Document:

EXECUTION
COPY

      

      VITACOST.COM,
INC.

       

      and

       

      MELLON
INVESTOR SERVICES LLC

       

      as Rights
Agent

       

      RIGHTS
AGREEMENT

       

      Dated
March 24, 2010

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  	 
      	 
      	
                                                                                                                          Page

                                                                                                                        
	 	 	 
	
                                                                                                                          Section
      1.

                                                                                                                        	
                                                                                                                          Certain Definitions

                                                                                                                        	
                                                                                                                          1

                                                                                                                        
	
                                                                                                                          Section 2.

                                                                                                                        	
                                                                                                                          Appointment of Rights Agent

                                                                                                                        	
                                                                                                                          7

                                                                                                                        
	
                                                                                                                          Section 3.

                                                                                                                        	
                                                                                                                          Issuance of Rights
    Certificates

                                                                                                                        	
                                                                                                                          7

                                                                                                                        
	
                                                                                                                          Section 4.

                                                                                                                        	
                                                                                                                          Form of Rights Certificates

                                                                                                                        	
                                                                                                                          9

                                                                                                                        
	
                                                                                                                          Section 5.

                                                                                                                        	
                                                                                                                          Countersignature and
      Registration

                                                                                                                        	
                                                                                                                          10

                                                                                                                        
	
                                                                                                                          Section 6.

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

                                                                                                                        	
                                                                                                                          10

                                                                                                                        
	
                                                                                                                          Section 7.

                                                                                                                        	
                                                                                                                          Exercise of Rights; Purchase Price; Expiration
      Date of Rights

                                                                                                                        	
                                                                                                                          11

                                                                                                                        
	
                                                                                                                          Section 8.

                                                                                                                        	
                                                                                                                          Cancellation and Destruction of Rights
      Certificates

                                                                                                                        	
                                                                                                                          13

                                                                                                                        
	
                                                                                                                          Section 9.

                                                                                                                        	
                                                                                                                          Reservation and Availability of Capital
      Stock

                                                                                                                        	
                                                                                                                          13

                                                                                                                        
	
                                                                                                                          Section 10.

                                                                                                                        	
                                                                                                                          Preferred Stock Record Date

                                                                                                                        	
                                                                                                                          15

                                                                                                                        
	
                                                                                                                          Section 11.

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

                                                                                                                        	
                                                                                                                          15

                                                                                                                        
	
                                                                                                                          Section 12.

                                                                                                                        	
                                                                                                                          Certificate of Adjusted Purchase Price or Number
      of Shares

                                                                                                                        	
                                                                                                                          24

                                                                                                                        
	
                                                                                                                          Section 13.

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

                                                                                                                        	
                                                                                                                          25

                                                                                                                        
	
                                                                                                                          Section 14.

                                                                                                                        	
                                                                                                                          Fractional Rights and Fractional
      Shares

                                                                                                                        	
                                                                                                                          28

                                                                                                                        
	
                                                                                                                          Section 15.

                                                                                                                        	
                                                                                                                          Rights of Action

                                                                                                                        	
                                                                                                                          30

                                                                                                                        
	
                                                                                                                          Section 16.

                                                                                                                        	
                                                                                                                          Agreement of Rights Holders

                                                                                                                        	
                                                                                                                          30

                                                                                                                        
	
                                                                                                                          Section 17.

                                                                                                                        	
                                                                                                                          Rights Certificate Holder Not Deemed a
      Stockholder

                                                                                                                        	
                                                                                                                          30

                                                                                                                        
	
                                                                                                                          Section 18.

                                                                                                                        	
                                                                                                                          Concerning the Rights Agent

                                                                                                                        	
                                                                                                                          31

                                                                                                                        
	
                                                                                                                          Section 19.

                                                                                                                        	
                                                                                                                          Merger or Consolidation or Change of Name of
      Rights Agent

                                                                                                                        	
                                                                                                                          31

                                                                                                                        
	
                                                                                                                          Section 20.

                                                                                                                        	
                                                                                                                          Rights and Duties of Rights
      Agent

                                                                                                                        	
                                                                                                                          32

                                                                                                                        
	
                                                                                                                          Section 21.

