Document:

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

    

    BONDS.COM
GROUP, INC.

    

    COMMON
STOCK WARRANT

    

    Warrant No:
[      ]

    

    1.           Issuance; Certain
Definitions.  This warrant is one of several warrants (the
“Warrants”)
being issued in connection with a Secured Convertible Promissory Note and
Warrant Purchase Agreement dated as of September 22, 2008 between Bonds.com
Group, Inc., a Delaware corporation (the “Company”) and the
Purchasers set forth therein. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by the Company,
hereby grants [      ]
[      ] or registered assigns (the “Holder”) the right to
purchase at any time until 5:00 P.M., E.S.T., on September 22, 2013 (“Expiration Date”),
[      ] (   ) fully paid and
nonassessable shares of the Company’s common stock, $.0001 par value (the “Common Stock”) at an
exercise price per share (the “Exercise Price”) of
$0.46875 per share, such number of shares of Common Stock and Exercise Price
subject to further adjustment as set forth in Section 6 hereof.

    

    2.           Exercise of
Warrants.  This Warrant is immediately exercisable in whole or
in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check.  Upon
surrender of this Warrant with the annexed Notice of Exercise Form duly executed
(which Notice of Exercise Form may be submitted either by delivery to the
Company or the Company’s transfer agent or by facsimile transmission as provided
in Section 8 hereof), together with payment of the Exercise Price for the shares
of Common Stock purchased, the Holder shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.           Reservation of
Shares.  The Company hereby agrees that at all times during the
term of this Warrant there shall be reserved for issuance upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance upon exercise of this Warrant (the “Warrant Shares” and
together with the shares of Common Stock issuable under all of the Warrants, the
“Applicable Warrant
Shares”).

    

    4.           Mutilation or Loss of
Warrant.  Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) receipt of an Affidavit of Loss by the
Company and reasonably satisfactory indemnification (as determined by the
Company), and (in the case of mutilation) upon surrender and cancellation of
this Warrant, the Company will execute and deliver a new Warrant of like tenor
and date and any such lost, stolen, destroyed or mutilated Warrant shall
thereupon become void.

    

    5.           Rights of the
Holder.   The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth
herein.

     

    6.           Adjustments to Exercise
Price and Number of Warrant Shares.  The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time upon the happening of any of
the following.  In case the Company shall (i) pay a dividend in shares
of Common Stock or make a distribution in shares of Common Stock to holders of
its outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock, then the
number of Warrant Shares purchasable upon exercise of this Warrant immediately
prior thereto shall be adjusted so that the Holder shall be entitled to receive
the kind and number of Warrant Shares or other securities of the Company which
it would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder pursuant to this Section 6, the Holder shall thereafter be entitled to
purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such
event.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.           Transfer, Division and
Combination.

    

    7.1           This
Warrant has not been registered under the Securities Act of 1933, as amended,
(the “Act”) and
has been issued to the Holder for investment and not with a view to the
distribution of either the Warrant or the Warrant Shares.  Neither
this Warrant nor any of the Warrant Shares or any other security issued or
issuable upon exercise of this Warrant may be sold, transferred, pledged or
hypothecated in the absence of an effective registration statement under the Act
relating to such security or an opinion of counsel satisfactory to the Company
that registration is not required under the Act.  As provided in the
Purchase Agreement, each certificate for the Warrant, the Warrant Shares and any
other security issued or issuable upon exercise of this Warrant shall contain a
legend on the face thereof, in form and substance satisfactory to counsel for
the Company, setting forth the restrictions on transfer contained in this
Section.

    .

    7.2           Subject
to compliance with the applicable provisions of the Purchase Agreement and any
applicable securities laws and the conditions set forth above hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

    

    7.3           This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 7, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

    

    7.4           The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 7.

    

    7.5           The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.

    

    8.           Notices.  Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered to the addresses and pursuant to the procedure
set forth in the Purchase Agreement.

