Regulations, and shall include any successor (by merger or otherwise) of such individual or entity, but shall not include a Public Group (as defined in Section 1.382-2T(f)(13) of the Treasury Regulations).
“Post Transferee” shall have the meaning set forth in Section 7(e).
“Preferred Shares” shall have the meaning set forth in the Recitals to this Agreement.  Any reference in this Agreement to Preferred Shares shall be deemed to include any authorized fraction of a Preferred Share, unless the context otherwise requires.
“Principal Party” shall mean the Surviving Person in a Business Combination; provided, however, that, (i) if such Surviving Person is a direct or indirect Subsidiary of any other Person, “Principal Party” shall mean the Person which is the ultimate parent of such Surviving Person and which is not itself a Subsidiary of another Person, and (ii) in the event ultimate control of such Surviving Person is shared by two or more Persons, “Principal Party” shall mean that Person that is immediately controlled by such two or more Persons.
“Prior Transferee” shall have the meaning set forth in Section 7(e).
“Purchase Price” with respect to each Right shall mean $23.00, as such amount may from time to time be adjusted as provided in this Agreement, and shall be payable in lawful money of the United States of America.  All references herein to the Purchase Price shall mean the Purchase Price as in effect at the time in question.
“Record Date” shall have the meaning set forth in the Recitals to this Agreement.
“Redemption Date” shall have the meaning set forth in Section 24(a).
“Redemption Price” with respect to each Right shall mean $0.0001, as such amount may from time to time be adjusted in accordance with Section 12.  All references herein to the Redemption Price shall mean the Redemption Price as in effect at the time in question.
“Registered Common Shares” shall mean Common Shares that are, as of the date of consummation of a Business Combination, and have continuously been for the 12 months immediately preceding such date, registered under Section 12 of the Exchange Act, and if a Person has multiple classes or series of Registered Common Shares outstanding, “Registered Common Shares” of such Person shall mean the class or series of Registered Common Shares of such Person having voting power (being the power under ordinary circumstances (and not merely upon the happening of a contingency) to vote in the election of directors of such Person (if such Person is a corporation) or to participate in the management and control of such Person (if such Person is not a corporation)), or in the case of multiple classes or series having voting power, having the greatest voting power.
“Requesting Person” shall have the meaning set forth in Section 34.
“Right” shall have the meaning set forth in the Recitals to this Agreement.

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“Right Certificate” shall mean a certificate evidencing a Right in substantially the form attached hereto as Exhibit B.
“Rights Agent” shall have the meaning set forth in the Preamble to this Agreement.
“Section 382” shall mean section 382 of the Code or any amended or successor version thereof.
“Securities Act” shall mean the Securities Act of 1933, as amended (or any comparable or successor law or act), as in effect on the date in question, unless otherwise specifically provided.
“Share Acquisition Date” shall mean the date on which the Company learns that a Person has become an Acquiring Person; provided, however that, if such Person is determined by the Board (a) to be an Exempt Person or (b) to be an Inadvertent Acquiror, then in the case of each of clause (a) and (b), the Share Acquisition Date shall be deemed not to have occurred; but only for so long as such Person (i) in the case of clause (a), remains an Exempt Person or (ii) in the case of clause (b), does not thereafter become an Acquiring Person pursuant to the second sentence of the definition of “Acquiring Person”, unless, in the case of each of clause (i) and clause (ii), the Distribution Date shall have occurred.
“Subsidiary” of another Person shall mean a Person, at least a majority of the total outstanding voting power (being the power under ordinary circumstances (and not merely upon the happening of a contingency) to vote in the election of directors of such Person (if such Person is a corporation) or to participate in the management and control of such Person (if such Person is not a corporation)) of which is owned, directly or indirectly, by another Person or by one or more other Subsidiaries of such other Person or by such other Person and one or more other Subsidiaries of such other Person.
“Surviving Person” shall mean (a) the Person which is the continuing or surviving Person in a consolidation, merger, share exchange or other business combination specified in Section 11(c)(i)(A) or 11(c)(i)(B) or (b) the Person to which the Major Part of the assets of the Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of in a transaction specified in Section 11(c)(i)(C); provided, however, that, if the Major Part of the assets of the Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of in one or more related transactions specified in Section 11(c)(i)(C) to more than one Person, the “Surviving Person” in such case shall mean the Person that acquired assets of the Company and/or its Subsidiaries with the greatest fair market value in such transaction or transactions.
“Tax Benefits” shall mean the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers, foreign tax credit carryovers, research and development credit carryovers and any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, and the Treasury Regulations promulgated thereunder, of the Company or any of its Subsidiaries.
“Trading Day” shall mean a day on which the principal national securities exchange (or principal recognized foreign stock exchange, as the case may be) on which any securities or Rights, 

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as the case may be, are listed or admitted to trading is open for the transaction of business or, if the securities or Rights in question are not listed or admitted to trading on any national securities exchange (or recognized foreign stock exchange, as the case may be), a Business Day.
“Treasury Regulations” shall mean final, temporary and proposed tax regulations promulgated under the Code, as amended.
“Trust” shall have the meaning set forth in Section 11(b)(ii).
“Trust Agreement” shall have the meaning set forth in Section 11(b)(ii).

SECTION 2.  Appointment of Rights Agent.  The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions hereof (and no implied terms and conditions), and the Rights Agent hereby accepts such appointment.  Upon ten (10) days’ prior written notice to the Rights Agent, the Company may from time to time appoint one or more co-Rights Agents as it may deem necessary or desirable (the term “Rights Agent” being used herein to refer, collectively, to the Rights Agent together with any such co-Rights Agents).  In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agents, as among them, shall be as the Company shall determine, and shall be provided in writing to the Rights Agent and any such co-Rights Agent.  The Rights Agent shall have no duty to supervise and shall not be liable for the acts or omissions of any such co-Rights Agents.  To the extent that any co-Rights Agent takes any action pursuant to this Agreement, such co-Rights Agent will be entitled to all of the rights and protections of, and subject to all of the applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement.

SECTION 3.  Issue of Rights and Right Certificates.
(a)    One Right shall be associated with: (i) each Common Share outstanding on the Record Date; (ii) each additional Common Share (other than Common Shares issued upon the exercise or exchange of any Right) that shall become outstanding between the Record Date and the earliest to occur of the Distribution Date, the Redemption Date or the Expiration Date; and (iii) each additional Common Share with which Rights are issued after the Distribution Date but prior to the earlier of the Redemption Date or the Expiration Date as provided in Section 23, subject to adjustment as provided in this Agreement.
(b)    Until the Distribution Date, (x) the Rights shall, except as otherwise provided in Section 3(c), be evidenced by the certificates for Common Shares registered in the names of the holders thereof, or, in the case of Common Shares held in uncertificated form, by the transaction statement or other record of ownership of such Common Shares and not by separate Right Certificates, and (y) the Rights, including the right to receive Right Certificates, shall be transferable only in connection with the transfer of the underlying Common Shares.  As soon as practicable after the Distribution Date, the Company shall prepare and execute, the Rights Agent shall countersign, and the Company will send or cause to be sent (and the Rights Agent shall, if requested and provided with all necessary information, at the expense of the Company send) by first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, 

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at the address of such holder shown on the records of the Company or the transfer agent or registrar for the Common Shares, one or more Right Certificates evidencing one whole Right for each Common Share held by such record holder, subject to the provisions of Section 15 and to adjustment as provided in this Agreement.  As of and after the Distribution Date, the Rights shall be evidenced solely by such Right Certificates.  The Company shall, as promptly as practicable, notify the Rights Agent upon the occurrence of the Distribution Date and, if such notification is given orally, the Company shall confirm same in writing (including via electronic mail) on or prior to the Business Day next following.  Until such written notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not occurred.
(c)    As soon as practicable after the Record Date, the Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in substantially the form attached hereto as Exhibit C (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 or the transfer agent or registrar for the Common Shares.  With respect to any Common Shares outstanding as of the Record Date, and until the earliest of the Distribution Date, the Redemption Date or the Expiration Date, (i) in the case of certificated shares, (A) the Rights associated with the Common Shares represented by any certificate shall be evidenced by such certificate for the Common Shares with a copy of the Summary of Rights attached thereto and the registered holders of the Common Shares shall also be the registered holders of the associated Rights and (B) the surrender for transfer of any such certificate, even without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with the Common Shares represented thereby, and (ii) in the case of Common Shares held in uncertificated form, (A) the Rights associated with the Common Shares shall be evidenced by the balances indicated in the book-entry account system of the transfer agent for such Common Shares and the registered holders of the Common Shares shall also be the registered holders of the associated Rights and (B) the transfer of any Common Shares in the book-entry account system of the transfer agent for such Common Shares shall also constitute the transfer of the Rights associated with such Common Shares.
(d)    In the case of certificated Common Shares, certificates issued for Common Shares after the Record Date (including upon transfer or exchange of outstanding Common Shares), but prior to the earliest to occur of the Distribution Date, the Redemption Date or the Expiration Date, shall have printed on, written on or otherwise affixed to them a legend in substantially the following form or such similar legend as the Company may deem appropriate and is not inconsistent with the provisions of this Agreement:
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Tax Asset Protection Rights Agreement, dated as of September 21, 2016, (as it may be amended from time to time (the “Rights Agreement”)), between CAMBIUM LEARNING GROUP, INC., a Delaware corporation (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, (or any successor Rights Agent, the “Rights Agent”), the terms of which (including restrictions on the transfer of such Rights) are hereby incorporated herein by reference and a copy 

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of which is on file at the principal executive offices of the Company.  Under certain circumstances, as set forth in the Rights Agreement, such Rights shall be evidenced by separate certificates and shall no longer be evidenced by this certificate.  The Company shall mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor.  RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Notwithstanding this Section 3(d), neither the omission of a legend nor the inclusion of a legend that makes reference to a rights agreement other than this Agreement shall affect the enforceability of any part of this Agreement or the rights of any holder of Rights.
(e)    In the case of Common Shares held in uncertificated form, the Company shall cause the confirmation and account statements sent to holders of Common Shares in book-entry form (including upon transfer or exchange of outstanding Common Shares) prior to the earliest of the Distribution Date, the Redemption Date or the Expiration Date to bear a legend in substantially the following form:
Each share of Common Stock, par value $0.001 per share, of CAMBIUM LEARNING GROUP, INC., a Delaware corporation (the “Company”), entitles the holder thereof to certain Rights as set forth in a Tax Asset Protection Rights Agreement, dated as of September 21, 2016 (as it may be amended from time to time (the “Rights Agreement”)), between the Company and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, (or any successor Rights Agent, the “Rights Agent”), the terms of which (including restrictions on the transfer of such Rights) are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company.  Under certain circumstances, as set forth in the Rights Agreement, such Rights shall be evidenced by separate certificates and shall no longer be evidenced by the shares to which this statement relates.  The Company shall mail to the holder of shares to which this statement relates a copy of the Rights Agreement without charge after receipt of a written request therefor.  RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.

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Notwithstanding this Section 3(e), neither the omission of a legend nor the inclusion of a legend that makes reference to a rights agreement other than this Agreement shall affect the enforceability of any part of this Agreement or the rights of any holder of Rights.
(f)    In the event that the Company purchases or otherwise acquires any Common Shares after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Expiration Date, any Rights associated with such Common Shares will be deemed canceled and retired so that the Company will not be entitled to exercise any Rights associated with the Common Shares so purchased or acquired.

SECTION 4.  Form of Right Certificates.  The Right Certificates (and the form of election to purchase and form of assignment to be printed on the reverse side thereof) shall be in substantially the form set forth as 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 (but which do not affect the rights, duties or responsibilities of the Rights Agent) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage.  Subject to the other provisions of this Agreement (including Sections 7, 11 and 23), the Right Certificates, whenever issued, shall be dated as of the Distribution Date and shall entitle the holders thereof to purchase such number of Preferred Shares as shall be set forth therein for the Purchase Price set forth therein, subject to adjustment as provided in this Agreement.

SECTION 5.  Execution, Countersignature and Registration.  
(a)    The Right Certificates shall be executed on behalf of the Company by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or the Secretary of the Company, either manually or by facsimile signature, and may have affixed thereto the Company’s seal or a facsimile thereof.  The Right Certificates shall be countersigned by the Rights Agent either manually or by facsimile signature, and shall not be valid or obligatory for any purpose unless so countersigned.  In the event that any officer of the Company who shall have signed any of the Right Certificates shall cease to be such an officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates may nevertheless 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 Right Certificates had not ceased to be such an officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of execution of this Agreement any such person was not such an officer of the Company.
(b)    Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its office designated for such purpose, books for registration and transfer of the Right Certificates issued hereunder.  Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced by each of the Right Certificates, the certificate number of each of the Right Certificates and the date of each of the Right Certificates.

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SECTION 6.  Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights.  
(a)    Subject to Sections 7(e) and 15, at any time after the Distribution Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become null and void pursuant to Section 7(e)) may be transferred, split-up, combined or exchanged for another Right Certificate or Right Certificates representing, in the aggregate, the same number of Rights as the Right Certificate or Right Certificates surrendered then represented.  Any registered holder desiring to transfer, split-up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent and shall surrender the Right Certificate or Right Certificates to be transferred, split-up, combined or exchanged at the office of the Rights Agent designated for such purpose; provided, however, that neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any Right Certificate surrendered for transfer until the registered holder shall have properly completed and duly signed the certification contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request.  Thereupon the Rights Agent shall, subject to Sections 7(e) and 15, countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested.  The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split-up, combination or exchange of Right Certificates.  If and to the extent the Company does require payment of any such taxes or charges, the Company shall give the Rights Agent prompt written notice thereof and the Rights Agent shall not deliver any Right Certificate unless and until it is satisfied that all such payments have been made, and the Rights Agent shall promptly forward any such sum collected by it to the Company or to such Persons as the Company may specify by written notice.  The Rights Agent shall have no duty or obligation under any section of this Agreement that requires the payment of taxes or charges unless and until it is satisfied that all such taxes and/or charges have been paid.
(b)    Subject to Sections 7(e) and 15, upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a valid Right Certificate, and, in case of loss, theft or destruction, of an open surety bond reasonably satisfactory to them, holding the Rights Agent and the Company harmless, 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 Right Certificate if mutilated, the Company shall execute a new Right Certificate of like tenor and deliver such new Right Certificate to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
(c)    Notwithstanding any other provision hereof, the Company and the Rights Agent may amend this Agreement to provide for uncertificated Rights in addition to or in place of Rights evidenced by Right Certificates.