                                                                                                                        	
                                                                                                                          Change of Rights Agent

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	
                                                                                                                          Section 22.

                                                                                                                        	
                                                                                                                          Issuance of New Rights
      Certificates

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	
                                                                                                                          Section 23.

                                                                                                                        	
                                                                                                                          Redemption

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	
                                                                                                                          Section 24.

                                                                                                                        	
                                                                                                                          Exchange

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	
                                                                                                                          Section 25.

                                                                                                                        	
                                                                                                                          Notice of Certain Events

                                                                                                                        	
                                                                                                                          37

                                                                                                                        
	
                                                                                                                          Section 26.

                                                                                                                        	
                                                                                                                          Notices

                                                                                                                        	
                                                                                                                          38

                                                                                                                        
	
                                                                                                                          Section 27.

                                                                                                                        	
                                                                                                                          Supplements and Amendments

                                                                                                                        	
                                                                                                                          39

                                                                                                                        
	
                                                                                                                          Section 28.

                                                                                                                        	
                                                                                                                          Successors

                                                                                                                        	
                                                                                                                          39

                                                                                                                        
	
                                                                                                                          Section 29.

                                                                                                                        	
                                                                                                                          Determinations and Actions by the Board of
      Directors, etc

                                                                                                                        	
                                                                                                                          40

                                                                                                                        
	
                                                                                                                          Section 30.

                                                                                                                        	
                                                                                                                          Benefits of this Agreement

                                                                                                                        	
                                                                                                                          40

                                                                                                                        
	
                                                                                                                          Section 31.

                                                                                                                        	
                                                                                                                          Severability

                                                                                                                        	
                                                                                                                          40

                                                                                                                        
	
                                                                                                                          Section 32.

                                                                                                                        	
                                                                                                                          Governing Law

                                                                                                                        	
                                                                                                                          40

                                                                                                                        
	
                                                                                                                          Section 33.

                                                                                                                        	
                                                                                                                          Counterparts

                                                                                                                        	
                                                                                                                          40

                                                                                                                        
	
                                                                                                                          Section 34.

                                                                                                                        	
                                                                                                                          Descriptive Headings

                                                                                                                        	
                                                                                                                          41

                                                                                                                        

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          	
                  EXHIBITS

                	 
      
	 
      	 
      
	
                  Exhibit
      A

                	
                  Form
      of Certificate of Designation

                
	
                  Exhibit
      B

                	
                  Form
      of Rights Certificate

                
	
                  Exhibit
      C

                	
                  Summary
      of Rights

                

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      RIGHTS
AGREEMENT

       

      This
Rights Agreement dated March 24, 2010 (the “Agreement”), is made
and entered into by and between Vitacost.com, Inc., a Delaware corporation (the
“Company”), and
Mellon Investor Services LLC (operating with the service name BNY Mellon
Shareowner Services), a New Jersey limited liability company, as Rights Agent
(the “Rights
Agent”).

       

      WITNESSETH:

       

      WHEREAS,
the Board of Directors of the Company (the “Board”) has
authorized and declared a dividend distribution, effective as of March 24, 2010
(the “Rights Dividend
Declaration Date”), of one Preferred Stock purchase right (a “Right”) for each
share of Common Stock of the Company outstanding at the Close of Business on
March 24, 2010 (the “Record Date”), and
has further authorized and directed the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof)
for each share of Common Stock of the Company issued (whether originally issued
or delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, each Right initially
representing the right to purchase one one-thousandth of a share of Preferred
Stock, upon the terms and subject to the conditions hereinafter set
forth;

       

      NOW,
THEREFORE, in consideration of the foregoing premises and the agreements
contained herein, the parties, intending to be legally bound, hereby agree as
follows:

       

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

       