    

    9.           Supplements and Amendments;
Whole Agreement.  This Warrant may be amended or supplemented
only by an instrument in writing signed by the Company and the holders
representing a majority in interests of the Applicable Warrant Shares that
remain issuable under the then outstanding Warrants.  This Warrant
contains the full understanding of the parties hereto with respect to the
subject matter hereof and thereof and there are no representations, warranties,
agreements or understandings other than expressly contained herein and
therein.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10.           Governing
Law.  THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF FLORIDA AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA. MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN PALM BEACH COUNTY,
FLORIDA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS WARRANT, OR FOR RECOGNITION OR ENFORCEMENT OF
ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OF FLORIDA OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS WARRANT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

    

    11.           Counterparts.  This
Warrant 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.

    

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

    

    [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, this
Warrant is hereby executed as of [      ] 0,
2008.

    

    BONDS.COM
GROUP, INC.

    

    
      
        
          
            
              	
                      By:

                    	 
      
	 
      	
                      Name:

                    	
                       

                    
	 
      	
                      Title:

                    	 
      

            

          

        

      

    

    

    Acknowledged
by the Company’s Transfer Agent:

    

    Corporate
Stock Transfer, Inc.

    

    
      
        
          	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    NOTICE OF EXERCISE OF
WARRANT

    

    The
undersigned hereby irrevocably elects to exercise the right, represented by the
Warrant Certificate dated as of ______________, 20__, to purchase
___________ shares of the Common Stock of BONDS.COM GROUP, INC. at an
Exercise Price of $___________ per share, for an aggregate price of $___________
and tenders herewith payment in accordance with Section 1 of said Common Stock
Purchase Warrant.

    

    Please
deliver the stock certificate to:

    

    Dated:______________________

    

    
      
        
          	 
      
	
                  [Name
      of Holder]

                

        

      

    

    

    
      
        
          	
                  By:

                	 
      

        

      

    

    

    Upon
Exercise, please deliver this completed form, the original warrant and the
consideration required for the Exercise Price to the Company’s Transfer Agent at
the following address:

    

    Corporate
Stock Transfer, Inc.

    3200
Cherry Creek South Drive, Suite 430

    Denver,
Colorado  80209

    Attn:
Carylyn K. Bellex_4-1.htm

    
      

    

    EXHIBIT 4.1

     

     

    BASIC
EARTH SCIENCE SYSTEMS, INC.

     

    and

     

    CORPORATE
STOCK TRANSFER, INC.

     

    RIGHTS
AGREEMENT

     

    Dated
as of February 4, 2009

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE OF CONTENTS

     

    
      	
              Section 1.

            	
              Definitions 

            	
              1

            

    

     

    
      	
              Section
      2.

            	
              Appointment of Rights Agent 

            	
              4

            

    

     

    
      	
              Section
      3.

            	
              Issue of Right Certificates 

            	
              5

            

    

     

    
      	
              Section
      4.

            	
              Form of Right Certificates 

            	
              6

            

    

     

    
      	
              Section
      5.

            	
              Countersignature and
    Registration 

            	
              6

            

    

     

    
      	
              Section
      6.

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

            	
              7

            

    

     

    
      	
              Section
      7.

            	
              Exercise of Rights; Purchase Price; Expiration Date of
      Rights 

            	
              7

            

    

     

    
      	
              Section
      8.

            	
              Cancellation and Destruction of Right
      Certificates 

            	
              8

            

    

     

    
      	
              Section
      9.

            	
              Availability of Preferred
Shares 

            	
              8

            

    

     

    
      	
              Section
      10.

            	
              Preferred Shares Record Date

            	
              8

            

    

     

    
      	
              Section
      11.

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

            	
              9

            

    

     

    
      	
              Section
      12.

            	
              Certificate of Adjusted Purchase Price or Number of
      Shares

            	
              14

            

    

     

    
      	
              Section
      13.

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

            	
              14

            

    

     

    
      	
              Section
      14.