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SECTION 7.  Exercise of Rights; Expiration Date of Rights.  
(a)    Subject to the other provisions of this Agreement (including Sections 7(e) and 11), each Right shall entitle the registered holder thereof, upon exercise thereof as provided in this Agreement, to purchase for the Purchase Price, at any time after the Distribution Date and at or prior to the earlier of (i) the Expiration Date and (ii) the Redemption Date, one one-thousandth (1/1,000th) of a Preferred Share, subject to adjustment as provided in this Agreement.  For purposes of clarity, the Rights and this Agreement shall expire on the Expiration Date and no Person shall have any rights pursuant to this Agreement or any Right after the Expiration Date, unless the Rights have been exchanged or redeemed pursuant to the terms hereof.
(b)    Subject to the other provisions of this Agreement (including Section 7(e)), the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided in this Agreement) in whole or in part at any time after the Distribution Date and at or prior to the earlier of (i) the Expiration Date and (ii) the Redemption Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof properly completed and duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the Purchase Price for each one one-thousandth (1/1,000th) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) as to which the Rights are exercised, together with any amount equal to any applicable transfer tax, in the manner required hereby.
(c)    Subject to the other provisions of this Agreement (including Section 7(e)), upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase properly completed and duly executed, accompanied by payment of the Purchase Price for the Preferred Shares to be purchased together with an amount equal to any applicable transfer tax, in lawful money of the United States of America, in cash or by certified check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly: (i) either (A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent for such shares) certificates representing the number of one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) 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 Preferred Shares with a depositary agent under a depositary arrangement, requisition from the depositary agent depositary receipts representing the number of one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) to be purchased (in which case certificates for the Preferred Shares to be represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company shall direct the depositary agent to comply with all such requests; (ii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or, upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder; (iii) when necessary to comply with this Agreement (or otherwise when appropriate, as determined by the Company with written notice to the Rights Agent), requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in accordance with Section 15; and (iv) when necessary to comply with this Agreement (or otherwise when appropriate, as determined by the Company with written 

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notice to the Rights Agent), after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Right Certificate.
(d)    In case the registered holder of any Right Certificate shall exercise fewer than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 15.
(e)    Notwithstanding anything in this Agreement to the contrary, any Rights that are at any time beneficially owned by: (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person; (ii) a transferee of an Acquiring Person (or of any Associate or Affiliate of such Acquiring Person) who becomes a transferee after the Acquiring Person becomes such (a “Post Transferee”); (iii) a transferee of an Acquiring Person (or of any Associate or Affiliate of such Acquiring Person) 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 (or from such Affiliate or Associate) to holders of equity interests in such Acquiring Person (or such Affiliate or Associate) or to any Person with whom the Acquiring Person (or such Affiliate or Associate) has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board has determined is part of a plan, agreement, arrangement or understanding (written or oral) which has as a primary purpose or effect the avoidance of this Section 7(e) (a “Prior Transferee”); or (iv) any subsequent transferee receiving transferred Rights from a Post Transferee or a Prior 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) are complied with, but, it and the Rights Agent shall have no liability to any holder of any Right Certificate or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliate or Associate, or any transferee thereof, hereunder.  The Company shall give the Rights Agent written notice of the identity of any Acquiring Person, Associate or Affiliate known to it, or the nominee of any of the foregoing, and the Rights Agent may rely on such notice in carrying out its duties under this Agreement, shall not be liable for and shall be deemed not to have any knowledge of the identity of any such Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing unless and until it shall have received such notice.
(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 of any Right Certificates upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) properly completed and duly signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company and the Rights Agent shall reasonably request.

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

SECTION 9.  Reservation and Availability of Preferred Shares.  
(a)    The Company shall cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any authorized and issued Preferred Shares held in its treasury, free from preemptive rights or any right of first refusal, a number of Preferred Shares sufficient to permit the exercise in full of all outstanding Rights.
(b)    If there are not sufficient Preferred Shares issued but not outstanding or authorized but unissued to permit the exercise or exchange of Rights in accordance with this Agreement, the Company shall take all such action as may be necessary to authorize additional Preferred Shares for issuance upon the exercise or exchange of Rights pursuant to this Agreement; provided, however, that if the Company is unable to cause the authorization of additional Preferred Shares, then the Company shall, or, if action by the Company’s stockholders is necessary to cause such authorization, in lieu of seeking any such authorization, the Company may, to the extent necessary and permitted by applicable law and any agreements or instruments in effect prior to the Distribution Date to which it is a party, (i) upon surrender of a Right, pay cash equal to the Purchase Price in lieu of issuing Preferred Shares and requiring payment therefor, (ii) upon due exercise of a Right and payment of the Purchase Price for each Preferred Share as to which such Right is exercised, issue Common Stock or other equity and/or debt securities having a value equal to the value of the Preferred Shares that otherwise would have been issuable pursuant to this Agreement, which value shall be determined by a nationally recognized investment banking firm selected by the Board, or (iii) upon due exercise of a Right and payment of the Purchase Price for each Preferred Share as to which such Right is exercised, distribute a combination of Preferred Shares, cash and/or other equity and/or debt securities having an aggregate value equal to the value of the Preferred Shares that otherwise would have been issuable pursuant to this Agreement, which value shall be determined by a nationally recognized investment banking firm selected by the Board.  To the extent that any legal or contractual restrictions (pursuant to agreements or instruments in effect prior to 

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the Distribution Date to which it is party) prevent the Company from paying the full amount payable in accordance with the foregoing sentence, the Company shall pay to holders of the Rights as to which such payments are being made all amounts that are not then restricted on a pro rata basis as such payments become permissible under such legal or contractual restrictions until such payments have been paid in full.
(c)    The Company shall take all actions as may be necessary to ensure that all Preferred Shares delivered upon exercise or exchange of Rights shall, at the time of delivery of the certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares.
(d)    The Company shall pay when due and payable any and all Federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of Right Certificates or of any Preferred Shares or Common Shares or other securities upon the exercise or exchange of the Rights.  The Company and the Rights Agent shall not, however, be required to pay any transfer tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or in respect of the issuance or delivery of certificates or depositary receipts for the Preferred Shares or Common Shares or other securities, as the case may be, in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or exchange or to issue or deliver any certificates or depositary receipts for Preferred Shares or Common Shares or other securities, as the case may be, upon the exercise or exchange of any Rights until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s and the Rights Agent’s satisfaction that no such tax or charge is due.

SECTION 10.  Record Date.  Each Person in whose name any certificate for Preferred Shares or Common Shares or other securities is issued upon the exercise or exchange of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares or Common Shares or other securities, as the case may be, represented thereby on, and such certificate shall be dated, the date on which the Right Certificate evidencing such Rights was duly surrendered and payment of any Purchase Price (and any applicable transfer taxes) was made; provided, however, that, if the date of such surrender and payment is a date upon which the transfer books of the Company for the Preferred Shares or Common Shares or other securities, as the case may be, are closed, such Person shall be deemed to have become the record holder of such Preferred Shares or Common Shares or other securities, as the case may be, on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books of the Company for the Preferred Shares or Common Shares or other securities, as the case may be, are open.

SECTION 11.  Adjustments in Rights After There Is an Acquiring Person; Exchange of Rights for Shares; Business Combinations.  
(a)    Subject to the other provisions of this Agreement (including Section 7(e)), upon the occurrence of the Share Acquisition Date, each holder of a Right shall thereafter have a right to receive, upon exercise thereof for the Purchase Price in accordance with the terms of this Agreement, such number of one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) as shall equal the result obtained by multiplying 

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the Purchase Price by a fraction, the numerator of which is the number of one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) for which such Right is then exercisable and the denominator of which is 50% of the Market Value of the Common Shares on such Share Acquisition Date.
(b)    (i)  The Board may, at its option, at any time after the Share Acquisition Date, mandatorily exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that shall have become null and void and nontransferable pursuant to Section 7(e)) for consideration per Right consisting of either: (A) one-half of the Preferred Shares (or fractions thereof) that would be issuable at such time upon the exercise of one Right in accordance with Section 11(a) or, if applicable, Section 9(b)(ii) or 9(b)(iii); or (B) cash, property, Preferred Shares (including fractions thereof), Common Shares (including fractions thereof), or other equity or debt securities (or any combination of any of the foregoing) having an aggregate value equal to one-half of the value of Preferred Shares (including fractions thereof) that would be issuable at such time upon the exercise of one Right in accordance with Section 11(a), which values shall be determined by a nationally recognized investment banking firm selected by the Board (the consideration issuable per Right pursuant to this Section 11(b)(i) being the “Exchange Consideration”).  The Board may, at its option, cause the Company to issue to the holders of Common Shares a number of Common Shares in lieu of each Preferred Share equal to the Formula Number (as defined in the Certificate of Designation) if there are sufficient Common Shares issued but not outstanding or authorized but unissued.  If the Board elects to exchange all the Rights for Exchange Consideration pursuant to this Section 11(b)(i) prior to the physical distribution of the Right Certificates, the Company may distribute the Exchange Consideration in lieu of distributing Right Certificates, in which case for purposes of this Agreement holders of Rights shall be deemed to have simultaneously received and surrendered for exchange Right Certificates on the date of such distribution.  Notwithstanding the foregoing, the Board may not effect such exchange at any time after any Person (other than: (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit or compensation plan of the Company or of any of its Subsidiaries or any Person organized, appointed or established by the Company and holding Common Shares for or pursuant to the terms of any such employee benefit or compensation plan or (iv) VSS or any of its Subsidiaries or Affiliates), together with all Affiliates and Associates of any such Person, becomes the Beneficial Owner of more than 50% of the Common Shares then outstanding.
(ii)    Any action of the Board ordering the exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and, immediately upon the taking of such action and without any further action and without any notice, the right to exercise any such Right so exchanged pursuant to Section 11(a) shall terminate and the only right thereafter of a holder of such Right shall be to receive the Exchange Consideration in exchange for each such Right held by such holder or, if the Exchange Consideration shall not have been paid or issued, to exercise any such Right pursuant to Section 11(c)(i).  The Company shall promptly give public notice of any such exchange (with prompt written notice thereof to the Rights Agent); provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange.  The Company shall promptly mail a notice of any such exchange to all holders of the Rights to be exchanged 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 

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notice of exchange shall state the method by which the exchange of the Rights for the Exchange Consideration will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which shall have become null and void and nontransferable pursuant to the provisions of Section 7(e)) held by each holder of Rights.  If the Board elects to exchange Rights for Exchange Consideration consisting all or in part of Preferred Shares or Common Shares, the Company may elect to deposit such Preferred Shares or Common Shares with a depositary agent under a depositary arrangement, and, in such event, the Company shall cause the depositary agent to issue, in lieu of certificates for such Preferred Shares or Common Shares, depositary receipts representing the number of such Preferred Shares (or fractions thereof) or Common Shares (or fractions thereof) to be exchanged (in which case the certificates for such Preferred Shares or Common Shares to be represented by such receipts shall be deposited by the transfer agent with the depositary agent).  If the Board elects to mandatorily exchange any Rights under Section 11(b)(i), the Board may, at its option and without limiting any rights the Company may have under Section 26, cause the Company to enter into such arrangements or implement such procedures as it deems necessary or appropriate, in its sole discretion, for the purpose of ensuring that the Exchange Consideration is not received by holders of Rights that have become null and void pursuant to Section 7(e), including entering into a trust agreement in such form and with such terms as the Board shall then approve (the “Trust Agreement”).  If the Board so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all or a portion (as designated by the Board) of the Exchange Consideration distributable pursuant to the exchange, and all holders of Rights entitled to receive such Exchange Consideration pursuant to the exchange shall be entitled to receive such Exchange Consideration (and any dividends paid or distributions made with respect to any securities constituting such Exchange Consideration after the date on which such securities are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement.  Prior to effecting an exchange and distributing such Exchange Consideration, the Company may require (or cause the trustee of the Trust to require), as a condition thereof, that any holder of Rights provide evidence, including the identity of the Beneficial Owners thereof and their Affiliates and Associates (or former Beneficial Owners thereof and their Affiliates and Associates) as the Company shall reasonably request in order to determine if such Rights are null and void.  If any Person shall fail to comply with such request, the Company shall be entitled conclusively to deem the Rights formerly held by such Person to be null and void pursuant to Section 7(e) hereof and not transferable, exercisable or exchangeable in connection herewith.
(c)    (i)  In the event that, directly or indirectly, any transactions specified in the following clause (A), (B) or (C) of this Section 11(c)(i) (each such transaction being a “Business Combination”) shall be consummated:
(A)    the Company shall consolidate with, or merge with and into, or participate in a statutory share exchange with, or otherwise effect any business combination or similar transaction with, any Acquiring Person or any Affiliate or Associate of an Acquiring Person;

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(B)    any Acquiring Person or any Affiliate or Associate of an Acquiring Person shall merge with and into, or participate in a statutory share exchange with, or otherwise effect any business combination or similar transaction with, the Company and, in connection with such merger, statutory share exchange, business combination or similar transaction, all or part of the outstanding Common Shares shall be changed into or exchanged for capital stock or other securities of the Company or of any Acquiring Person or Affiliate or Associate of an Acquiring Person or cash or any other property; or
(C)    the Company shall sell, lease, license, exchange or otherwise transfer or dispose of (or one or more of its Subsidiaries shall sell, lease, license, exchange or otherwise transfer or dispose of), in one or more transactions, the Major Part of the assets of the Company and its Subsidiaries (taken as a whole) to any Acquiring Person or any Affiliate or Associate of an Acquiring Person,
then, in each such case, proper provision shall be made so that each holder of a Right, except as provided in Section 7(e), shall thereafter have the right to receive, upon the exercise thereof for the Purchase Price in accordance with the terms of this Agreement, the securities specified below (or, at such holder’s option, the securities specified in Section 11(a) if the Company is the surviving corporation in such Business Combination):
(1)    if the Principal Party in such Business Combination has Registered Common Shares outstanding, each Right shall thereafter represent the right to receive, upon the exercise thereof for the Purchase Price in accordance with the terms of this Agreement, such number of Registered Common Shares of such Principal Party, free and clear of all liens, encumbrances or other adverse claims, as shall have an aggregate Market Value as of the time of exercise thereof equal to the result obtained by multiplying the Purchase Price by two;
(2)    if the Principal Party in such Business Combination does not have Registered Common Shares outstanding, each Right shall thereafter represent the right to receive, upon the exercise thereof for the Purchase Price in accordance with the terms of this Agreement, at the election of the holder of such Right at the time of the exercise thereof, any of:
(i)    if the Principal Party in such Business Combination has Common Shares listed on or admitted to trading on any recognized foreign stock exchange, such number of Common Shares of such Principal Party, free and clear of all liens, encumbrances or other adverse claims, as shall have an aggregate Market Value as of the time of exercise thereof equal to the result obtained by multiplying the Purchase Price by two;
(ii)    such number of Common Shares of the Surviving Person in such Business Combination (if the Principal Party is also the Surviving Person in such Business Combination) as shall have an aggregate Book Value immediately after giving effect to such Business 

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Combination equal to the result obtained by multiplying the Purchase Price by two;
(iii)    such number of Common Shares of the Principal Party in such Business Combination (if the Principal Party is not also the Surviving Person in such Business Combination) as shall have an aggregate Book Value immediately after giving effect to such Business Combination equal to the result obtained by multiplying the Purchase Price by two; or
(iv)    if the Principal Party in such Business Combination is an Affiliate of one or more Persons that has Registered Common Shares outstanding, such number of Registered Common Shares of whichever of such Affiliates of the Principal Party has Registered Common Shares with the greatest aggregate Market Value on the date of consummation of such Business Combination as shall have an aggregate Market Value on the date of such Business Combination equal to the result obtained by multiplying the Purchase Price by two.
(ii)    The Company shall not consummate any Business Combination unless each issuer of Common Shares for which Rights may be exercised, as set forth in this Section 11(c), shall have sufficient authorized Common Shares that have not been issued or reserved for issuance (and which shall, when issued upon exercise thereof in accordance with this Agreement, be validly issued, fully paid and nonassessable and free of preemptive rights, rights of first refusal or any other restrictions or limitations on the transfer of ownership thereof) to permit the exercise in full of the Rights in accordance with this Section 11(c) and unless prior thereto:
(A)    a registration statement under the Securities Act on an appropriate form, with respect to the Rights and the Common Shares of such issuer purchasable upon exercise of the Rights, shall be effective under the Securities Act; and
(B)    the Company and each such issuer shall have:
(1)    executed and delivered to the Rights Agent a supplemental agreement providing for the assumption by such issuer of the obligations set forth in this Section 11(c) (including the obligation of such issuer to issue Common Shares upon the exercise of Rights in accordance with the terms set forth in Sections 11(c)(i) and 11(c)(iii)) and further providing that such issuer, at its own expense, shall use its best efforts to:
(i)    cause a registration statement under the Securities Act on an appropriate form, with respect to the Rights and the Common Shares of such issuer purchasable upon exercise of the Rights, to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date;

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(ii)    qualify or register the Rights and the Common Shares of such issuer purchasable upon exercise of the Rights under the “blue sky” or securities laws of such jurisdictions as may be necessary or appropriate; and
(iii)    list the Rights and the Common Shares of such issuer purchasable upon exercise of the Rights on each national securities exchange on which the Common Shares were listed prior to the consummation of the Business Combination or, if the Common Shares were not listed on a national securities exchange prior to the consummation of the Business Combination, on a national securities exchange;
(2)    furnished to the Rights Agent a written opinion of independent counsel stating that such supplemental agreement is a valid, binding and enforceable agreement of such issuer; and
(3)    filed with the Rights Agent a certificate of a nationally recognized firm of independent accountants setting forth the number of Common Shares of such issuer that may be purchased upon the exercise of each Right after the consummation of such Business Combination.
(iii)    After consummation of any Business Combination and subject to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for which Rights may be exercised as set forth in this Section 11(c) shall be liable for, and shall assume, by virtue of such Business Combination, all the obligations and duties of the Company pursuant to this Agreement, (B) the term “Company” shall thereafter be deemed to refer to such issuer, (C) each such issuer shall take such steps in connection with such consummation as may be necessary to assure that the provisions of this Agreement (including Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights, (D) the number of Common Shares of each such issuer thereafter receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions of Sections 11 and 12 and (E) the other provisions of this Agreement (including Sections 7, 9 and 10) with respect to the Preferred Shares shall apply, as nearly as reasonably may be, on like terms to any such Common Shares.
(iv)    In case the issuer of Common Shares for which Rights may be exercised, as set forth in this Section 11(c), has a provision in any of its authorized securities or in its certificate of incorporation or by-laws or other agreement or instrument governing its affairs, or a provision in any rights, warrants or other instruments or securities outstanding, which provision would have the effect of (A) causing such issuer to issue (other than to holders of Rights pursuant to this Section 11(c)), in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 11(c), Common Shares of such issuer at less than the then Market Value per share thereof or securities exercisable for, or convertible into, Common Shares of such issuer at less than such then Market Value, (B) providing for any special payment, tax or similar provision in connection with the issuance of the Common Shares of such issuer pursuant to the provisions of Section 11(c), or (C) diminishing or otherwise eliminating the benefits intended to be afforded by 

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the Rights, 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 issuer shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such issuer shall have been canceled, waived or amended, in a manner satisfactory to the Board, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction.