      (a)           “Acquiring Person”
shall mean any Person who or which shall be the Beneficial Owner of 15% or more
of the shares of Common Stock of the Company then outstanding, but shall not
include (i) an Exempt Person or (ii) an Existing
Holder.  Notwithstanding the foregoing, no Person shall become an
“Acquiring Person” for any purposes of this Agreement either (y) as the result
of an acquisition of Common Stock by the Company which, by reducing the number
of shares of Common Stock of the Company outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding solely by reason of share purchases by the Company
and shall, following written notice from, or public disclosure by, the Company
of such share purchases by the Company, become the Beneficial Owner of one or
more additional shares of Common Stock of the Company without the prior written
consent of the Company (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock, in each
case payable and paid ratably to all holders of Common Stock) and shall then
Beneficially Own more than 15% of the Common Stock of the Company then
outstanding, then such Person shall be deemed to be an “Acquiring Person,” or
(z) if the Board determines in good faith that a Person who would otherwise be
an “Acquiring Person,” as defined pursuant to the first sentence of this Section
1(a), has become such inadvertently (including, without limitation, because (A)
such Person was unaware that it beneficially owned a percentage of Common Stock
of the Company that would otherwise cause such Person to be an “Acquiring
Person” or (B) such Person was aware of the extent of its Beneficial Ownership
of Common Stock of the Company but had no actual knowledge of the consequences
of such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing any control of the Company, and such Person promptly
enters into an irrevocable written commitment in favor of the Company to divest,
and thereafter divests (without retaining any power, including voting power with
respect to such shares of Common Stock), as promptly as practicable (as
determined in good faith by the Board), a sufficient number of shares of Common
Stock of the Company so that such Person no longer would be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this Section 1(a)
(or, in the case solely of Derivative Common Shares, such Person terminates the
subject derivative transaction or transactions or disposes of the subject
derivative security or securities, or establishes to the satisfaction of the
Board that such Derivative Common Shares are not held with any intention of
changing or influencing control of the Company), then such Person shall not be
deemed to be or have become an “Acquiring Person” at any time for any purposes
of this Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

       

      (c)           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 (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement);

       

       (ii)           which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with regulatory
requirements, fulfillment of a condition or otherwise) pursuant to any
agreement, plan, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion, exchange rights or other rights, warrants or
options, or otherwise;

       

       (iii)           which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or acquire “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, or any comparable or successor rule),
including pursuant to any agreement, plan, arrangement or understanding (whether
or not in writing); provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,”
any security under this subparagraph (iii) as a result of an agreement, plan,
arrangement or understanding to vote such security if such agreement, plan,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable proxy solicitation rules and regulations
promulgated under the Exchange Act (including, without limitation, Regulation
14A, as applicable) or (B) is made in connection with, or provides for any
participation in, a proxy or consent solicitation made, or to be made, pursuant
to, and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act (including, without limitation,
Regulation 14A, as applicable), in either case described in clause (A) or (B)
above, to the extent such agreement, plan, arrangement or understanding also is
then not reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (iv)           which
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s
Affiliates or Associates) has any agreement, plan, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or in connection with a proxy or consent
solicitation of the type described in clause (A) or (B) of the proviso to
subparagraph (iii) of this Section 1(c)) or disposing of any securities of the
Company (a joint filing of a Schedule 13D under the Exchange Act or any
comparable or successor report being deemed to be conclusive evidence of such an
agreement, plan, arrangement or understanding); or

       

      (v)           that
are the subject of a derivative transaction entered into by such Person (or any
of such Person’s Affiliates or Associates), or derivative security acquired by
such Person (or any of such Person’s Affiliates or Associates), which gives such
Person (or any of such Person’s Affiliates or Associates) the economic
equivalent of ownership of an amount of such securities due to the fact that the
value of the derivative is explicitly determined by reference to the price or
value of such securities, without regard to whether (A) such derivative conveys
any voting rights in such securities to such Person (or any of such Person’s
Affiliates or Associates), (B) the derivative is required to be, or is capable
of being, settled through delivery of such securities, or (C) such Person (or
any of such Person’s Affiliates or Associates) may have entered into other
transactions that hedge the economic effect of such derivative.  In
determining the amount of Common Stock deemed beneficially owned by virtue of
the operation of this subparagraph (v) of this Section 1(c), the subject Person
shall be deemed to beneficially own (without duplication) the amount of Common
Stock that is synthetically owned pursuant to such derivative transactions or
such derivative securities.  Such amount of Common Stock that is
deemed so beneficially owned pursuant to the operation of this subparagraph (v)
of this Section 1(c) shall be referred to herein as “Derivative Common
Shares”;