            	
              Fractional Rights and Fractional
    Shares

            	
              14

            

    

     

    
      	
              Section
      15.

            	
              Rights of Action

            	
              15

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Section
      16.

            	
              Agreement of Right Holders

            	
              16

            

    

     

    
      	
              Section
      17.

            	
              Right Certificate Holder Not Deemed a
      Stockholder

            	
              16

            

    

     

    
      	
              Section
      18.

            	
              Concerning the Rights Agent

            	
              16

            

    

     

    
      	
              Section
      19.

            	
              Merger or Consolidation or Change of Name of Rights
      Agent

            	
              17

            

    

     

    
      	
              Section
      20.

            	
              Duties of Rights Agent 

            	
              17

            

    

     

    
      	
              Section
      21.

            	
              Change of Rights Agent

            	
              19

            

    

     

    
      	
              Section
      22.

            	
              Issuance of New Right Certificates

            	
              19

            

    

     

    
      	
              Section
      23.

            	
              Redemption

            	
              19

            

    

     

    
      	
              Section
      24.

            	
              Exchange

            	
              20

            

    

     

    
      	
              Section
      25.

            	
              Notice of Certain Events

            	
              21

            

    

     

    
      	
              Section
      26.

            	
              Notices

            	
              21

            

    

     

    
      	
              Section
      27.

            	
              Supplements and Amendments

            	
              22

            

    

     

    
      	
              Section
      28.

            	
              Successors

            	
              22

            

    

     

    
      	
              Section
      29.

            	
              Benefits of This Agreement

            	
              22

            

    

    
      	
              Section
      30.

            	
              Severability

            	
              22

            

    

     

    
      	
              Section
      31.

            	
              Governing Law

            	
              22

            

    

     

    
      	
              Section
      32.

            	
              Counterparts

            	
              22

            

    

     

    
      	
              Section
      33.

            	
              Descriptive Headings

            	
              22

            

    

     

    
      
        
        

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    Agreement,
dated as of February 4, 2009, between BASIC EARTH SCIENCE SYSTEMS, INC., a
Delaware corporation (the “Company”), and
CORPORATE STOCK TRANSFER, INC., as rights agent (the “Rights
Agent”).

     

    The Board
of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “Right”) for each
Common Share (as hereinafter defined) of the Company outstanding on February 17,
2009 (the “Record
Date”), each Right representing the right to purchase one one-thousandth
of a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).

     

    Accordingly,
in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:

     

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

     

    (a) “Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company or any entity holding Common Shares for
or pursuant to the terms of any such plan, (iv) any Person who is, as of the
date of this Agreement, the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding, but only so long as such Person thereafter does
not, at any time while the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding, acquire Beneficial Ownership of any
additional
Common Shares (other than upon the exercise of any rights hereunder or pursuant
to a stock dividend or distribution or similar action by the Company); provided, however, that such Person shall
cease to be excluded from the definition of Acquiring Person pursuant to this
clause (iv) immediately at such time as such Person ceases to be the Beneficial
Owner of 15% or more of the Common Shares of the Company then outstanding, or
(v) any Grandfathered Person, but only so long as such Grandfathered Person does
not acquire Beneficial Ownership of 36% or more of the Common Shares of the
Company then outstanding.  Notwithstanding the foregoing, no Person
shall become an “Acquiring Person” as the result of an acquisition of Common
Shares by the Company which, by reducing the number of Common Shares of the
Company outstanding, increases the proportionate number of Common Shares of the
Company beneficially owned by such Person to 15% or more of the Common Shares of
the Company then outstanding; provided, however, that, if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person shall be deemed to
be an “Acquiring Person.”  Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an “Acquiring Person” for any purposes of this Agreement.

    
      
        
        

      

      
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    (b) “Affiliate” shall have
the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement.

     

    (c) “Associate” shall have
the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement.