SECTION 12.  Certain Adjustments.
(a)    To preserve the actual or potential economic value of the Rights, if at any time after the date of this Agreement there shall be any change in the Common Shares or the Preferred Shares, whether by reason of stock dividends, stock splits, reclassifications, recapitalizations, mergers, consolidations, combinations or exchanges of securities, split-ups, split-offs, spin-offs, liquidations, other similar changes in capitalization, any distribution or issuance of cash, assets, evidences of indebtedness or subscription rights, options or warrants to holders of Common Shares or Preferred Shares, as the case may be (other than distribution of the Rights or regular quarterly cash dividends), or otherwise, then, in each such event the Board shall make such appropriate adjustments in the number of Preferred Shares (or the number and kind of other securities) issuable upon exercise of each Right, the Purchase Price and Redemption Price in effect at such time and the number of Rights outstanding at such time (including the number of Rights or fractional Rights associated with each Common Share, as the case may be) such that following such adjustment such event shall not have had the effect of reducing or limiting the benefits the holders of the Rights would have had absent such event.
(b)    If, as a result of an adjustment made pursuant to Section 12(a), the holder of any Right thereafter exercised shall become entitled to receive any securities other than Preferred Shares, thereafter the number of such securities so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions of Sections 11 and 12 and the other provisions of this Agreement (including Sections 7, 9 and 10) with respect to the Preferred Shares shall apply, as nearly as reasonably may be, on like terms to any such other securities.
(c)    All Rights originally issued by the Company subsequent to any adjustment made to the amount of Preferred Shares or other securities relating to a Right shall evidence the right to purchase, for the Purchase Price, the adjusted number and kind of securities purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided in this Agreement.
(d)    Right Certificates shall represent the right to purchase Preferred Shares or other securities purchasable from time to time hereunder, including any adjustment or change in the securities purchasable upon exercise of the Rights, even though such certificates may continue to express the securities purchasable at the time of issuance of the initial Right Certificates.
(e)    In any case in which action taken pursuant to Section 12(a) requires that an adjustment be made effective as of a record date for a specified event, the Company may elect to 

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defer (with prompt written notice thereof to the Rights Agent) until the occurrence of such event the issuing to the holder of any Right exercised after such record date the Preferred Shares and/or other securities, if any, issuable upon such exercise over and above the Preferred Shares and/or other securities, if any, issuable before giving effect to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional securities upon the occurrence of the event requiring such adjustment.

SECTION 13.  Certificate of Adjustment.  Whenever an adjustment is made or any event occurs affecting the Rights or their exercisability (including an event which causes the Rights to become null and void) as provided in Section 11 or 12, the Company shall (a) promptly prepare a certificate setting forth such adjustment or describing such event and a brief, reasonably detailed statement of the facts, computations and methodology accounting for such adjustment, (b) promptly 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 Right Certificate (or, if prior to the Distribution Date, to each holder of Common Shares) in accordance with Section 25, provided that the failure to prepare, file or mail such certificate or summary shall not affect the validity of such adjustment.  The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and, subject to Section 21(c) shall have no duty or liability with respect to, and shall not be deemed to have knowledge of, any adjustment or any such event unless it shall have received such a certificate.  The Rights Agent shall not be obligated or responsible for calculating any adjustment hereunder.  Nor shall the Rights Agent be under any obligation to determine when an adjustment event or any condition precedent thereto has occurred.

SECTION 14.  Additional Covenants.
(a)    Notwithstanding any other provision of this Agreement, no adjustment to the number of Preferred Shares (or fractions of a share) or other securities for which a Right is exercisable or the number of Rights outstanding or associated with each Common Share or any similar or other adjustment shall be made or be effective if such adjustment would have the effect of reducing or limiting the benefits the holders of the Rights would have had absent such adjustment, including the benefits under Sections 11 and 12, unless the terms of this Agreement are amended so as to preserve such benefits.
(b)    The Company covenants and agrees that, after the Distribution Date, except as permitted by Section 26, it shall not take (or permit any Subsidiary of the Company to take) any action if at the time such action is taken it is intended or reasonably foreseeable that such action will reduce or otherwise limit the benefits the holders of Rights would have had absent such action, including the benefits under Sections 11 and 12.  Any action taken by the Company during any period after any Person becomes an Acquiring Person but prior to the Distribution Date shall be null and void unless such action could be taken under this Section 14(b) from and after the Distribution Date.  The Company shall not consummate any Business Combination if: (i) any issuer of Common Shares for which Rights may be exercised after such Business Combination in accordance with Section 11(c) shall have taken any action that reduces or otherwise limits the benefits the holders of Rights would have had absent such action, including the benefits under 

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Sections 11 and 12; (ii) at the time of or immediately after such consolidation, merger, sale, transfer or other transaction 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; (iii) prior to, simultaneously with or immediately after such consolidation, merger, sale, transfer or other transaction, the stockholders of the Person who constitutes, or would constitute, the issuer for purposes of Section 11(c) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates; or (iv) the form, nature or jurisdiction of organization of the issuer would preclude, limit or in any way restrict the exercisability of the Rights.

SECTION 15.  Fractional Rights and Fractional Shares.
(a)    The Company may, but shall not be required to, issue fractions of Rights or distribute Right Certificates which evidence fractional Rights.  In lieu of such fractional Rights, the Company may pay to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Right.  For purposes of this Section 15(a), the current market value of a whole Right shall be the closing price of the Rights (as determined pursuant to the second sentence of the definition of Market Value contained in Section 1) for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable.
(b)    The Company may, but shall not be required to, issue fractions of Preferred Shares (other than one one-thousandths (1/1000ths) of a Preferred Share (as such fraction may be adjusted as provided in this Agreement) or any integral multiple thereof) upon exercise of the Rights or distribute certificates that evidence fractional Preferred Shares.  In lieu of fractional Preferred Shares, the Company may elect to (i) utilize a depository arrangement as provided by the terms of the Preferred Shares or (ii) in the case of a fraction of a Preferred Share (other than one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction may adjusted as provided in this Agreement) or any integral multiple thereof), pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share, if any are outstanding and publicly traded (or the same fraction of the current market value of one Common Share times the Formula Number (as defined in the Certificate of Designation) if the Preferred Shares are not outstanding and publicly traded).  For purposes of this Section 15(b), the current market value of a Preferred Share (or Common Share) shall be the closing price of a Preferred Share (or Common Share) (as determined pursuant to the second sentence of the definition of Market Value contained in Section 1) for the Trading Day immediately prior to the date of such exercise.  If, as a result of an adjustment made pursuant to Section 12(a), the holder of any Right thereafter exercised shall become entitled to receive any securities other than Preferred Shares, the provisions of this Section 15(b) shall apply, as nearly as reasonably practicable, on like terms to such other securities.
(c)    The Company may, but shall not be required to, issue fractions of Common Shares upon exchange of Rights pursuant to Section 11(b), or to distribute certificates that evidence fractional Common Shares.  In lieu of such fractional Common Shares, the Company may pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares 

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would otherwise be issuable an amount in cash equal to the same fraction of the current Market Value of one Common Share as of the date on which a Person became an Acquiring Person.
(d)    Each holder of Rights by the acceptance of such Rights expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right except as provided in this Section 15.
(e)    Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares under any section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.
(f)    The Company shall provide an initial funding of one thousand dollars ($1,000) for the purpose of issuing cash in lieu of fractional shares to the extent cash is required to be paid in lieu of fractional shares.  From time to time thereafter, the Rights Agent may request additional funding to cover fractional payments.  The Rights Agent shall have no obligation to make fractional payments unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto.

SECTION 16.  Rights of Action.  
(a)    All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Sections 19 and 21, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right 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 Right Certificate (or, prior to the Distribution Date, of the Common Shares) may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right 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 shall be entitled to specific performance of the obligations of any Person under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Agreement.  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, judgment decree or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory, self-regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, 

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prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use reasonable efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible.

SECTION 17.  Transfer and Ownership of Rights and Right Certificates.  
(a)    Prior to the Distribution Date, the Rights shall be transferable only in connection with the transfer of the Common Shares and the Right associated with each such Common Share shall be automatically transferred upon the transfer of each such Common Share to the transferee thereof.
(b)    After the Distribution Date, the Right Certificates shall be transferable, subject to Section 7(e), only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and, subject to the reasonable satisfaction of the Rights Agent and the Company, certificates properly completed and duly executed.
(c)    The Company and the Rights Agent may deem and treat the Person in whose name a Right 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 Right Certificates or the associated certificate for Common Shares 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.

SECTION 18.  Right Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate shall be entitled to vote or receive dividends or other distributions 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 of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company, including 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, or to receive dividends or other distributions or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof.

SECTION 19.  Concerning the Rights Agent.  
(a)    The Company shall 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 preparation, negotiation, delivery, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder, including any taxes or governmental charges imposed as a result of the action taken by it hereunder (other than any taxes on the fees payable to it).  The provisions of this Section 19 and Section 21 below shall survive the termination of this Agreement, 

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the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.
(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 acceptance and administration of this Agreement and the exercise and performance of its duties hereunder in reliance upon any Right Certificate or certificate for the 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 believed by it to be genuine and to be signed, executed and, where expressly required hereunder, verified or acknowledged, by the proper Person or Persons, or upon the written advice or opinion of counsel as set forth in Section 21.  The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder and, subject to Section 21(c), the Rights Agent shall be fully protected and incur no liability for failing to take action in connection therewith unless and until it has received such notice in writing.

SECTION 20.  Merger or Consolidation or Change of Name of Rights Agent.  
(a)    Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services or stock transfer or 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 Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 22.  In case, at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
(b)    In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and, in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

SECTION 21.  Duties of Rights Agent.  The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Agreement (and no implied duties and obligations) upon the following terms and conditions, by all of which the Company and the holders of Right 

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Certificates (or, prior to the Distribution Date, of the Common Shares), by their acceptance thereof, shall be bound:
(a)    The Rights Agent may consult with legal counsel (who may be legal counsel for the Company or legal counsel for the Rights Agent), and the written advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent and, subject to Section 21(c), the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in accordance with such written advice or opinion.
(b)    Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including the identity of any Acquiring Person and the determination of the current per share market price of any security) be proved or established by the Company prior to taking, suffering or omitting to take 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 Chief Financial Officer, the President, the General Counsel, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and, subject to Section 21(c), the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it 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 or willful misconduct (which gross negligence or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction).  In no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever arising out of any act or failure to act hereunder (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage.
(d)    Subject to Section 21(c), 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 Right Certificates (except as to 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 Right Certificate (except its countersignature thereof) and, subject to Section 21(c), shall have no liability therefor; nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming null and void pursuant to Section 7(e)) or any change or adjustment in the terms of Rights as required under the provisions of Section 11 or 12 or responsible for the manner, method or amount of any such change or adjustment 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 Right Certificates after actual notice of any such adjustment pursuant to Section 13); nor shall it by any act hereunder be deemed to make any representation or warranty 

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as to the authorization or reservation of any Preferred Shares or Common Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares or Common Shares will, when so issued, be validly authorized and issued, fully paid and nonassessable.
(f)    The Company agrees that it shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g)    The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, a Vice President, the Secretary, Assistant Secretary, Treasurer or the General Counsel of the Company, in connection with its duties and such instructions shall be full authorization and protection to the Rights Agent and, subject to Section 21(c), the Rights Agent shall not be liable for or in respect of any action taken, suffered or omitted by it in accordance with any such instructions or for any delay in acting while waiting for such instructions.  In the event of any conflict or inconsistency between or among any such instructions, the later in time shall govern.  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, suffered or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or suffered or such omission shall be effective.  Subject to Section 21(c), the Rights Agent shall not be liable for any action taken or suffered 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; provided that such date is at least three days after the date such application is delivered to the Company.
(h)    The Rights Agent and any stockholder, affiliate, 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 or its Subsidiaries may be interested, or contract with or lend money to the Company or its Subsidiaries or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement, subject to applicable securities laws.  Nothing herein shall preclude the Rights Agent or any stockholder, affiliate, director, officer or employee from acting in any other capacity for the Company or for any other Person.
(i)    If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has either not been properly completed or indicates an affirmative response to any clause thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.
(j)    The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder 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, absent gross negligence or willful misconduct (each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment thereof.

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(k)    The Company shall indemnify the Rights Agent for, and hold the Rights Agent harmless against, any loss, liability, damage, claim or expense (including reasonable fees and expenses of legal counsel) that the Rights Agent may incur resulting from any action taken, suffered or omitted by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under this Agreement; provided, however, that the Rights Agent shall not be indemnified or held harmless with respect to any such loss, liability, damage or expense incurred by the Rights Agent as a result of, or arising out of, its own gross negligence or willful misconduct.  In the event the Rights Agent shall have notice of any such assertion of an action, proceeding, suit or claim or have been served with the summons or other first legal process giving information as to the nature and basis of the action, proceeding, suit or claim, the Rights Agent shall promptly notify the Company of the assertion of any action, proceeding, suit or claim against the Rights Agent.  The Rights Agent agrees not to settle any litigation in connection with any action, proceeding, suit or claim with respect to which it may seek indemnification from the Company without the prior written consent of the Company, which consent shall not be unreasonably withheld.  If a final, non-appealable judgment of a court of competent jurisdiction shall be issued in favor of the Rights Agent in respect of an action by the Rights Agent to enforce the indemnification provisions of this Section 21(k), then the Company shall reimburse the Rights Agent’s for all reasonable costs and expenses in enforcing such indemnification provisions and its rights to reimbursement hereunder.
(l)    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 it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(m)    Notwithstanding anything contained herein to the contrary, the Rights Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to the Rights Agent as fees and charges, but not including reimbursable expenses, during the term of this Agreement.
(n)    The Rights Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.
(o)    The Rights Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including without limitation obligations under applicable regulation or law.
(p)    The Rights Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied).  The Rights Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Rights.