       

      provided, however, that (A) a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,”
(1) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (2) securities which a Person
or any of such Person’s Affiliates or Associates may acquire, does or do acquire
or may be deemed to acquire or may be deemed to have the right to acquire,
pursuant to any merger or other acquisition agreement between the Company and
such Person (or one or more of such Person’s Affiliates or Associates) if, prior
to there being an Acquisition Person, such agreement has been approved by the
Board, (3) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (4) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event, if such Rights were
acquired by such Person or any of such Person’s Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
“Original
Rights”) or pursuant to Section 11(a)(i) or Section 11(p) hereof in
connection with an adjustment made with respect to any Original Rights; (B)
nothing in this Section 1(c) shall cause a Person engaged in business as an
underwriter of securities to be the “Beneficial Owner” of, or to “beneficially
own,” any securities acquired through such Person’s participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition, and then only if such securities continue to be owned by
such Person at such expiration of 40 days; and (C) no Person who is an officer,
director or employee of an Exempt Person shall be deemed, solely by reason of
such Person’s status or authority as such, to be the “Beneficial Owner” of, or
to “beneficially own” any securities that are “beneficially owned” (as defined
in this Section 1(c)), including, without limitation, in a fiduciary capacity,
by an Exempt Person or by any other such officer, director or employee of an
Exempt Person.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

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

       

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

       

      (f)           “Common Stock” shall
mean the Common Stock, $0.00001 par value, of the Company, except that “Common
Stock” when used with reference to any Person other than the Company shall mean
the capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.

       

      (g)           “Distribution Date”
shall mean the earlier of (i) the Close of Business on the 10th day
after the Stock Acquisition Date (or, if the 10th day
after the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date), or (ii) the Close of Business on the 10th
Business Day (or, if such 10th
Business Day occurs before the Record Date, the Close of Business on the Record
Date), or such specified or unspecified later date on or after the Record Date
as may be determined by action of the Board, after the date of the commencement
(within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act) by any Person (other than an Exempt Person) of, or the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender offer or exchange offer, the consummation of which
would result in any Person (other than an Exempt Person) becoming the Beneficial
Owner of shares of Common Stock of the Company aggregating 15% or more of the
Common Stock of the Company then outstanding and becoming an Acquiring
Person.

       

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

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (i)           “Exempt Person” shall
mean the Company or any Subsidiary of the Company, in each case including,
without limitation, in its fiduciary capacity, or any employee benefit or
compensation plan of the Company or of any Subsidiary of the Company, or any
Person or entity holding Common Stock for or pursuant to the terms of any such
plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the
Company.

       

      (j)           “Existing Holder”
shall mean any Person who, as of the Rights Dividend Declaration Date, is the
Beneficial Owner of 15% or more of the Common Stock of the Company then
outstanding; provided, however, that if such
Person shall, after the Rights Dividend Declaration Date, become the Beneficial
Owner of additional shares of Common Stock of the Company representing 1% or
more of the shares of Common Stock of the Company then outstanding without the
prior written consent of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock in
shares of Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock, in each case payable and paid ratably to all holders of Common
Stock) and, upon becoming the Beneficial Owner of such additional shares of
Common Stock of the Company, shall then Beneficially Own more than 15% of the
Common Stock of the Company then outstanding, then such Person shall no longer
be an “Existing Holder”; it being hereby understood that the Company shall be
entitled to rely in good faith solely on publicly available information to make
any determination as to the status of any Person as an Existing
Holder.

       

      (k)           “Expiration Date”
shall mean the earliest of (i) the Close of Business on the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, or (iii) the time at which the Board mandates the exchange of the Rights
as provided in Section 24 hereof.

       

      
        (l)           “Final Expiration Date”
shall mean the earlier of (i) the Close of Business on March 24, 2015 or (ii)
the thirtieth (30th) day
following the Company’s 2012 Annual Meeting, if the Stockholder Approval does
not occur at such Annual Meeting.

      

       

      (m)           “Person” shall mean
any natural person, partnership, joint venture, firm, corporation, limited
liability company, limited liability partnership, unincorporated association,
trust or other entity, and shall include any successor (by merger or otherwise)
of the foregoing.