     

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

     

    (i) which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly;

     

    (ii) which
such Person or any of such Person’s Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person’s Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

     

    (iii) which are
beneficially owned, directly or indirectly, by any other Person with which such
Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering
of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(d)(ii)(B) hereof) or disposing
of any securities of the Company.

     

    Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person’s Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.

     

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

     

    
      
        
        

      

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

     

    (g) “Common Shares” when
used with reference to the Company shall mean the shares of common stock, par
value $0.001 per share, of the Company.  “Common Shares” when used
with reference to any Person other than the Company shall mean the capital stock
(or equity interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.

     

    (h) “Distribution Date”
shall have the meaning set forth in Section 3(a) hereof.

     

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

     

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

     

    (k) “Final Expiration
Date” shall have the meaning set forth in Section 7(a)
hereof.

     

    (l) “Grandfathered Person”
shall mean:

     

    (i) Ray J.
Singleton, Jr.;

     

    (ii) any
current, former or future spouse of any Person described in subparagraph (i) of
this paragraph (l);

     

    (iii) any child
or grandchild, whether by birth or adoption, whether now living or hereafter
born, of any Person described in subparagraph (i) or (ii) of this paragraph
(l);

     

    (iv) any
spouse (including any former or future spouse) of any Person described in
subparagraph (iii) of this paragraph (l);

     

    (v) any
estate of, or the executor or administrator of any estate of, or any guardian or
custodian for, any Person described in subparagraph (i), (ii), (iii) or (iv) of
this paragraph (l) (so long as such executor, administrator, guardian or
custodian is acting in his or her capacity as such);

     

    (vi) any legal
advisor of any Person described in subparagraph (i), (ii), (iii), (iv), (v), or
(vii) of this paragraph (l) who is given a revocable proxy by such Person with
respect to voting securities of the Company of which such Person is the
Beneficial Owner or who is or becomes an attorney-in-fact or agent of such
Person;

     

    (vii) any
corporation, trust (including any voting trust), general partnership, limited
partnership, organization or other entity (whether now existing or hereafter
formed) of which substantially all of the outstanding beneficial, voting or
equity interests are beneficially owned, directly or indirectly, either (A) by
one or more of the Persons described in subparagraphs (i), (ii), (iii), (iv) and
(v) of this paragraph (l), or (B) by any combination of one or more of the
Persons described in subparagraphs (i), (ii), (iii), (iv) and (v) of this
paragraph (l); and

     

    (viii) any other
Person (A) who or which is or becomes an Affiliate or Associate of any Person
described in subparagraph (i), (ii), (iii), (iv), (v), (vi),or (vii) of
this

     

    
      
        
        

      

      
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    paragraph
(l), or (B) of which any Person described in subparagraph (i), (ii), (iii),
(iv), (v), (vi), or (vii) of this paragraph (l) is or becomes an Affiliate or
Associate; provided, in either case (A) or case (B), such other Person is not
the Beneficial Owner of 5% or more of the Common Shares then outstanding (for
purposes of determining the number of Common Shares of which such other Person
is the Beneficial Owner under this subparagraph (viii), such other Person shall
not be deemed to beneficially own Common Shares solely by reason of an Affiliate
or Associate relationship of the kind described in (A) or (B) above in this
subparagraph (viii)).

     

    (m) “NASDAQ” shall mean
the National Association of Securities Dealers, Inc. Automated Quotation
System.

     

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

     

    (o) “Preferred Shares”
shall mean shares of Series A Junior Participating Preferred Stock, par value
$0.001 per share, of the Company having the rights and preferences set forth in
the Form of Certificate of Designations attached to this Agreement as Exhibit
A.

     

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

     

    (q) “Record Date” shall
have the meaning set forth in the second paragraph hereof.

     

    (r) “Redemption Date”
shall have the meaning set forth in Section 7(a) hereof.

     

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

     

    (t) “Right” shall have the
meaning set forth in the second paragraph hereof.

     

    (u) “Right Certificate”
shall have the meaning set forth in Section 3(a) hereof.