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(q)    The Rights Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.
(r)    In the event the Rights Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent in connection with the performance of its duties hereunder, the Rights Agent shall notify the Company in writing of such ambiguity or uncertainty and, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company, the holder of any Right Certificate or any other person or entity for refraining from taking such action, unless the Right Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the reasonable satisfaction of the Rights Agent.

SECTION 22.  Change of Rights Agent.  Subject to Section 25, the Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to the Company and, in the event the Rights Agent or one of its Affiliates is not the transfer agent to the Company, to each transfer agent of the Common Shares and the Preferred Shares known to the Rights Agent.  The Company shall notify the holders of the Right Certificates (or, prior to the Distribution Date, of the Common Shares) by first-class mail.  In the event any transfer agency relationship in effect between the Company and the Rights Agent or any of its Affiliates terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties as Rights Agent under this Agreement as of the effective date of such termination, and the Company shall be responsible for distributing any required notice to other Persons.  The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and in the event the Rights Agent or any one of its Affiliates is not the transfer agent to the Company, to each transfer agent of the Common Shares and the Preferred Shares by registered or certified mail, and to the holders of the Right Certificates (or, prior to the Distribution Date, of the Common Shares) by first-class mail.  If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such appointment within a period of 30 days after 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 Right Certificate (or, prior to the Distribution Date, of the Common Shares) (who shall, with such notice, submit such holder’s Right Certificate or, prior to the Distribution Date, the certificate representing such holder’s Common Shares, for inspection by the Company), then the registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares) may apply to any court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a Person organized and doing business under the laws of the United States, in good standing, which is authorized under such laws to exercise stock transfer or corporate trust powers and is subject to supervision or examination by Federal or state authority and which has at the time of its appointment as Rights Agent a combined capital (with its direct or 

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indirect parents and Subsidiaries) and surplus of at least $50,000,000; provided, however, that the principal transfer agent for the Common Shares shall in any event be qualified to be the 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 reasonable further assurance, conveyance, act or deed necessary for the purpose, without limiting any of its rights or remedies hereunder.  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 Common Shares and the Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates (or, prior to the Distribution Date, of the Common Shares).

SECTION 23.  Issuance of Additional Rights and Right Certificates.  Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board to reflect any adjustment or change 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 earlier of the Redemption Date and the Expiration Date, 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 securities, notes or debentures issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof and (iii) no such Right Certificate shall be issued to an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

SECTION 24.  Redemption and Termination.  
(a)    The Board may, at its option, at any time prior to the earlier of (i) the Distribution Date and (ii) the Expiration Date, order the redemption of all, but not fewer than all, of the then outstanding Rights at the Redemption Price (the date of such redemption being the “Redemption Date”), and the Company, at its option, may pay the Redemption Price either in cash or Common Shares or other securities of the Company deemed by the Board, in the exercise of its sole discretion, to be at least equivalent in value to the Redemption Price.
(b)    Immediately upon the action of the Board ordering the redemption of the Rights (or at such later time as the Board may establish for the effectiveness of such redemption), 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.  Promptly after the action of the Board 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 

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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.  Each such notice of redemption shall state the method by which payment of the Redemption Price will be made.  The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder of Rights receives such notice.  In any case, failure to give such notice by mail, or any defect in the notice, to any particular holder of Rights shall not affect the sufficiency of the notice to other holders of Rights.  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 except as specifically set forth in this Section 24(b) or in Section 11(b) or in connection with the purchase of Common Shares prior to the Distribution Date.

SECTION 25.  Notices.  Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of a Right Certificate (or, prior to the Distribution Date, of the Common Shares) to or on the Company shall be sufficiently given or made in writing and when received if sent by first-class mail, postage-prepaid, or a nationally recognized overnight courier, addressed (until another address is filed in writing with the Rights Agent) as follows:
Cambium Learning Group, Inc.
17855 Dallas Parkway, Suite 400
Dallas, Texas  75287
Attention: General Counsel

With a copy to:
Lowenstein Sandler LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Steven E. Siesser, Esq.

Subject to the provisions of Section 22, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of a Right Certificate (or, prior to the Distribution Date, of the Common Shares) to or on the Rights Agent shall be sufficiently given or made in writing and sent if sent by first-class mail, postage-prepaid, or nationally recognized overnight courier addressed (until another address is filed in writing with the Company) as follows:
Wells Fargo Shareowner Services
1110 Center Point Curve, Suite 101
Mendota Heights, MN 55120
Attention: Relationship Management Team

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to any holder of a Right Certificate (or, prior to the Distribution Date, of the Common Shares) shall be sufficiently given or made in writing and sent by first-class mail, postage-

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prepaid, or nationally recognized overnight courier, whether or not actually received, addressed to such holder at the address of such holder as shown on 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. 

SECTION 26.  Supplements and Amendments.  At any time prior to the Distribution Date, and subject to the penultimate sentence of this Section 26, the Company may, and the Rights Agent shall if the Company so directs, supplement or amend any provision of this Agreement in any manner which the Company may deem necessary or desirable (including the date on which the Distribution Date or Expiration Date shall occur, the amount of the Purchase Price, the definition of “Acquiring Person” or the time during which the Rights may be redeemed pursuant to Section 24) without the approval of any holder of the Rights.  From and after the Distribution Date, and subject to applicable law, the Company may, and the Rights Agent shall if the Company so directs, amend this Agreement without the approval of any holders of Right Certificates (a) to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision of this Agreement or (b) to otherwise change or supplement any other provisions in this Agreement in any matter which the Company may deem necessary or desirable and which does not adversely affect the interests of the holders of Right Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), any such supplement or amendment to be evidenced in writing and executed by the Company.  Any supplement or amendment adopted during any period after any Person has become an Acquiring Person but prior to the Distribution Date shall be null and void unless such supplement or amendment could have been adopted under the prior sentence from and after the Distribution Date.  All supplements and amendments shall be in writing and must be authorized by the Board.  Upon delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment complies with this Section 26, the Rights Agent shall execute such supplement or amendment.  Notwithstanding anything to the contrary contained in this Agreement, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or immunities under this Agreement.  In addition, notwithstanding anything to the contrary contained in this Agreement, no supplement or amendment to this Agreement shall be made that reduces the Redemption Price (except as required by Section 12(a)).  Time shall be of the essence of this Agreement, including as to entering into any amendments or supplements pursuant to this Section 26.

SECTION 27.  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 28.  Benefits of Rights Agreement; Determinations and Actions by the Board, etc.  
(a)    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 Right Certificates (and, prior to the Distribution Date, of the Common Shares) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the 

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Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, of the Common Shares).
(b)    Except as explicitly otherwise provided in this Agreement, the Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company, or as may be necessary or advisable, in the administration of this Agreement, including the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend this Agreement and a determination of whether there is an Acquiring Person).  All such actions, calculations, interpretations and determinations that are done or made by the Board in good faith shall be final, conclusive and binding on the Company, the Rights Agent (except with respect to rights, duties, obligations and immunities of the Rights Agent hereunder) and the holders of Rights (or, prior to the Distribution Date, the Common Shares), as such, and all other Persons.  The Rights Agent shall always be entitled to assume that the Board acted in good faith and shall be fully protected and incur no liability in reliance thereon.  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, will be made in accordance with, as the Board deems to be applicable, the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act or the provisions of Section 382.
(c)    Nothing contained in this Agreement shall be deemed to be in derogation of the obligation of the Board to exercise its fiduciary duty.  Without limiting the foregoing, nothing contained herein shall be construed to suggest or imply that the Board shall not be entitled to reject any tender offer or other acquisition proposal, or to recommend that holders of Common Shares reject any tender offer, or to take any other action (including the commencement, prosecution, defense or settlement of any litigation and the submission of additional or alternative offers or other proposals) with respect to any tender offer or other acquisition proposal that the Board believes is necessary or appropriate in the exercise of such fiduciary duty.

SECTION 29.  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.

SECTION 30.  Governing Law.  This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the law of the State of Delaware and for all purposes shall be governed by and construed in accordance with the law of such State applicable to contracts to be made and performed entirely within such State.  The Company and each holder hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if such court will lack subject matter jurisdiction, the United States District Court for the District of Delaware, over any suit, action or proceeding arising out of or relating to this Agreement.  The Company and each holder acknowledge that the forum designated by this Section 30 has a reasonable relation to this Agreement and to such Persons’ relationship with one another.  The Company and 

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each holder hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in this Section 30.  The Company and each holder undertake not to commence any action subject to this Agreement in any forum other than the forum described in this Section 30.  The Company and each holder agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding brought in any such court will be conclusive and binding upon such Persons.

SECTION 31.  Counterparts; Effectiveness.  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.  A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.  This Agreement shall be effective as of the Close of Business on the date hereof.

SECTION 32.  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 of this Agreement.

SECTION 33.  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 acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunctions 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.

SECTION 34.  Process to Seek Exemption.  Any Person who desires to effect any acquisition of securities that would, if consummated, result in such Person becoming an Acquiring Person (a “Requesting Person”) may, prior to such time and in accordance with this Section 34, request that the Board grant an exemption with respect to such acquisition under this Agreement so that such Person would be deemed to be an “Exempt Person” as defined in Section 1 for purposes of this Agreement (an “Exemption Request”).  An Exemption Request shall be in proper form and shall be delivered by overnight delivery service or first-class mail, postage-prepaid, to the Secretary of the Company at the principal executive office of the Company.  The Exemption Request shall be deemed made upon receipt by the Secretary of the Company.  To be in proper form, an Exemption Request shall set forth (a) the name and address of the Requesting Person, (b) the number and percentage of Common Shares then Beneficially Owned by the Requesting Person, together with all Affiliates and Associates of the Requesting Person, and (c) a reasonably detailed description of the transaction or transactions by which the Requesting Person would propose to become an Acquiring Person and the maximum number and percentage of Common Shares that the Requesting Person proposes to acquire.  The Board, or a duly constituted committee of Independent Directors, shall make a determination whether to grant an exemption in response to an Exemption Request as promptly as practicable (and, in any event, within ten Business Days) after receipt thereof; provided, that the failure of the Board (or any such committee) to make a determination within such period shall be deemed to constitute the denial by the Board of the Exemption Request.  The Requesting 

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Person shall respond promptly to reasonable and appropriate requests for additional information from the Board and its advisors to assist the Board in making its determination.  The Board, or a duly constituted committee of Independent Directors, shall only grant an exemption in response to an Exemption Request if the Board determines in its sole discretion, or such committee determines in its sole discretion, that the acquisition of Beneficial Ownership of Common Shares by the Requesting Person, considered alone or with other transactions (including past transactions or contemplated transactions), (i) will not jeopardize or endanger the availability to the Company of its NOLs or other Tax Benefits, taking into account such facts and circumstances as the Board (or any such committee) reasonably deems relevant or (ii) is otherwise in the best interests of the Company.  Any exemption granted hereunder may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that the Requesting Person agree that it will not acquire Beneficial Ownership of Common Shares in excess of the maximum number and percentage of shares approved by the Board), in each case, as and to the extent the Board, or a duly constituted committee of Independent Directors, shall determine necessary or desirable to provide for the protection of the NOLs and other Tax Benefits or as is otherwise in the best interests of the Company.  The Exemption Request shall be considered and evaluated by the Board, or a duly constituted committee of Independent Directors, and the action of a majority of such directors (or such committee) shall be deemed to be the determination of the Board for purposes of such Exemption Request.

SECTION 35.  Tax Benefits Review.  In addition to the review and evaluation otherwise contemplated by this Agreement, the Board, or a duly constituted committee of Independent Directors, shall review the calculation for determining whether an ownership change has occurred under Section 382 once per year (or with such greater frequency as the Board (or any such committee), in its sole discretion, shall determine is advisable).  The Board (or any such committee) shall determine after such review whether maintenance of this Agreement continues to be advisable in order to preserve the value of the NOLs and other Tax Benefits, taking into account such facts and circumstances as the Board (or any such committee) reasonably deems relevant.

SECTION 36.  Confidentiality.  The Rights Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public rights holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement, including the fees for services set forth in the attached schedule, shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities.

SECTION 37.  Customer Identification Program.  The Company acknowledges that the Rights Agent is subject to the customer identification program (“Customer Identification Program”) requirements under the USA PATRIOT Act and its implementing regulations, and that the Rights Agent must obtain, verify and record information that allows the Rights Agent to identify the Company.  Accordingly, prior to accepting an appointment hereunder, the Rights Agent may request information from the Company that will help the Rights Agent to identify the Company, including without limitation the Company’s physical address, tax identification number, organizational documents, certificate of good standing, license to do business, or any other information that the 

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Rights Agent deems necessary.  The Company agrees that the Rights Agent cannot accept an appointment hereunder unless and until the Rights Agent verifies the Company’s identity in accordance with the Customer Identification Program requirements.

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

	
		
	 
	CAMBIUM LEARNING GROUP, INC.

	 
	 

	 
	 

	 
	By: /s/ Barbara Benson

	 
	Name:  Barbara Benson

	 
	Title:  Chief Financial Officer

	 
	 

	 
	 

	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION

	 
	 

	 
	 

	 
	By: /s/ Allison M. Seeley

	 
	Name:  Allison M. Seeley

	 
	Title:  Officer

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Exhibit A

Certificate of Designation

CERTIFICATE OF THE VOTING POWERS, 
DESIGNATIONS, PREFERENCES AND RELATIVE 
PARTICIPATING, OPTIONAL AND OTHER SPECIAL 
RIGHTS AND QUALIFICATIONS, LIMITATIONS 
OR RESTRICTIONS OF SERIES A PARTICIPATING CUMULATIVE 
PREFERRED STOCK OF CAMBIUM LEARNING GROUP, INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware, CAMBIUM LEARNING GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors (the “Board”) of the Company by Section B of Article IV of the Third Amended and Restated Certificate of Incorporation of the Company, the Board on September 21, 2016, adopted the following resolution designating a new series of preferred stock as Series A Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board of Directors (the “Board”) of CAMBIUM LEARNING GROUP, INC. (the “Company”) in accordance with the provisions of the Third Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) and the provisions of Section 151(g) of the General Corporation Law of the State of Delaware, a series of preferred stock of the Company is hereby authorized, and the designation and number of shares thereof, and the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, shall be as follows (in addition to the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate which are applicable to shares of Preferred Stock, par value $0.001 per share of the Company (the “Preferred Stock”)):
SECTION 1.  Designation and Number of Shares.  The shares of such series shall be designated as “Series A Participating Cumulative Preferred Stock” (the “Series A Preferred Stock”). The number of shares initially constituting the Series A Participating Cumulative Preferred Stock shall be 1,000,000; provided, however, that, if more than a total of 1,000,000 shares of Series A Preferred Stock shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to the Tax Asset Protection Rights Agreement, dated as of September 21, 2016, between the Company and Wells Fargo Bank, National Association, a national banking association (the “Rights Agreement”), the Board, pursuant to Section 151(g) of the General Corporation Law of the State of Delaware, shall direct by resolution or resolutions that a certificate be properly executed, acknowledged, filed and recorded, in accordance with the provisions of Section 103 thereof, providing for the total number of shares of Series A Preferred Stock authorized to be issued to be 

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increased (to the extent that the Certificate then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights.
SECTION 2.  Dividends or Distributions.
(a)    Subject to the superior rights of the holders of shares of any other series of Preferred Stock or other class of capital stock of the Company ranking superior to the shares of Series A Preferred Stock with respect to dividends, in preference to the holders of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”), and of any other junior stock, the holders of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board, out of the assets of the Company legally available therefor, (1) quarterly dividends payable in cash on the last day of each fiscal quarter in each year, or such other dates as the Board shall approve (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 a fraction of a share of Series A Preferred Stock, in the amount of $1.00 per whole share (rounded to the nearest cent) less the amount of all cash dividends declared on the Series A Preferred Stock pursuant to the following clause (2) since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock (the total of which shall not, in any event, be less than zero) and (2) dividends payable in cash on the payment date for each cash dividend declared on the shares of Common Stock in an amount per whole share (rounded to the nearest cent) equal to the Formula Number (as hereinafter defined) then in effect times the cash dividends then to be paid on each share of Common Stock.  In addition, if the Company shall pay any dividend or make any distribution on the Common Stock payable in assets, securities or other forms of noncash consideration (other than dividends or distributions solely in shares of Common Stock), then, in each such case, the Company shall simultaneously pay or make on each outstanding whole share of Series A Preferred Stock a dividend or distribution in like kind equal to the Formula Number then in effect times such dividend or distribution on each share of Common Stock.  As used herein, the “Formula Number” shall be 1,000; provided, however, that, if at any time after September 21, 2016, the Company shall (i) declare or pay any dividend on the Common Stock payable in shares of Common Stock or make any distribution on the Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of Common Stock into a larger number of shares of Common Stock or (iii) combine (by a reverse stock split or otherwise) the outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such event the Formula Number shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided further that, if at any time after September 21, 2016, the Company shall issue any shares of its capital stock in a merger, reclassification, or change of the outstanding shares of Common Stock, then in each such event the Formula Number shall be appropriately adjusted to reflect such merger, reclassification or change so that each share of Preferred Stock continues to be the economic equivalent of a Formula Number of shares of Common Stock prior to such merger, reclassification or change.