       

      (n)           “Preferred Stock”
shall mean shares of Series A Junior Participating Preferred Stock, $0.00001 par
value, of the Company, having the rights and preferences set forth in the form
of Certificate of Designation, Preferences and Rights attached hereto as Exhibit
A.

       

      (o)           “SEC” shall mean the
U.S. Securities and Exchange Commission.

       

      (p)           “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii) (A), (B) or
(C) hereof.

       

      (q)           “Section 13 Event”
shall mean any event described in clauses (x), (y) or (z) of Section 13(a)
hereof.

       

      (r)           “Stock Acquisition
Date” shall mean the date of the first public announcement (which, for
purposes of this definition, shall include, without limitation, the filing of
any report pursuant to Section 13(d) of the Exchange Act or pursuant to any
comparable successor statute) by the Company or an Acquiring Person that an
Acquiring Person has become such or that discloses information which reveals the
existence of an Acquiring Person, or such earlier date as a majority of the
Board shall become aware of the existence of an Acquiring
Person.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      (s)         “Stockholder Approval”
shall mean the approval of this Agreement by the affirmative vote of the holders
of a majority of the shares of Common Stock of the Company entitled to vote and
that are present, or represented by proxy, and are voted on the proposal to
approve this Agreement, at a meeting of stockholders of the Company duly held in
accordance with applicable law.

       

      (t)         “Subsidiary” shall
mean, with reference to any Person, including the Company, any corporation of
which an amount of voting securities sufficient to elect at least a majority of
the directors of such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.

       

      (u)         “Triggering Event”
shall mean any Section 11(a)(ii) Event or any Section 13 Event.

       

      (v)         The
following terms shall have the meanings for such terms in the Sections set forth
below:

       

      
        
          
            
              	
                      Term

                    	 	
                      Section

                    
	 
      	 	 
      
	
                      Act

                    	 	
                      9(c)

                    
	
                      Adjustment
      Shares

                    	 	
                      11(a)(ii)

                    
	
                      Agreement

                    	 	
                      Preamble

                    
	
                      Board

                    	 	
                      Recitals

                    
	
                      Company

                    	 	
                      Preamble

                    
	
                      current
      market price

                    	 	
                      11(d)(ii)

                    
	
                      Current
      Value

                    	 	
                      11(a)(iii)

                    
	
                      Derivative
      Common Shares

                    	 	
                      1(c)

                    
	
                      equivalent
      preferred stock

                    	 	
                      11(b)

                    
	
                      NASDAQ

                    	 	
                      9(b)

                    
	
                      NASDAQ
      GM

                    	 	
                      9(b)

                    
	
                      Original
      Rights

                    	 	
                      1(c)

                    
	
                      Post
      Transferee

                    	 	
                      7(e)

                    
	
                      Principal
      Party

                    	 	
                      13(b)

                    
	
                      Prior
      Transferee

                    	 	
                      7(e)

                    
	
                      Purchase
      Price

                    	 	
                      13(a)

                    
	
                      Ratio
      of Exchange

                    	 	
                      24(a)

                    
	
                      Record
      Date

                    	 	
                      Recitals

                    
	
                      Redemption
      Price

                    	 	
                      23(a)

                    
	
                      Rights
      Agent

                    	 	
                      Preamble

                    
	
                      Right

                    	 	
                      Recitals

                    
	
                      Rights
      Certificates

                    	 	
                      3(a)

                    
	
                      Rights
      Dividend Declaration Date

                    	 	
                      Recitals

                    
	
                      Section
      11(a)(ii) Trigger Date

                    	 	
                      11(a)(iii)

                    
	
                      Spread

                    	 	
                      11(a)(iii)

                    
	
                      Substitution
      Period

                    	 	
                      11(a)(iii)

                    
	
                      Summary
      of Rights

                    	 	
                      3(b)

                    
	
                      Trading
      Day

                    	 	
                      11(d)(i)

                    

            

          

        

      

       

      
        
           

        

        
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      Section
2.          Appointment of Rights
Agent. The
Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the express terms and conditions hereof (and no implied terms or
conditions), 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.

       

      Section
3.          Issuance of Rights
Certificates.