     

    (v) “Shares Acquisition
Date” shall mean the first date of public announcement by the Company or
an Acquiring Person that an Acquiring Person has become such.

     

    (w) “Subsidiary” of any
Person shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

     

    (x) “Summary of Rights”
shall have the meaning set forth in Section 3(b) hereof.

     

    (y) “Trading Day” shall
have the meaning set forth in Section 11(d) hereof.

     

    Section 2. Appointment of Rights
Agent.  The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment.  The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.  The Rights Agent shall have no duty to supervise, and in
no event shall be liable for the acts or omissions of any such co-Rights
Agent.

    
      
        
        

      

      
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    Section 3. Issue of Right
Certificates.  (a) Until the earlier of (i) the tenth day after
the Shares Acquisition Date or (ii) the tenth Business Day (or such later date
as may be determined by action of the Board of Directors of the Company prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares of the Company for or pursuant to
the terms of any such plan) of a tender or exchange offer the consummation of
which would result in any Person becoming the Beneficial Owner of Common Shares
of the Company aggregating 15% or more of the then outstanding Common Shares of
the Company (including any such date which is after the date of this Agreement
and prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the “Distribution Date”),
(x) the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares of the Company registered in the
names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares of the Company.  As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested and provided with the necessary information,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares of the Company as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a
“Right
Certificate”), evidencing one Right for each Common Share so
held.  As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.

     

    (b) On the
Record Date, or as soon as practicable thereafter, the Company will send a copy
of a Summary of Rights to Purchase Preferred Shares, in substantially the form
of Exhibit C hereto (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.  With respect to certificates for
Common Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto.  Until the Distribution Date (or the earlier
of the Redemption Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares of the Company outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the Common Shares of
the Company represented thereby.

     

    (c) Certificates
for Common Shares which become outstanding (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:

     

    This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between Basic Earth Science Systems, Inc. (the
“Company”) and Corporate Stock Transfer, Inc. (the “Rights Agent”), dated as of
February 4, 2009, as it may be amended from time to time (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal offices of the Company.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor.  As set
forth in the Rights Agreement, Rights beneficially owned by any Person (as
defined in the Rights Agreement) who becomes an Acquiring Person (as defined in
the Agreement) become null and void.

     

    
      
        
        

      

      
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     With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares of the Company
represented thereby.  In the event that the Company purchases or
acquires any Common Shares of the Company after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares of the Company which
are no longer outstanding.

     

    Section
4. Form of Right
Certificates.  The Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same 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 duties, rights 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 applicable rule or
regulation made pursuant thereto or with any applicable rule or regulation of
any stock exchange or the Financial Industry Regulatory Authority, or to conform
to usage.  Subject to the provisions of Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of
one
one-thousandths of a Preferred Share as shall be set forth therein at the price
per one one-thousandth of a Preferred Share set forth therein (the “Purchase Price”), but
the number of such one one-thousandths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.

     

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

     

    Following
the Distribution Date, and receipt by the Rights Agent of all necessary
information, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose (the “Designated Office”),
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 on
its face by 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.  Subject to the provisions of
Section 14 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the registered holder
to purchase a like number of one one-thousandths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase.  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 Designated Office of the Rights Agent.  Thereupon the
Rights Agent shall 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.  The Rights Agent shall have no duty or obligation under
this Section 6 unless and until it is reasonably satisfied that all such taxes
and/or charges have been paid.

     

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

     

    Section 7. Exercise of Rights; Purchase
Price; Expiration Date of Rights.  (a) The registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein), in whole or in part, at any time after the
Distribution Date, upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof properly and duly executed, to
the Rights Agent at the Designated Office of the Rights Agent, together with
payment of the Purchase Price for each one one-thousandth of a Preferred Share
as to which the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on February 4, 2019 (the “Final Expiration
Date”), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the “Redemption Date”), or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.