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(b)    The Company shall declare a cash dividend on the Series A Preferred Stock as provided in Section 2(a) immediately prior to or at the same time it declares a cash dividend on the Common Stock; provided, however, that, in the event no cash dividend shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, during the period between the first issuance of any share or fraction of a share of Series A Preferred Stock, a dividend of $0.10 per whole share on the Series A Preferred Stock shall nevertheless accrue on such subsequent Quarterly Dividend Payment Date or the first Quarterly Dividend Payment Date, as the case may be.  The Board may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock.
(c)    Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from and after the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue and be cumulative from and after the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from and after such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.
(d)    So long as any shares of Series A Preferred Stock are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Stock unless, in each case, the dividend required by this Section 2 to be declared on the Series A Preferred Stock shall have been declared and set aside.
(e)    The holders of shares of Series A Preferred Stock shall not be entitled to receive any dividends or other distributions except as herein provided.
SECTION 3.  Voting Rights.  The holders of shares of Series A Preferred Stock, in addition to the voting rights provided by law, shall have the following voting rights:
(a)    Each holder of Series A Preferred Stock shall be entitled to a number of votes equal to the Formula Number then in effect, for each share of Series A Preferred Stock held of record, multiplied by the maximum number of votes per share which any holder of Common Stock or stockholders generally then have with respect to such matter (assuming any holding period or other requirement to vote a greater number of shares is satisfied).  
(b)    Except as otherwise herein provided or by the Certificate or applicable law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall 

A-3

vote together as one class for the election of directors of the Company and on all other matters submitted to a vote of the holders of Common Stock of the Company.
(c)    Except as provided herein or by the Certificate or applicable law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required for authorizing or taking any corporate action.
SECTION 4.  Certain Restrictions.
(a)    Whenever quarterly dividends or other dividends or distributions on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Company shall not:
(i)    declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A 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 Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii)    redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock; provided, however, that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv)    purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(b)    The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under Section 4(a), purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5.  Liquidation Rights.  Upon the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, no distribution shall be made (1) to the holders of any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding 

A-4

up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (x) $1,000 per whole share or (y) an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Stock or (2) to the holders of any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.  Neither the merger nor consolidation of the Company into or with another entity nor the merger or consolidation of any other entity into or with the Company shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of this Section 5.
SECTION 6.  Consolidation, Merger, etc.  In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash or any other property, then in any such case the then outstanding shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is exchanged or changed. In the event both this Section 6 and Section 2 appear to apply to a transaction, this Section 6 will control.
SECTION 7.  No Redemption; No Sinking Fund; No Conversion.
(a)    The shares of Series A Preferred Stock shall not be subject to redemption by the Company or at the option of any holder of Series A Preferred Stock; provided, however, that, subject to Section 4(a)(iv), the Company may purchase or otherwise acquire outstanding shares of Series A Preferred Stock in the open market or by offer to any holder or holders of shares of Series A Preferred Stock.
(b)    The shares of Series A Preferred Stock shall not (i) be subject to or entitled to the operation of a retirement, sinking fund or purchase fund or (ii) be convertible into or exchangeable for shares of any other class or series.
SECTION 8.  Ranking.  The Series A Preferred Stock shall rank junior to all other series of Preferred Stock of the Company unless the Board shall specifically determine otherwise in fixing the powers, preferences and relative, participating, optional and other special rights of the shares of such Series And the qualifications, limitations and restrictions thereof.
SECTION 9.  Fractional Shares.  The Series A Preferred Stock shall be issuable upon exercise of the Rights issued pursuant to the Rights Agreement in whole shares or in any fraction of a share that is one one-thousandth of a share (as such fraction may be adjusted as provided in the Rights Agreement) or any integral multiple of such fraction which shall entitle the holder, in proportion to such holder’s fractional shares, to receive dividends, exercise voting rights, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. In lieu of fractional shares, the Company, prior to the first issuance of a share or a fraction of a share 

A-5

of Series A Preferred Stock, may elect (a) to make a cash payment as provided in the Rights Agreement for fractions of a share other than one one-thousandths of a share (as such fraction may be adjusted as provided in the Rights Agreement) or any integral multiple thereof or (b) to issue depository receipts evidencing such authorized fraction of a share of Series A Preferred Stock pursuant to an appropriate agreement between the Company and a depository selected by the Company; provided, however, 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 holders of the Series A Preferred Stock.
SECTION 10.  Reacquired Shares.  Any shares of Series A Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Certificate.
SECTION 11.  Amendment.  So long as any shares of Series A Preferred Stock shall be outstanding, (i) none of the powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock as herein provided shall be amended in any manner which would alter or change the powers, preferences, rights or privileges of the holders of Series A Preferred Stock so as to affect them adversely and (ii) no amendment, alteration or repeal of the Certificate or of the By-laws of the Company shall be effected so as to affect adversely any of such powers, preferences, rights or privileges, in each case without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Series A Preferred Stock, voting as a separate class; provided, however, that no such amendment, alteration or repeal approved by the holders of at least 66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to apply to the powers, preferences, rights or privileges of any holder of shares of Series A Preferred Stock originally issued upon exercise of the Rights after the time of such approval without the approval of such holder.

A-6

IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed in its corporate name on this 21st day of September, 2016.

	
		
	 
	CAMBIUM LEARNING GROUP, INC.

	 
	 

	 
	 

	 
	By:_________________________________

	 
	Name:

	 
	Title:

A-7

Exhibit B

[FORM OF RIGHT CERTIFICATE]
	
		
	Certificate No. [R]-
	Rights

	 
	 

	 
	 

NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT (AS DEFINED BELOW)), OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.0001 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 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 BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.

Right Certificate
CAMBIUM LEARNING GROUP, 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 Tax Asset Protection Rights Agreement, dated as of September 21, 2016 (the “Rights Agreement”), between Cambium Learning Group, Inc. (the “Company”) and Wells Fargo Bank, National Association, a national banking association (the “Rights Agent”), unless the Rights evidenced hereby shall have been previously redeemed or exchanged by the Company, to purchase from the Company at any time after the Distribution Date (as defined in the Rights Agreement) and at or prior to the earlier of the Redemption Date or the Expiration Date (as such terms are defined in the Rights Agreement), at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-thousandth (1/1,000th) of a fully paid, nonassessable share of Series A Participating Cumulative Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Shares”), at a purchase price per one one-thousandth (1/1,000th) of a share equal to $23.00 (the “Purchase Price”) payable in cash, upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be purchased upon exercise of each Right evidenced by this Right Certificate, as set forth above, are the Purchase Price and the number and kind of shares which may be so purchased as of [ ], 20[ ]. As provided in the Rights Agreement, the Purchase Price and the number and kind of shares which may be purchased upon the exercise of each Right evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.

B-1

If the Rights evidenced by this Right Certificate are at any time beneficially owned by an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement), such Rights shall be null and void and nontransferable and the holder of any such Right (including any purported transferee or subsequent holder) shall not have any right to exercise or transfer any such Right.
This Right Certificate is subject to all 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 reference to the Rights Agreement 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 Right Certificates. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number and kind of shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Right Certificate may be redeemed by the Company at its option at a redemption price (in cash or shares of Common Stock, par value $0.001 per share, of the Company or other securities of the Company deemed by the Board of Directors of the Company to be at least equivalent in value) of $0.0001 per Right (which amount shall be subject to adjustment as provided in the Rights Agreement) at any time prior to the earlier of (i) the Distribution Date and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions of Preferred Shares or distribute certificates which evidence fractions of Preferred Shares upon the exercise of any Right or Rights evidenced hereby, in each case other than fractions constituting one one-thousandth (1/1,000th) of a share (as such fraction may be adjusted as provided in the Rights Agreement).  In lieu of issuing fractional shares, the Company may elect to make a cash payment as provided in the Rights Agreement for fractions of a share other than one one-thousandth (1/1,000th) of a share (as such fraction may be adjusted as provided in the Rights Agreement) or any integral multiple thereof or to issue certificates or utilize a depository arrangement as provided in the terms of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate 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, including, without limitation, 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 

B-2

stockholders (except as provided in the Rights Agreement), or to receive dividends or other distributions or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Rights Agent.

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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

Dated as of:

	
		
	ATTEST:
	CAMBIUM LEARNING GROUP, INC.

	 
	 

	 
	 

	_____________________________________
	By: __________________________________

	Name:
	Name:

	Title:
	Title:

	 
	 

Date of countersignature:
Countersigned:
WELLS FARGO BANK, NATIONAL ASSOCIATION

	
	
	 

	By: __________________________________

	Authorized Signatory:

	 

B-4

[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise the Rights represented by this Right Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise              Rights represented by this Right Certificate to purchase the Preferred Shares (or other shares) issuable upon the exercise of such Rights and requests that certificates for such shares be 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 Right Certificate, a new Right 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: ___________________________
NOTICE: Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) at a guarantee level satisfactory to the Rights Agent. A notary public is not sufficient.

CERTIFICATE
The undersigned hereby certifies that (1) the Rights evidenced by this Right Certificate are not being exercised by or on behalf of a person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), (2) this Right Certificate is not being sold, assigned or transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and (3) after due inquiry and to the best knowledge of the undersigned, the undersigned did not acquire the Rights evidenced by this Right Certificate from any person who is or was an Acquiring Person or an Affiliate or Associate thereof.
Dated:                           ,
_______________________________ 
Signature

B-5

FORM OF ASSIGNMENT
(To be executed by the registered holder if such 
holder desires to transfer the Right Certificate)

FOR VALUE RECEIVED,                                             hereby sells, assigns and transfers unto
_____________________________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint Attorney, to transfer the within Right Certificate on the books of the within-named Corporation, with full power of substitution.

Dated:                           ,
_______________________________
Signature

Signature Guaranteed: ___________________________

NOTICE: Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) at a guarantee level satisfactory to the Rights Agent. A notary public is not sufficient.

CERTIFICATE
The undersigned hereby certifies that (1) the Rights evidenced by this Right Certificate are not being sold, assigned or transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), (2) this Right Certificate is not being sold, assigned or transferred to or on behalf of any such Acquiring Person, Affiliate or Associate and (3) after inquiry and to the best knowledge of the undersigned, the undersigned did not acquire the Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement).
Dated:                           ,
_______________________________
Signature

B-6

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

Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) at a guarantee level satisfactory to the Rights Agent. A notary public is not sufficient.

B-7

Exhibit C

RIGHTS BENEFICIALLY OWNED BY ANY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
FORM OF
SUMMARY OF RIGHTS TO PURCHASE 
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK 
OF CAMBIUM LEARNING GROUP, INC.

On September 21, 2016, the Board of Directors of Cambium Learning Group, Inc., a Delaware corporation, declared a dividend of one right for each outstanding share of common stock, par value $0.001 per share, of the Company.  The dividend is payable on October 7, 2016, to our stockholders of record on that date.  The description and terms of the rights are set forth in a Tax Asset Protection Rights Agreement, dated as of September 21, 2016, as it may be amended from time to time (the “Rights Agreement”), between Cambium Learning Group, Inc. and Wells Fargo Bank, National Association, a national banking association, as rights agent.

Our Board adopted the Rights Agreement in an effort to protect shareholder value by, among other things, attempting to protect against a possible limitation on our ability to use its net operating loss carryforwards and other tax benefits to reduce potential future United States Federal income tax obligations.  We have experienced substantial operating losses, and under the Internal Revenue Code of 1986, as amended (the “Code”), and rules promulgated thereunder, we may “carry forward” these tax attributes in certain circumstances to offset any current and future earnings and thus reduce our federal income tax liability, subject to certain requirements and restrictions.  To the extent that our tax attributes do not otherwise become limited, we believe that we will be able to carry forward a significant amount of losses and credits, and therefore these tax attributes could be a substantial asset to us.  However, if we experience an “ownership change,” as defined in Section 382 of the Code, our ability to use these tax attributes will be substantially limited, and the timing and usage of the tax attributes could be substantially delayed, which could therefore significantly impair the value of these assets.

In general terms, the rights plan imposes a significant penalty upon any person or group that acquires beneficial ownership of 4.99% or more of our outstanding common stock without the prior approval of our Board.  A person or group that acquires a percentage of our common stock in excess of that threshold is called an “acquiring person.”  Any rights held by an acquiring person are null and void and may not be exercised.  The term “beneficial ownership” is defined in the Rights Agreement and generally means direct, indirect or constructive ownership as determined under Section 382 of the Internal Revenue Code.

This summary of rights provides a general description of the Rights Agreement and does not purport to be complete. Because it is only a summary, this description should be read together with the entire Rights Agreement, which we incorporate in this summary by reference.  We will file a copy of the Rights Agreement with the Securities and Exchange Commission as an exhibit to our 

C-1

registration statement on Form 8-A. Upon written request, we will provide a copy of the Rights Agreement free of charge to any stockholder.

The Rights.  Our Board authorized the issuance of one right per each outstanding share of our common stock outstanding at October 7, 2016.  Each right, if and when it becomes exercisable, will entitle the registered holder to purchase from us one one-thousandth (1/1,000th) of a share of our Series A Participating Cumulative Preferred Stock at a price of $23.00.  Each fractional share of preferred stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of our common stock.  Prior to exercise, however, a right does not give its holder any rights as a stockholder of the Company, including, without limitation, any voting or dividend rights.

Exercisability.  The rights will not be exercisable until the earlier of:

		
	•
	ten days after such time as Cambium Learning Group, Inc. learns that a person or group has become an acquiring person; and 

		
	•
	such date, if any, as may be designated by our Board after a person or group begins, or first publicly discloses an intention to begin, a tender or exchange offer for our outstanding common stock that could reasonably be expected to result in such person or group becoming an acquiring person. 

We refer to the date that the rights become exercisable as the “distribution date.”  Until the earliest of the distribution date, the redemption date or the expiration date (as such terms are defined below), the rights will be evidenced by our common stock certificates, which will contain a notation to that effect, along with a copy of this Summary of Rights, and the surrender for transfer of any such certificate shall also constitute the transfer of the rights associated with the common stock represented thereby. In the case of shares of common stock held in uncertificated form, the rights will be evidenced by the balances indicated in the book-entry account system of the transfer agent for our common stock, and the transfer of any shares of common stock in the book-entry account system of the transfer agent for such common stock shall also constitute the transfer of the rights associated with such shares.  Therefore, until the distribution date, the rights will be transferred with and only with the underlying shares of common stock.  As soon as practicable following the distribution date, the rights will separate from the common stock and be evidenced by right certificates, which we will mail to all holders of rights that have not become null and void, and such separate right certificates alone will thereafter evidence the rights.