     

    (b) The
Purchase Price for each one one-thousandth of a Preferred Share purchasable
pursuant to the exercise of a Right shall initially be $5.00, and shall be
subject to adjustment from time to time as provided in Section 11 or 13 hereof,
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

     

    (c) Upon
receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase properly and duly executed, accompanied by payment of the
Purchase Price for the shares to be purchased and an amount equal to any
applicable tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier’s
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof; (iii) promptly 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; and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.

    
      
        
        

      

      
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      (d) In case
the registered holder of any Right Certificate shall exercise less 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 to the
registered holder of such Right Certificate or to such holder’s duly authorized
assigns, subject to the provisions of Section 14 hereof.

    

     

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

     

    Section 9. Availability of Preferred
Shares.  The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued Preferred
Shares or any Preferred Shares held in its treasury the number of Preferred
Shares that will be sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7 hereof.  The Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares delivered upon exercise 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.

     

    The
Company further covenants and agrees that it will pay when due and payable any
and all taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares upon the exercise
of Rights.  The Company shall not, however, be required to pay any tax
or charge which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of certificates
or depositary receipts for the Preferred Shares in a name other than that of,
the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates or depositary receipts for
Preferred Shares upon the exercise 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 reasonable satisfaction that no such tax or charge is
due.

     

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

     

    
      
        
        

      

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

     

    (a) (i) In
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.

     

    (ii) Subject
to Section 24 hereof, in the event any Person becomes an Acquiring Person, each
holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of the Company (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event.  In the
event that any Person shall become an Acquiring Person and the Rights shall then
be outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.

     

    From and
after the occurrence of such event, any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be null and void, and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement.  No Right Certificate shall be issued pursuant to
Section 3 hereof that represents Rights beneficially owned by an Acquiring
Person whose Rights would be null and void pursuant to the preceding sentence or
any Associate or Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be null and void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence shall be cancelled.

    
      
        
        

      

      
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    (iii) In the
event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) above, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights.  In the event the Company shall,
after good faith effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall substitute, for
each Common Share that would otherwise be issuable upon exercise of a Right, a
number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date
of issuance of such Preferred Shares or fraction thereof.

     

    (b) In case
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares (“equivalent preferred
shares”)) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price (as defined in Section 11(d)) of the Preferred Shares on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.  In case such subscription price
may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and holders of the Rights.  Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed; and, in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

     

    (c) In case
the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Shares) or
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    referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then-current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
then-current per share market price of the Preferred Shares on such record date;
provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right.  Such adjustments shall be made
successively whenever such a record date is fixed; and, in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.

     

    (d) (i) For
the purpose of any computation hereunder, the “current per share market price”
of any security (a “Security” for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to but not including such date; provided, however, that, in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such Security
or Securities convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the
expiration of 30 Trading Days after but not including the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security.  The closing price for
each day shall be the last sale price, regular way, reported at or prior to 4:00
P.M. Eastern time or, in case no such sale takes place on such day, the average
of the bid and asked prices, regular way, reported as of 4:00 P.M. Eastern time,
in either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities
exchange, the last quoted price reported at or prior to 4:00 P.M. Eastern time
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported as of 4:00 P.M. Eastern time by NASDAQ or
such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company.  The term “Trading Day” shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business, or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

     

                (ii) For the
purpose of any computation hereunder, the “current per share market price” of
the Preferred Shares shall be determined in accordance with the method set forth
in Section 11(d)(i).  If the Preferred Shares are not publicly traded,
the “current per share market price” of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand.  If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, “current per share market price” shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

     

    
      
        
        

      

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

     

    (f) If, as a
result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares, thereafter the number
of such other shares 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 with respect to the Preferred Shares contained in
Section 11(a) through (c) hereof, inclusive, and the provisions of Sections 7,
9, 10 and 13 hereof with respect to the Preferred Shares shall apply on like
terms to any such other shares.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (k) Before
taking any action that would cause an adjustment reducing the Purchase Price
below one one-thousandth of the then par value, if any, of the Preferred Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.

     

    (l) In any
case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer (with prompt 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 of the Preferred Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

     

    (m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it,
in its sole discretion, shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Shares, issuance wholly for cash
of any Preferred Shares at less than the current market price, issuance wholly
for cash of Preferred Shares or securities which by their terms are convertible
into or exchangeable
for Preferred Shares, dividends on Preferred Shares payable in Preferred Shares
or issuance of rights, options or warrants referred to in Section 11(b) hereof,
hereafter made by the Company to holders of the Preferred Shares shall not be
taxable to such stockholders.

     

    (n) In the
event that, at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares, or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then, in any such case, (A) the number of one
one-thousandths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-thousandths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it.  The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

     

    
      
        
        

      

      
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    Section 12. Certificate of Adjusted
Purchase Price or Number of Shares.  Whenever an adjustment is
made as provided in Section 11 or 13 hereof, the Company shall promptly (a)
prepare a certificate setting forth the amount of the adjustment and a brief
statement of the facts and computations accounting for such adjustment
(including, without limitation, the record date for the adjustment), (b) file
with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares and the Securities and Exchange Commission
a copy of such certificate and (c) if such adjustment occurs at any time after
the Distribution Date, mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.  The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall have no duty with respect to and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such certificate.

     

    Section 13. Consolidation, Merger or
Sale or Transfer of Assets or Earning Power.  In the event,
directly or indirectly, at any time after a Person has become an Acquiring
Person, (a) the Company shall consolidate with, or merge with and into, any
other Person, (b) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (c) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly-owned Subsidiaries, then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of such
other Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term “Company” shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares of the Company thereafter deliverable upon
the exercise of the Rights.  The Company shall not consummate any such
consolidation, merger, sale or transfer unless, prior thereto, the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing.  The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights.  The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.

     

    Section
14. Fractional Rights and
Fractional Shares.  (a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights.  In lieu of such fractional Rights, there shall be
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    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 the purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable.  The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company.  If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.

     

    (b) The
Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share).  Fractions of Preferred
Shares in integral multiples of one one-thousandth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate
agreement between the Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts.  In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company shall
pay to the registered holders of 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.  For the purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.

     

    (c) The
holder of a Right, by the acceptance of the Right, expressly waives such
holder’s right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).  The Rights Agent
shall have no duty or obligation with respect to this Section 14 and Section
24(d) unless and until it has received specific instructions (and sufficient
cash, if required) from the Company with respect to its duties and obligations
under such Sections.

     

    Section 15. Rights of
Action.  All rights of action in respect of this Agreement,
excepting the rights of action expressly given to the Rights Agent under Section
18 hereof, 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 will be entitled to specific performance
of the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement.

     

    
      
        
        

      

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

     

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

     

    (b) after the
Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the Designated Office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of transfer;
and

     

    (c) the
Company and the Rights Agent may deem and treat the person in whose name the
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 Certificate or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.

     

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

     

    Section
18. Concerning the Rights
Agent.  The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder, and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration of this Agreement
and the exercise and performance of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance, amendment and
administration of this Agreement, including without
limitation the costs and expenses of defending against any claim of liability
arising therefrom directly or indirectly in the
premises.  

     

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

     

    
      
        
        

      

      
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    Section
19. Merger or Consolidation or
Change of Name of Rights Agent.  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 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 that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof.  In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
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.

     

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

     

    (a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken,
suffered or omitted by it in accordance with such 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 be proved or established
by the Company prior to taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization and protection to the Rights Agent
for any action taken or suffered or omitted by it under the provisions of this
Agreement in reliance upon such certificate.

     

    
      
        
        

      

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

     

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

     

    (e) The
Rights Agent shall not be under any liability or 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); nor
shall it be responsible or liable 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 or liable for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, 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 that such change or adjustment is required);
nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.