Subject to the right of our Board to redeem or exchange the rights as described below, on the first date of public announcement by us or any acquiring person that a person has become an acquiring person, or ten days after such earlier date as a majority of our Board becomes aware of the existence of an acquiring person, all holders of rights, except the acquiring person, may thereafter exercise their rights, upon payment of the purchase price, to purchase that number of one one-thousandths (1/1,000ths) of a preferred share equal to the number of shares of our common stock which, at the time of such transaction, would have a market value of twice the purchase price.  Any 

C-2

rights that are or were beneficially owned by an acquiring person on or after the distribution date will become null and void and will not be subject to this “flip-in” provision.

In the event Cambium Learning Group, Inc. is acquired in a merger or other business combination or 50% or more of our assets or (or assets representing 50% or more of our earning power) are sold, proper provision will be made so that all holders of rights, except the acquiring person, may thereafter exercise their rights, upon payment of the purchase price, to purchase that number of shares of common stock of the acquiring person (or other appropriate entity) which at the time of the transaction would have a market value of twice the purchase price of the rights.  This “flip-over” provision only applies to a merger or similar business combination with an acquiring person.

ANY RIGHTS THAT ARE OR WERE, AT ANY TIME ON OR AFTER THE DATE AN ACQUIRING PERSON BECOMES SUCH, BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (OR A TRANSFEREE THEREOF) WILL BECOME NULL AND VOID AND ANY HOLDER OF ANY SUCH RIGHT (INCLUDING ANY SUBSEQUENT HOLDER) WILL BE UNABLE TO EXERCISE ANY SUCH RIGHT.

Exempt Persons and Exempt Transactions.  Our Board recognizes that there may be instances when an acquisition of our common stock that would cause a stockholder to become an acquiring person may not jeopardize the availability of any tax attributes to Cambium Learning Group, Inc.

Generally, the Rights Agreement provides that any person or group which beneficially owned 4.99% or more of our outstanding shares of common stock as of the close of business on the date of the Rights Agreement (we refer to such person herein a “grandfathered person” and the percentage of such ownership as the “grandfathered percentage”) will not be deemed an “acquiring person” unless such grandfathered person exceeds its grandfathered percentage by 0.5% or more of our outstanding shares of common stock.  If a grandfathered person subsequently becomes the beneficial owner of less than 4.99% of our outstanding shares of common stock, then such person or group will cease to be a grandfathered person.

Additionally, the Rights Agreement includes procedures whereby our Board (or a duly constituted independent committee thereof) may designate a person as an “Exempt Person” or to designate a transaction involving our common stock as an “Exempt Transaction.” An “Exempt Person” cannot become an acquiring person under the Rights Agreement. Our Board can revoke an “Exempt Person” designation if it subsequently makes a contrary determination regarding whether a person jeopardizes the availability of tax attributes to Cambium Learning Group, Inc.  An Exempt Person cannot be a grandfathered person.  Veronis Suhler Stevenson and its subsidiaries and affiliates are designated as “Exempt Persons” for all purposes under the Rights Agreement.  

Expiration.  The Rights Agreement and the rights will expire on the earliest of: (i) the close of business on September 21, 2019, which is the third anniversary of the date on which our Board adopted the Rights Agreement or such earlier date as of which the Board determines that the Rights 

C-3

Agreement is no longer necessary for the preservation of tax benefits; (ii) the close of business on the effective date of the repeal of Section 382 or any successor statute if our Board determines that the Rights Agreement is no longer necessary or desirable for the preservation of our net operating losses or other tax assets; (iii) the time at which all exercisable Rights are exchanged as provided in Section 11(b) of the Rights Agreement; or (iv) the close of business on the first day of a taxable year of Cambium Learning Group, Inc. with respect to which our Board determines that no net operating losses or other tax assets may be carried forward (the earliest of such events being herein referred to as the “expiration date”).

Equitable Adjustments.  The number of preferred shares or other securities issuable upon exercise of the rights, the purchase price and the redemption price are subject to adjustment by our Board in the event of any change in the preferred shares or our common stock or, whether by reason of stock dividends, stock splits, reclassifications, recapitalizations, mergers, consolidations, combinations or exchanges of securities, split-ups, split-offs, spin-offs, liquidations, other similar changes in capitalization, any distribution or issuance of assets, evidences of indebtedness or subscription rights, options or warrants to holders of our capital stock or otherwise.

The preferred stock is authorized to be issued in fractions, which are an integral multiple of one one-thousandth (1/1,000th) of a share of preferred stock.  We may, but are not required to, issue fractions of shares upon the exercise of rights (other than one one-thousandths (1/1000ths) of a preferred share (as such fraction may be adjusted as provided in the Rights Agreement) or any integral multiple thereof), and in lieu of fractional shares, we may make a cash payment based on the market price of such shares on the first trading date prior to the date of exercise or utilize a depositary arrangement as provided by the terms of the preferred stock.

Redemption.  Our Board may redeem all (but not fewer than all) of the rights for a redemption price of $0.0001 per right any time before the earlier of (i) the distribution date and (ii) the expiration date (the date of such redemption being the “redemption date”).  Once the rights are redeemed, the right to exercise the rights will terminate and the only right of the holders of rights will be to receive the redemption price.

Exchange.  At any time after there is an acquiring person and prior to the acquisition by such person or group of 50% or more of our shares of common stock then outstanding, our Board may exchange all or part of the then outstanding rights (other than rights that have become null and void) for (i) one-half of the preferred shares (or fractions thereof) that would be issuable at such time upon the exercise of one right pursuant to the terms of the Rights Agreement or (ii) in the case of holders of our common stock: cash, property, preferred shares (including fractions thereof), shares of common stock (including fractions thereof), or other equity or debt securities (or any combination of any of the foregoing) having an aggregate value equal to one-half of the value of preferred shares (including fractions thereof) that would be issuable at such time upon the exercise of one right pursuant to the terms of the Rights Agreement.

Amendments.  At any time prior to the distribution date, Cambium Learning Group, Inc. may, without the approval of any holder of the rights, supplement or amend any provision of the Rights Agreement (including the date on which the distribution date will occur, the amount of the 

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purchase price or the definition of “acquiring person”), except that no supplement or amendment may be made that reduces the redemption price. After a distribution date, the provisions of the Rights Agreement may be amended by Cambium Learning Group, Inc. in order to cure any ambiguities, to correct or supplement any provision that may be defective or inconsistent with any other provisions of the Rights Agreement, or to make any other necessary or desirable changes that do not adversely affect the interests of holders of rights.

C-5Exhibit 10.2

 

SENESTECH, INC.

 

2015 EQUITY INCENTIVE PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS: July
3, 2015

APPROVED BY THE STOCKHOLDERS: July ___,
2015

TERMINATION DATE: July 3, 2025

 

1.           General.

 

(a)          Eligible
Stock Award Recipients. Employees, Directors and Consultants are eligible to receive Stock
Awards.

 

(b)          Available
Stock Awards. The Plan provides for the grant of the following types of Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock
Awards, (v) Restricted Stock Unit Awards and (vi) Other Stock Awards.

 

(c)          Purpose.
The Plan, through the granting of Stock Awards, is intended to help the Company secure and retain the services of eligible award
recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide
a means by which the eligible recipients may benefit from increases in value of the Common Stock.

 

2.           Administration.

 

(a)          Administration
by Board. The Board will administer the Plan. The Board may delegate administration of
the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)          Powers
of Board. The Board will have the power, subject to, and within the limitations of, the
express provisions of the Plan:

 

(i)          To
determine (A) who will be granted Stock Awards; (B) when and how each Stock Award will be granted; (C) what type of Stock Award
will be granted; (D) the provisions of each Stock Award (which need not be identical), including when a person will be permitted
to exercise or otherwise receive cash or Common Stock under the Stock Award; (E) the number of shares of Common Stock subject to
a Stock Award; and (F) the Fair Market Value applicable to a Stock Award.

 

(ii)         To
construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for
administration of the Plan and Stock Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency
in the Plan or in any Stock Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan
or Stock Award fully effective.

 

(iii)        To
settle all controversies regarding the Plan and Stock Awards granted under it.

 

(iv)        To
accelerate, in whole or in part, the time at which a Stock Award may be exercised or vest (or at which cash or shares of Common
Stock may be issued). 

 

    1.

     

    

 

 

(v)         To
suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or a Stock Award Agreement, suspension or termination
of the Plan will not impair a Participant’s rights under his or her then-outstanding Stock Award without his or her written
consent except as provided in subsection (viii) below.

 

(vi)        To
amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating
to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan
or Stock Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant
with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any,
of applicable law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization
Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number
of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible
to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D)
materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends
the term of the Plan, or (F) materially expands the types of Stock Awards available for issuance under the Plan. Except as
provided in the Plan (including subsection (viii) below) or a Stock Award Agreement, no amendment of the Plan will impair a Participant’s
rights under an outstanding Stock Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant
consents in writing.

 

(vii)       To
submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy
the requirements of Section 422 of the Code regarding Incentive Stock Options.

 

(viii)      To
approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards, including,
but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Stock Award Agreement,
subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s
rights under any Stock Award will not be impaired by any such amendment unless (A) the Company requests the consent of the
affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s
rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the
amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable
law, if any, the Board may amend the terms of any one or more Stock Awards without the affected Participant’s consent (A) to
maintain the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the
terms of an Incentive Stock Option, if such change results in impairment of the Award solely because it impairs the qualified status
of the Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring
the Stock Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws.

 

(ix)         Generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Plan or Stock Awards.

 

(x)          To
adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors
or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary
for immaterial modifications to the Plan or any Stock Award Agreement that are required for compliance with the laws of the relevant
foreign jurisdiction).

 

    2.

     

    

 

(xi)         
To effect, with the consent of any adversely affected Participant, (A) the reduction of
the exercise, purchase or strike price of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and
the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4)
Other Stock Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such
substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted
under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under
generally accepted accounting principles.

 

(c)          Delegation
to Committee. The Board may delegate some or all of the administration of the Plan to
a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with
the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including
the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board will thereafter be to the Committee or subcommittee). Any delegation of administrative
powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board
or Committee (as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers
delegated to the subcommittee. The Board may retain the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board some or all of the powers previously delegated.

 

(d)          
Delegation to an Officer. The Board may delegate
to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be
recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted
by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such
Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the
total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may
not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award Agreement most
recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation
authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also
as a Director) to determine the Fair Market Value pursuant to Section 13(t) below. 

 

(e)          Effect
of Board’s Decision. All determinations, interpretations and constructions made
by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.           Shares
Subject to the Plan.

 

(a)          Share
Reserve. 

 

(i)          Subject
to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued
pursuant to Stock Awards from and after the Effective Date will not exceed 10,000,000 shares (the “Share Reserve”).

 

    3.

     

    

 

(ii)         For
clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued
pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a).

 

(b)          Reversion
of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires
or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash
(i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or
otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common
Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency
or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to
and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding
obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available
for issuance under the Plan. 

 

(c)          Incentive
Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating
to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise
of Incentive Stock Options will be a number of shares of Common Stock equal to three (3) multiplied by the Share Reserve. 

 

(d)          Source
of Shares. The stock issuable under the Plan will be shares of authorized but unissued
or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.

 

4.           Eligibility.

 

(a)          Eligibility
for Specific Stock Awards. Incentive Stock Options may be granted only to employees of
the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in
Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are
providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless
(i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for
example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), or (ii) the
Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from or alternatively
comply with the distribution requirements of Section 409A of the Code. 

 

(b)          Ten
Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the
date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

(c)          Consultants.
A Consultant will not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or sale of the
Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the
Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701,
unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption
under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.

 

    4.

     

    

 

5.           Provisions
Relating to Options and Stock Appreciation Rights.

 

Each Option or SAR
will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option
is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some
portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion
thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however,
that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock
Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)          Term.
Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the
expiration of ten (10) years from the date of its grant or such shorter period specified in the Stock Award Agreement.

 

(b)          Exercise
Price. Subject to the provisions of Section  4(b) regarding Ten Percent Stockholders,
the exercise or strike price of each Option or SAR will be not less than one hundred percent (100%) of the Fair Market Value
of the Common Stock subject to the Option or SAR on the date the Stock Award is granted. Notwithstanding the foregoing, an Option
or SAR may be granted with an exercise or strike price lower than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Stock Award if such Stock Award is granted pursuant to an assumption of or substitution for another
option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section
409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.

 

(c)          Purchase
Price for Options. The purchase price of Common Stock acquired pursuant to the exercise
of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board will have the authority to grant Options that do not permit all
of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require
the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:

 

(i)          by
cash, check, bank draft or money order payable to the Company;

 

(ii)         pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock
subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds; 

 

(iii)        by
delivery to the Company (either by actual delivery or attestation) of shares of Common Stock; 

 

    5.

     

    

 

(iv)        if
an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number
of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter
to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,”
(B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding
obligations;

 

(v)         according
to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest will compound at least
annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the
Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification
of the Option as a liability for financial accounting purposes; or

 

(vi)        in
any other form of legal consideration that may be acceptable to the Board and specified in the applicable Stock Award Agreement.

 

(d)          Exercise
and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written
notice of exercise to the Company in compliance with the provisions of the Stock Award Agreement evidencing such SAR. The appreciation
distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair
Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock
equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR
on such date, over (B) the strike price. The appreciation distribution may be paid in Common Stock, in cash, in any combination
of the two or in any other form of consideration, as determined by the Board and contained in the Stock Award Agreement evidencing
such SAR.

 

(e)          Transferability
of Options and SARs. The Board may, in its sole discretion, impose such limitations on
the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the
contrary, the following restrictions on the transferability of Options and SARs will apply:

 

(i)          Restrictions
on Transfer. An Option or SAR will not be transferable except by will or by the laws of
descent and distribution (and pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the
Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable
tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

 

(ii)         Domestic
Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an
Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or
other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2). If an Option is an Incentive Stock Option,
such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer. 

 

    6.

     

    

 

(iii)        Beneficiary
Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant
may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third
party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common
Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator
of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration
resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any
conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

(f)          Vesting
Generally. The total number of shares of Common Stock subject to an Option or SAR may
vest and therefore become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to
such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction
of performance goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs
may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of
shares of Common Stock as to which an Option or SAR may be exercised.

 

(g)          Termination
of Continuous Service. Except as otherwise provided in the applicable Stock Award Agreement
or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than
for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR
(to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service)
within the period of time ending on the earlier of (i) the date three (3) months following the termination of the
Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which
period will not be less than thirty (30) days if necessary to comply with applicable laws unless such termination is
for Cause) and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination
of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option
or SAR (as applicable) will terminate.

 

(h)          Extension
of Termination Date. Except as otherwise provided in the applicable Stock Award Agreement
or other agreement between the Participant and the Company, if the exercise of an Option or SAR following the termination of the
Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would
be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under
the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of three (3) months
(that need not be consecutive) after the termination of the Participant’s Continuous Service during which the exercise of
the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option
or SAR as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s Stock
Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of the Participant’s
Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will
terminate on the earlier of (i) the expiration of a period of time (that need not be consecutive) equal to the applicable
post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the
Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy,
or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.

 

    7.

     

    

 

(i)          Disability
of Participant. Except as otherwise provided in the applicable Stock Award Agreement or
other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of
the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was
entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time
ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such
longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if
necessary to comply with applicable laws), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock
Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within
the applicable time frame, the Option or SAR (as applicable) will terminate. 

 

(j)          Death
of Participant. Except as otherwise provided in the applicable Stock Award Agreement or
other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result
of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement
for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the
Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death)
by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or
by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death (or such
longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if
necessary to comply with applicable laws), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock
Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame,
the Option or SAR (as applicable) will terminate. 

 

(k)          
Termination for Cause. Except as explicitly
provided otherwise in a Participant’s Stock Award Agreement or other individual written agreement between the Company or
any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will
terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from
exercising his or her Option or SAR from and after the time of such termination of Continuous Service.

 

(l)          Non-Exempt
Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee
for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares
of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Stock Award may vest
prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies
or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted,
(iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s
Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with
the Company's then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier
than six (6) months following the date of grant. The foregoing provision is intended to operate so that any income derived by a
non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate
of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income
derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award
will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards
and are hereby incorporated by reference into such Stock Award Agreements. 

 

    8.

     

    

 

(m)          Early
Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder
may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all
of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation”
in Section 8(m), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company
or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation”
in Section 8(m) is not violated, the Company will not be required to exercise its repurchase right until at least six (6) months
(or such longer or shorter period of time required to avoid classification of the Option as a liability for financial accounting
purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement.

 

(n)          Right
of Repurchase. Subject to the “Repurchase Limitation” in Section 8(m),
the Option or SAR may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common
Stock acquired by the Participant pursuant to the exercise of the Option or SAR. 

 

(o)          Right
of First Refusal. The Option or SAR may include a provision whereby the Company may elect
to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part
of the shares of Common Stock received upon the exercise of the Option or SAR. Such right of first refusal will be subject to the
“Repurchase Limitation” in Section 8(m). Except as expressly provided in this Section 5(o) or in the
Stock Award Agreement, such right of first refusal will otherwise comply with any applicable provisions of the bylaws of the Company.

 

6.           Provisions
of Stock Awards Other than Options and SARs.

 

(a)          Restricted
Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain
such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s
election, shares of Common Stock may be (i) held in book entry form subject to the Company’s instructions until any
restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held
in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from
time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted
Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

 

(i)          Consideration.
A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company,
(B) past services to the Company or an Affiliate, or (C) any other form of legal consideration
(including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable
law. 

 

(ii)         Vesting.
Subject to the “Repurchase Limitation” in Section 8(m), shares of Common Stock awarded under the Restricted
Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the
Board.

 

(iii)        Termination
of Participant’s Continuous Service. If a Participant’s Continuous Service
terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock
held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted
Stock Award Agreement.

 

    9.

     

    

 

(iv)        Transferability.
Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only
upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted
Stock Award Agreement.

 

(v)         Dividends.
A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting
and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.

 

(b)          Restricted
Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form
and will contain such terms and conditions as the Board deems appropriate. The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not
be identical. Each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference
in the Agreement or otherwise) the substance of each of the following provisions:

 

(i)          Consideration.
At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by
the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)         Vesting.
At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting
of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)        Payment.
A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination
thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

 

(iv)        Additional
Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board,
as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their
cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award. 

 

(v)         Dividend
Equivalents. Dividend equivalents may be credited in respect of shares of Common
Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered
by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock
Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying
Restricted Stock Unit Award Agreement to which they relate.

 

(vi)        Termination
of Participant’s Continuous Service. Except as otherwise provided in the
applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited
upon the Participant’s termination of Continuous Service. 

 

    10.

     

    

 

(vii)       Compliance
with Section 409A of the Code. Notwithstanding anything to the contrary set forth
herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of
the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A
of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement
evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that
any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued
in accordance with a fixed pre-determined schedule.

 

(c)          Other
Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to,
or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise
price or strike price less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the time of grant) may
be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section
6. Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and
the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent
thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.

 

7.            Covenants
of the Company.

 

(a)          Availability
of Shares. The Company will keep available at all times the number of shares of Common
Stock reasonably required to satisfy then-outstanding Stock Awards.

 

(b)          Securities
Law Compliance. The Company will seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register
under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If,
after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency
the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the
Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless
and until such authority is obtained. A Participant will not be eligible for the grant of a Stock Award or the subsequent issuance
of cash or Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities
law. 

 

(c)          No
Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation
to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company will
have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a
possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences
of a Stock Award to the holder of such Stock Award.

 

8.           Miscellaneous.

 

(a)          Use
of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common
Stock pursuant to Stock Awards will constitute general funds of the Company.

 

    11.

     

    

 

(b)          Corporate
Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the
Company of a Stock Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to,
or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions
or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number
of shares) that are inconsistent with those in the Stock Award Agreement as a result of a clerical error in the papering of the
Stock Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect
term in the Stock Award Agreement.

 

(c)          Stockholder
Rights. No Participant will be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to a Stock Award unless and until (i) such Participant has
satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Stock Award pursuant to its terms,
and (ii) the issuance of the Common Stock subject to the Stock Award has been entered into the books and records of the Company.

 

(d)          No
Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or
any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant
any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or
will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with
the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and
any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case
may be.

 

(e)          Change
in Time Commitment. In the event a Participant’s regular level of time commitment
in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if
the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time
Employee) after the date of grant of any Stock Award to the Participant, the Board has the right in its sole discretion to (x)
make a corresponding reduction in the number of shares subject to any portion of such Stock Award that is scheduled to vest or
become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend
the vesting or payment schedule applicable to such Stock Award. In the event of any such reduction, the Participant will have no
right with respect to any portion of the Stock Award that is so reduced or extended.

 

(f)          Incentive
Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined
at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000)
(or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the
Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply
with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option
Agreement(s).

 

    12.

     

    

 

(g)          Investment
Assurances. The Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give
written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award
for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock.
The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance
of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel
deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock. 

 

(h)          Withholding
Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may,
in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the
following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding
shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock
Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required
to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for
financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any
amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement.

 

(i)          Electronic
Delivery. Any reference herein to a “written” agreement or document will include
any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium
controlled by the Company to which the Participant has access).

 

(j)          Deferrals.
To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or
the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance
with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant
is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards
and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the
Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions
of the Plan and in accordance with applicable law.

 

(k)          Compliance
with Section 409A of the Code. To the extent that the Board determines that any
Stock Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award
shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code.
To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the
Code.

 

    13.

     

    

 

(l)          Compliance
with Exemption Provided by Rule 12h-1(f). If at the end of the Company’s most recently
completed fiscal year: (i) the aggregate of the number of persons who hold outstanding compensatory employee stock options to purchase
shares of Common Stock granted pursuant to the Plan or otherwise (such persons, “Holders of Options”)
equals or exceeds five hundred (500), and (ii) the Company’s assets exceed $10 million, then the following restrictions will
apply during any period during which the Company does not have a class of its securities registered under Section 12 of the Exchange
Act and is not required to file reports under Section 15(d) of the Exchange Act: (A) the Options and, prior to exercise, the shares
of Common Stock to be issued on exercise of the Options may not be transferred until the Company is no longer relying on the exemption
provided by Rule 12h-1(f) promulgated under the Exchange Act (“Rule 12h-1(f)”), except: (1) as permitted
by Rule 701(c) promulgated under the Securities Act, (2) to a guardian upon the disability of the Holder of Options, or (3) to
an executor upon the death of the Holder of Options (collectively, the “Permitted Transferees”); provided,
however, the following transfers are permitted: (i) transfers by Holders of Options to the Company, and (ii) transfers in connection
with a change of control or other acquisition involving the Company, if following such transaction, the Options no longer remain
outstanding and the Company is no longer relying on the exemption provided by Rule 12h-1(f); provided further, that any Permitted
Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above, the Options and shares of Common
Stock issuable on exercise of the Options are restricted as to any pledge, hypothecation, or other transfer, including any short
position, any “put equivalent position” as defined by Rule 16a-1(h) promulgated under the Exchange Act, or any “call
equivalent position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by Holders of Options prior to exercise
of an Option until the Company is no longer relying on the exemption provided by Rule 12h-1(f); and (C) at any time that the Company
is relying on the exemption provided by Rule 12h-1(f), the Company will deliver to Holders of Options (whether by physical or electronic
delivery or written notice of the availability of the information on an internet site) the information required by Rule 701(e)(3),
(4), and (5) promulgated under the Securities Act every six (6) months, including financial statements that are not more than one
hundred eighty (180) days old; provided, however, that the Company may condition the delivery of such information upon the Holder
of Options’ agreement to maintain its confidentiality. 

 

(m)          Repurchase
Limitation. The terms of any repurchase right will be specified in the Stock Award Agreement.
The repurchase price for vested shares of Common Stock will be the Fair Market Value of the shares of Common Stock on the date
of repurchase. The repurchase price for unvested shares of Common Stock will be the lower of (i) the Fair Market Value of
the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company will not
exercise its repurchase right until at least six (6) months (or such longer or shorter period of time necessary to avoid
classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of
Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board. 

 

9.            Adjustments
upon Changes in Common Stock; Other Corporate Events.

 

(a)          Capitalization
Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately
and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a),
(ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options
pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding
Stock Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive. 

 

    14.

     

    

 

(b)          Dissolution
or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event
of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate
immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s
repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact
that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole
discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture
(to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed
but contingent on its completion. 

 

(c)          Corporate
Transaction.  The following provisions will apply to Stock Awards in the event
of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement
between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant
of a Stock Award. In the event of a Corporate Transaction, then, notwithstanding any other provision of the Plan, the Board may
take one or more of the following actions with respect to Stock Awards, contingent upon the closing or completion of the Corporate
Transaction:

 

(i)          arrange
for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume
or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award
to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);

 

(ii)         arrange
for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to
the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent
company);

 

(iii)        accelerate
the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to
a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such
a date, to the date that is five (5) days prior to the effective date of the Corporate Transaction), with such Stock
Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however,
that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of
a Corporate Transaction, which exercise is contingent upon the effectiveness of such Corporate Transaction;

 

(iv)        arrange
for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;

 

(v)         cancel
or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the
Corporate Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate;
and

 

(vi)        make
a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the
Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Corporate Transaction,
over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero
($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to
the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Corporate
Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.

 

    15.

     

    

 

 

The Board need not take
the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board
may take different actions with respect to the vested and unvested portions of a Stock Award. 

 

(d)          Change
in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in
any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no
such acceleration will occur. 

 

10.          Plan
Term; Earlier Termination or Suspension of the Plan.

 

(a)          Plan
Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner
by the Board, the Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the
date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)          No
Impairment of Rights. Suspension or termination of the Plan will not impair rights and
obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant
or as otherwise permitted in the Plan.

 

11.          Effective
Date of Plan.

 

This Plan will become
effective on the Effective Date. 

 

12.          Choice
of Law.

 

The laws of the
State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without
regard to that state’s conflict of laws rules.

 

13.          Definitions.
As used in the Plan, the following definitions will apply to the capitalized terms indicated
below: 

 

(a)          “Affiliate”
means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such
terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent”
or “majority-owned subsidiary” status is determined within the foregoing definition. 

 

(b)          “Board”
means the Board of Directors of the Company.

 

(c)          “Capitalization
Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject
to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through
merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash,
large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing,
the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

    16.

     

    

 

(d)          “Cause”
will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such
term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following
events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude
under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation
in, a fraud or act of dishonesty against the Company; (iii) such Participant’s intentional, material violation of any
contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant’s
unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s
gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without
Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant
was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect
upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

 

(e)          
“Change in Control” means the occurrence, in a single transaction or in a series of related transactions,
of any one or more of the following events: 

 

(i)          any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation
or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company
by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction
or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity
securities or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition
of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition
had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control will be deemed to occur; 

 

(ii)         there
is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after
the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more
than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such transaction;

 

    17.

     

    

 

(iii)        
the stockholders of the Company approve or the Board approves a plan of complete dissolution
or liquidation of the Company, or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation
into a parent corporation; 

 

(iv)        there
is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership
of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or

 

(v)         individuals
who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members
of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the
Incumbent Board. 

 

Notwithstanding the foregoing definition
or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control
(or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede
the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will
apply.

 

(f)          “Code”
means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(g)          “Committee”
means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

(h)          
“Common Stock” means the common stock of the Company.

 

(i)          “Company”
means Senestech, Inc., a Nevada corporation.

 

(j)          “Consultant”
means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory
services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is
compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director
to be considered a “Consultant” for purposes of the Plan. 

 

    18.

     

    

 

(k)          “Continuous
Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service,
provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is
rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s
Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example,
a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s
sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence
approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers
between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous
Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence
policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required
by law.

 

(l)          “Corporate
Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or
more of the following events:

 

(i)          a
sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated
assets of the Company and its Subsidiaries;

 

(ii)         a
sale or other disposition of at least ninety percent (90%) of the outstanding securities
of the Company;

 

(iii)        a
merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)        a
merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(m)          “Director”
means a member of the Board.

 

(n)          “Disability”
means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted
under the circumstances. 

 

(o)          “Effective
Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved
by the Company’s stockholders, and (ii) the date this Plan is adopted by the Board.

 

(p)          “Employee”
means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services,
will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(q)          “Entity”
means a corporation, partnership, limited liability company or other entity.

 

    19.

     

    

 

(r)          “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(s)          “Exchange
Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d)
or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or
any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any
natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as
of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities.

 

(t)          “Fair
Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section
409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code. 

 

(u)          “Incentive
Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies
as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(v)         “Nonstatutory
Stock Option” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock
Option.

 

(w)          “Officer”
means any person designated by the Company as an officer. 

 

(x)          “Option”
means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(y)          “Option
Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions
of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(z)          “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Option.

 

(aa)         “Other
Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant
to the terms and conditions of Section 6(c).

 

(bb)         “Other
Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing
the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions
of the Plan.

 

(cc)         “Own,”
“Owned,” “Owner,” “Ownership” A person or
Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to
such securities.

 

    20.

     

    

 

(dd)         “Participant”
means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Stock Award.

 

(ee)         “Plan”
means this Senestech, Inc. 2015 Equity Incentive Plan.

 

(ff)         “Restricted
Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

 

(gg)         “Restricted
Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing
the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms
and conditions of the Plan.

 

(hh)         “Restricted
Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the
terms and conditions of Section 6(b).

 

(ii)         “Restricted
Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted
Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement
will be subject to the terms and conditions of the Plan. 

 

(jj)         “Rule
405” means Rule 405 promulgated under the Securities Act. 

 

(kk)         “Rule
701” means Rule 701 promulgated under the Securities Act. 

 

(ll)         “Securities
Act” means the Securities Act of 1933, as amended.

 

(mm)         “Stock
Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock
that is granted pursuant to the terms and conditions of Section 5.

 

(nn)         “Stock
Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation
Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be
subject to the terms and conditions of the Plan.

 

(oo)         “Stock
Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory
Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right or any Other Stock Award.

 

(pp)         “Stock
Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions
of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

    21.

     

    

 

(qq)         “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding
capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability
company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent (50%) .

 

(rr)         “Ten
Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any
Affiliate.

 

    22.

     

    

 

SENESTECH,
INC.

STOCK OPTION GRANT NOTICE

(2015 EQUITY INCENTIVE PLAN)

 

Senestech,
Inc. (the “Company”), pursuant to its 2015 Equity Incentive Plan (the “Plan”),
hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This
option is subject to all of the terms and conditions as set forth in this notice, in the Option Agreement, the Plan and the Notice
of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined
herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement. If
there is any conflict between the terms in this notice and the Plan, the terms of the Plan will control.

 

	Optionholder:	

	Date of Grant:	

	Vesting Commencement Date:	

	Number of Shares Subject to Option:	

	Exercise Price (Per Share):	

	Total Exercise Price:	

	Expiration Date:	

 

	Type of Grant:	 ̈	Incentive Stock Option1	 ̈	Nonstatutory Stock Option
	 	 	 	 	 
	Exercise Schedule:	 ̈	Same as Vesting Schedule  	 ̈	Early Exercise Permitted

 

	Vesting Schedule: 	[Sample of standard vesting.  One-fourth (1/4th) of the shares vest one year after the Vesting Commencement Date; the balance of the shares vest in a series of thirty-six (36) successive equal monthly installments measured from the first anniversary of the Vesting Commencement Date, subject to Optionholder’s Continuous Service as of each such date.]
	 	 	 
	Payment: 	By one or a combination of the following items (described in the Option Agreement):
	 	 	 
	 	 ̈       By cash, check, bank draft or money order payable to the Company
	 	 ̈      Pursuant to a Regulation T Program if the shares are publicly traded
	 	 ̈      By delivery of already-owned shares if the shares are publicly traded
	 	 ̈      By deferred payment
	 	 ̈      If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Company’s consent at the time of exercise, by a “net exercise” arrangement

 

1
If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for
more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock
Option.