     

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

     

    (g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.

     

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

     

    
      
        
        

      

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

     

    Section
21. Change of Rights
Agent.  The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 days’
notice in writing mailed to the Company and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail.  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 to
each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent.  If the Company shall fail to make such appointment
within a period of 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 (which holder
shall, with such notice, submit such holder’s Right Certificate for inspection
by the Company), then the registered holder of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent.  Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be (i) a Person organized and doing business and in
good standing under the laws of any state
of the United States, so long as such Person is authorized under such laws to
exercise all of the duties of the Rights Agent under this Agreement and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (ii) an Affiliate of such
Person.  After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right
Certificates.  Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

     

    Section
22. Issuance of New 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 the Board of Directors of the Company to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

     

    Section 23. Redemption.  (a)
The Board of Directors of the Company may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights at a redemption price of $0.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption
Price”).  The redemption of the Rights by the Board of
Directors of the Company may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company, in its sole
discretion, may establish.

     

    
      
        
        

      

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

     

    Section
24. Exchange.  (a)
The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any adjustment in the number of Rights pursuant to Section 11(i) (such
exchange ratio being hereinafter referred to as the “Exchange
Ratio”).  Notwithstanding the foregoing, the Board of Directors
of the Company shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 60% or
more of the Common Shares then outstanding.

     

    (b) Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of the holders of such Rights shall be
to receive that number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio.  The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company promptly shall mail a notice of any such
exchange to the Rights Agent and to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights
Agent.  Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice.  Each
such notice of exchange will state the method by
which the exchange of the Common Shares for Rights will be effected, and, in the
event of any partial exchange, the number of Rights which will be
exchanged.  Any partial exchange shall be effected pro rata based on
the number of Rights (other than Rights which have become null and void pursuant
to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.

     

    (c) In the
event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights.  In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.

     

    
      
        
        

      

      
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      (d) The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares.  In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share.  For the purposes
of this paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.

    

     

    Section 25. Notice of Certain
Events.  (a) In case the Company shall, at any time after the
Distribution Date, propose (i) to pay any dividend payable in stock of any class
to the holders of the Preferred Shares or to make any other distribution to the
holders of the Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of the Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of the Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause
(i) or (ii) above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and, in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the
earlier.

     

    (b) In case
the event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall, as soon as practicable thereafter, give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof.

     

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

     

    Basic
Earth Science Systems, Inc.

    633
Seventeenth Street, Suite 1645

    Denver,
CO 80202

    Attention:
Ray J. Singleton, Jr.

    

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

     

    Corporate
Stock Transfer, Inc.

    3200
Cherry Creek South Drive, Suite 430

    Denver,
CO 80209

    Attention:  Carylyn
Bell

    
      
        
        

      

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

     

    Section
27. Supplements
and Amendments.  The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that, from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely affect the interests of
the holders of Rights.  

     

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

     

    Section 29. Benefits of This
Agreement.  Nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, 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 Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares).

     

    Section 30. 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 31. Governing
Law.  This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such state applicable to contracts to be made and performed
entirely within such state. 

     

    Section 32. Counterparts.  This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

     

    Section 33. Descriptive
Headings.  Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

     

    
      
        
          
          

        

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

     

    
      	
               

              Attest:

               

              By: /s/ Karen
      Mercer     

              Name:
      Karen Mercer

              Title:
      Secretary

               

               

            	
               

              BASIC
      EARTH SCIENCE SYSTEMS, INC.

               

              By: /s/ Ray
      Singleton    

              Name: Ray
      Singleton

              Title:
      President

               

               

               

            
	
              Attest:

               

              By: /s/ Shari
      Humphreys   

              Name:
      Shari Humphreys

              Title:
      Secretary

            	
              CORPORATE
      STOCK TRANSFER, INC.

               

              By: /s/
      Carylyn
      Bell                                                         

              Name:
      Carylyn Bell

              Title:
      President

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