 

     

     

    

 

Additional Terms/Acknowledgements:
Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and
the Plan. Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified,
amended or revised except as provided in the Plan.  Optionholder further acknowledges
that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding
between Optionholder and the Company regarding this option award and supersede all prior oral and written agreements, promises
and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder, and
(ii) the following agreements only. By accepting this option, you consent to receive
such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained
by the Company or another third party designated by the Company.

 

	Other Agreements:	 
	 	 
	 	 

 

	Senestech, Inc.	 	Optionholder:
	 	 	 
	By:	 	 	 
	Signature	 	Signature
	 	 	 
	Title:	 	 	Date:	 
	Date:	 	 	 	 

 

Attachments:
Option Agreement, 2015 Equity Incentive Plan and Notice of Exercise

 

     

     

    

 

ATTACHMENT
I

 

SENESTECH,
INC.

2015 EQUITY INCENTIVE PLAN

 

OPTION
AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock
Option Grant Notice (“Grant Notice”) and this Option Agreement, Senestech,
Inc. (the “Company”) has granted you an option under its 2015 Equity Incentive Plan (the “Plan”)
to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice at the exercise price indicated
in your Grant Notice. The option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date
of Grant”). If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan
will control. Capitalized terms not explicitly defined in this Option Agreement or in the Grant Notice but defined in the Plan
will have the same definitions as in the Plan.

 

The details of your option,
in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

1.            Vesting.
Your option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

2.            Number
of Shares and Exercise Price.
The number of shares of Common Stock subject to your option and your exercise price per share in your Grant Notice will be adjusted
for Capitalization Adjustments.

 

3.            Exercise
Restriction for Non-Exempt Employees.
If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt
Employee”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed
at least six (6) months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more
than six (6) months. Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to
any vested portion prior to such six (6) month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction
in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous
Service on your “retirement” (as defined in the Company’s benefit plans). 

 

4.            Exercise
prior to Vesting (“Early Exercise”).
If permitted in your Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”)
and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option;
provided, however, that:

 

(a)          a
partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment
of unvested shares of Common Stock;

 

(b)          any
shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase
option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;

 

     

     

    

 

(c)          you
will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in
the same vesting as if no early exercise had occurred; and

 

(d)          if
your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant)
of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable
for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand
dollars ($100,000), your option(s) or portions thereof that exceed such limit (according to the order in which they were granted)
will be treated as Nonstatutory Stock Options.

 

5.            Method
of Payment. You must pay
the full amount of the exercise price for the shares you wish to exercise. You may pay the exercise price in cash or by check,
bank draft or money order payable to the Company or in any other manner permitted by your Grant Notice, which may
include one or more of the following:

 

(a)          Provided
that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the
Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.
This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to
cover”.

 

(b)          Provided
that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation)
of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion
of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such
shares of Common Stock in a form approved by the Company. You may not exercise your option by delivery to the Company of Common
Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s
stock.

 

(c)          If
this option is a Nonstatutory Stock Option, subject to the consent of the Company at the time of exercise, by a “net exercise”
arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of your option
by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay
any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted
form of payment. Shares of Common Stock will no longer be outstanding under your option and will not be exercisable thereafter
if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as
a result of such exercise, and (iii) are withheld to satisfy your tax withholding obligations.

 

(d)          Pursuant
to the following deferred payment alternative:

 

(i)          Not
less than one hundred percent (100%) of the aggregate exercise price, plus accrued interest, will be due four (4) years from date
of exercise or, at the Company’s election, upon termination of your Continuous Service.

 

(ii)         Interest
will be compounded at least annually and will be charged at the minimum rate of interest necessary to avoid (1) the treatment as
interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred
payment arrangement and (2) the classification of your option as a liability for financial accounting purposes.

 

     

     

    

 

(iii)        In
order to elect the deferred payment alternative, you must, as a part of your written notice of exercise, give notice of the election
of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company hereunder, if the
Company so requests, you must tender to the Company a promissory note and a pledge agreement covering the purchased shares of Common
Stock, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company may request.

 

6.            Whole
Shares. You may exercise
your option only for whole shares of Common Stock.

 

7.            Securities
Law Compliance. In no event
may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities
Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the
registration requirements of the Securities Act. The exercise of your option also must comply with all other applicable laws and
regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas.
Reg. 1.401(k)-1(d)(3), if applicable).

 

8.            Term.
You may not exercise your option before the Date of Grant or after the expiration of the option’s term. The term of your
option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

(a)          immediately
upon the termination of your Continuous Service for Cause;

 

(b)          three
(3) months after the termination of your Continuous Service for any reason other than Cause, your
Disability or your death (except as otherwise provided in Section 8(d) below); provided, however, that if during any part
of such three (3) month period your option is not exercisable solely because of the condition set forth in the section above relating
to “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has
been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further,
that if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant,
and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not
expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that
is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;

 

(c)          twelve
(12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 8(d))
below;

 

(d)          eighteen
(18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous
Service terminates for any reason other than Cause;

 

(e)          the
Expiration Date indicated in your Grant Notice; or

 

(f)          the
day before the tenth (10th) anniversary of the Date of Grant.

 

     

     

    

 

If your option is an Incentive
Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires
that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your option’s
exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or your permanent and total
disability, as defined in Section 22(e)(3) of the Code. (The definition of disability in Section 22(e)(3) of the Code. The Company
has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that
your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months
after the date your employment with the Company or an Affiliate terminates.

 

9.            Exercise.

 

(a)          You
may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so permits) during
its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or
procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable withholding taxes to the
Company’s Secretary, stock plan administrator, or such other person as the Company may designate, together with such additional
documents as the Company may then require.

 

(b)          By
exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into
an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason
of (i) the exercise of your option, (ii) the lapse of any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (iii) the disposition of shares of Common Stock acquired upon such exercise.

 

(c)          If
your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option
that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred
upon exercise of your option.

 

(d)          By
exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares
of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective
date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the
Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472–or any successor or similar rule–or regulation–(the
“Lock-Up Period”); provided, however, that nothing contained in this section will prevent the
exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver
such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing
or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any
shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 9(d). The underwriters of
the Company’s stock are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority
to enforce the provisions hereof as though they were a party hereto.

 

     

     

    

 

10.           Transferability.
Except as otherwise provided in this Section 10, your option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by you. 

 

(a)          Certain
Trusts. Upon receiving written permission from the Board or its duly authorized designee,
you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of
the Code and applicable state law) while the option is held in the trust. You and the trustee must enter into transfer and other
agreements required by the Company. 

 

(b)          Domestic
Relations Orders. Upon receiving written permission from the Board or its duly authorized
designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company,
you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other
divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the
Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company
prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained
within the domestic relations order or marital settlement agreement. If this option is an Incentive Stock Option, this option may
be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(c)          Beneficiary
Designation. Upon receiving written permission from the Board or its duly authorized designee,
you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company
to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and
receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, your executor
or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock
or other consideration resulting from such exercise.

 

11.           Right
of First Refusal. Shares
of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be described in
the Company’s bylaws in effect at such time the Company elects to exercise its right; provided, however, that if there
is no right of first refusal described in the Company’s bylaws at such time, the right of first refusal described below will
apply. The Company’s right of first refusal will expire on the first date upon which any security of the Company is listed
(or approved for listing) upon notice of issuance on a national securities exchange or quotation system (the “Listing
Date”).

 

(a)          Prior
to the Listing Date, you may not validly Transfer (as defined below) any shares of Common Stock acquired upon exercise of your
option, or any interest in such shares, unless such Transfer is made in compliance with the following provisions:

 

(i)          Before
there can be a valid Transfer of any shares of Common Stock or any interest therein, the record holder of the shares of Common
Stock to be transferred (the “Offered Shares”) will give written notice (by registered or certified mail)
to the Company. Such notice will specify the identity of the proposed transferee, the cash price offered for the Offered Shares
by the proposed transferee (or, if the proposed Transfer is one in which the holder will not receive cash, such as an involuntary
transfer, gift, donation or pledge, the holder will state that no purchase price is being proposed), and the other terms and conditions
of the proposed Transfer. The date such notice is mailed will be hereinafter referred to as the “Notice Date”
and the record holder of the Offered Shares will be hereinafter referred to as the “Offeror.” If, from
time to time, there is any stock dividend, stock split or other change in the character or amount of any of the outstanding Common
Stock which is subject to the provisions of your option, then in such event any and all new, substituted or additional securities
to which you are entitled by reason of your ownership of the shares of Common Stock acquired upon exercise of your option will
be immediately subject to the Company’s Right of First Refusal (as defined below) with the same force and effect as the shares
subject to the Right of First Refusal immediately before such event.

 

     

     

    

 

(ii)         For
a period of thirty (30) calendar days after the Notice Date, or such longer period as may be required to avoid the classification
of your option as a liability for financial accounting purposes, the Company will have the option to purchase all (but not less
than all) of the Offered Shares at the purchase price and on the terms set forth in Section 11(a)(iii) (the Company’s “Right
of First Refusal”). In the event that the proposed Transfer is one involving no payment of a purchase price, the
purchase price will be deemed to be the Fair Market Value of the Offered Shares as determined in good faith by the Board in its
discretion. The Company may exercise its Right of First Refusal by mailing (by registered or certified mail) written notice of
exercise of its Right of First Refusal to the Offeror prior to the end of said thirty (30) days (including any extension required
to avoid classification of the option as a liability for financial accounting purposes).

 

(iii)        The
price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal will be the cash
price offered for the Offered Shares by the proposed transferee (as set forth in the notice required under Section 11(a)(i)), or
the Fair Market Value as determined by the Board in the event no purchase price is involved. To the extent consideration other
than cash is offered by the proposed transferee, the Company will not be required to pay any additional amounts to the Offeror
other than the cash price offered (or the Fair Market Value, if applicable). The Company’s notice of exercise of its Right
of First Refusal will be accompanied by full payment for the Offered Shares and, upon such payment by the Company, the Company
will acquire full right, title and interest to all of the Offered Shares.

 

(iv)        If,
and only if, the option given pursuant to Section 11(a)(ii) is not exercised, the Transfer proposed in the notice given pursuant
to Section 11(a)(i) may take place; provided, however, that such Transfer must, in all respects, be exactly as proposed
in said notice except that such Transfer may not take place either before the tenth (10th) calendar day after the expiration
of the thirty (30) day option exercise period or after the ninetieth (90th) calendar day after the expiration of the
thirty (30) day option exercise period, and if such Transfer has not taken place prior to said ninetieth (90th) day,
such Transfer may not take place without once again complying with this Section 11(a). The option exercise periods in this Section
11(a)(iv) will be adjusted to include any extension required to avoid the classification of your option as a liability for financial
accounting purposes.

 

(b)          As
used in this Section 11, the term “Transfer” means any sale, encumbrance, pledge, gift or other form
of disposition or transfer of shares of Common Stock or any legal or equitable interest therein; provided, however, that
the term Transfer does not include a transfer of such shares or interests by will or intestacy to your Immediate Family (as defined
below). In such case, the transferee or other recipient will receive and hold the shares of Common Stock so transferred subject
to the provisions of this Section, and there will be no further transfer of such shares except in accordance with the terms of
this Section 11. As used herein, the term "Immediate Family" will mean your spouse, the lineal descendant
or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of you or your spouse,
or the spouse of any child, adopted child, grandchild or adopted grandchild of you or your spouse.

 

(c)          None
of the shares of Common Stock purchased on exercise of your option will be transferred on the Company’s books nor will the
Company recognize any such Transfer of any such shares or any interest therein unless and until all applicable provisions of this
Section 11 have been complied with in all respects. The certificates of stock evidencing shares of Common Stock purchased on exercise
of your option will bear an appropriate legend referring to the transfer restrictions imposed by this Section 11.

 

     

     

    

 

(d)          To
ensure that the shares subject to the Company’s Right of First Refusal will be available for repurchase by the Company, the
Company may require you to deposit the certificates evidencing the shares that you purchase upon exercise of your option with an
escrow agent designated by the Company under the terms and conditions of an escrow agreement approved by the Company. If the Company
does not require such deposit as a condition of exercise of your option, the Company reserves the right at any time to require
you to so deposit the certificates in escrow. As soon as practicable after the expiration of the Company’s Right of First
Refusal, the agent will deliver to you the shares and any other property no longer subject to such restriction. In the event the
shares and any other property held in escrow are subject to the Company’s exercise of its Right of First Refusal, the notices
required to be given to you will be given to the escrow agent, and any payment required to be given to you will be given to the
escrow agent. Within thirty (30) days after payment by the Company for the Offered Shares, the escrow agent will deliver the Offered
Shares that the Company has repurchased to the Company and will deliver the payment received from the Company to you.

 

12.          Right
of Repurchase. To the extent
provided in the Company’s bylaws in effect at such time the Company elects to exercise its right, the Company will have the
right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option.

 

13.          Option
not a Service Contract.
Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever
any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue
your employment. In addition, nothing in your option will obligate the Company or an Affiliate, their respective stockholders,
boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the
Company or an Affiliate.

 

14.          Withholding
Obligations.

 

(a)          At
the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by
means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option. 

 

(b)          If
this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with
any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable
to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount
as may be necessary to avoid classification of your option as a liability for financial accounting purposes). If the date of determination
of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant
to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option.
Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common
Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences
to you arising in connection with such share withholding procedure shall be your sole responsibility.

 

     

     

    

 

(c)          You
may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly,
you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation
to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein,
if applicable, unless such obligations are satisfied.

 

15.          Tax
Consequences. You hereby agree that the Company does not have a duty to design or administer
the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against
the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or
your other compensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise
price per share specified in the Grant Notice is at least equal to the “fair market value” per share of the Common
Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. Because the
Common Stock is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation
with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue
Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of
its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined
by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service.

 

16.          Notices.
Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively
given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United
States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion,
decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent
to participate in the Plan by electronic means. By accepting this option, you consent to receive such documents by electronic delivery
and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third
party designated by the Company.

 

17.          Governing
Plan Document. Your option
is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject
to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the
Plan. If there is any conflict between the provisions of your option and those of the Plan, the provisions of the Plan will control.

 

     

     

    

 

ATTACHMENT
II

 

2015
EQUITY INCENTIVE PLAN

 

     

     

    

 

ATTACHMENT
III

 

SENESTECH, INC.

NOTICE OF EXERCISE

 

	SenesTech, Inc.	 	 
	3140 North Caden Court # 1	 	 
	Flagstaff, Arizona 86004	Date of Exercise:	 

 

This constitutes notice
to Senestech, Inc. (the “Company”) under my stock
option that I elect to purchase the below number of shares of Common Stock of the Company (the “Shares”)
for the price set forth below.

 

	Type of option (check one):	Incentive   ̈	 	Nonstatutory   ̈
	 	 	 	 
	Stock option dated:	 	 	 
	 	 	 	 
	Number of Shares as to which option is
    exercised:	 	 	 
	 	 	 	 
	Certificates to be issued in name
    of:	 	 	 
	 	 	 	 
	Total exercise price:	$_________________________	 	$_________________________
	 	 	 	 
	Cash payment delivered
    herewith:	$_________________________	 	$_________________________

 

By this exercise, I agree
(i) to provide such additional documents as you may require pursuant to the terms of the 2015 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the
exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within
fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this
option.

 

I further agree that, if
required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale
of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale
with respect to any shares of Common Stock or other securities of the Company for a period of one hundred eighty (180) days following
the effective date of a registration statement of the Company filed under the Securities Act (or such longer period as the underwriters
or the Company shall request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar
rule or regulation) (the “Lock-Up Period”). I further agree to execute and deliver such other agreements
as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary
to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of such period.

 

     

     

    

 

	 	Very truly yours,
	 	 
	 	 
	 	(Signature)
	 	 
	 	 
	 	Name (Please Print)

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