       

      (a)           Until
the Distribution Date, (x) the Rights shall be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates evidencing
the Common Stock registered in the names of the holders of the Common Stock
(which certificates evidencing the Common Stock shall be deemed also to be
certificates evidencing the Rights) and not by separate certificates, and (y)
the Rights shall be transferable only in connection with the transfer of the
underlying shares of Common Stock (including any transfer to the Company). The
Company promptly shall notify the Rights Agent in writing upon the occurrence of
the Distribution Date and, if such notification is given orally, the Company
shall confirm the same in writing on or prior to the next following Business
Day. Until such notice is received by the Rights Agent, the Rights Agent may
presume conclusively for all purposes that the Distribution Date has not
occurred. As soon as practicable after the Distribution Date, and the receipt by
the Rights Agent of notice of such occurrence, the Rights Agent, if requested by
the Company and provided with all necessary information and documentation, shall
send by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder then shown on the records of the Company or the transfer
agent or the registrar for the Common Stock, one or more rights certificates, in
substantially the form of Exhibit B hereto (the
“Rights
Certificates”), duly executed and countersigned in the manner provided
for in Section 5(a) hereof, evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. If an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. From and after the Distribution Date, the Rights shall be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of one or more shares of Common Stock, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders
thereof.

      
        
           

        

        
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      (b)          As
promptly as practicable following the Record Date, the Company shall send a copy
of a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary of Rights”),
by first-class, postage prepaid mail, to each record holder of the Common Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company or the transfer agent or the registrar for
the Common Stock. With respect to certificates evidencing the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights shall
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates evidencing shares of Common Stock in
respect of which Rights have been issued also shall constitute the transfer of
the Rights associated with such shares of Common Stock.

       

      (c)          Unless
the Board by resolution adopted at or before the time of the issuance (including
pursuant to the exercise of rights under the Company’s employee benefit plans)
of any Common Stock specifies to the contrary, Rights shall be issued in respect
of all shares of Common Stock that are issued (whether originally issued or from
the Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock in respect of which Rights are issued pursuant to the first
sentence of this Section 3(c) also shall be deemed to be certificates for
Rights, and commencing as soon as reasonably practicable following the date
hereof shall bear a legend in substantially the following form:

       

      “This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between Vitacost.com, Inc., a Delaware
corporation (the “Company”), and Mellon
Investor Services LLC (operating with the service name BNY Mellon Shareowner
Services), a New Jersey limited liability company, as Rights Agent (the “Rights Agent”), dated
March 24, 2010 (the “Rights Agreement”),
the terms of which are incorporated herein by reference in their entirety 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 no longer will 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 any written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an “Acquiring Person” or any “Affiliate”
or “Associate” thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.”

       

      With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated
with the Common Stock evidenced by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock also shall be the
registered holders of the associated Rights, and the transfer of any of such
certificates also shall constitute the transfer of the Rights associated with
the Common Stock evidenced by such certificates. If the Company purchases or
acquires any Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Stock shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Stock which are no longer
outstanding.

      
        
           

        

        
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      Section
4.          Form of Rights
Certificates.

       

      (a)           The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall each be substantially in the form set
forth in 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, which are not inconsistent with the provisions of this Agreement
and which do not affect the rights, duties, liabilities or responsibilities of
the Rights Agent, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11, Section 13 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-thousandths of a share, the “Purchase Price”), but
the amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as provided
herein.

       

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

       

      “The
Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e) of such
Agreement.”

      
        
           

        

        
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      Section
5.          Countersignature and
Registration.

       

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

       

      (b)           Following
the Distribution Date, and receipt by the Rights Agent of notice of such
occurrence, and of all other necessary information and documentation, as
provided in Section 3(a) hereof, the Rights Agent shall keep or cause to be
kept, at its office or offices designated as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates, the
Rights Certificate number and the date of each of the Rights
Certificates.

       

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

       

      (a)           Subject
to the provisions of Section 4(b), Section 7(e) and 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 Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock (or following
a Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office or offices of the
Rights Agent designated for such purpose. The Rights Certificates shall be
transferable only on the registry books of the Rights Agent. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate or
Certificates until the registered holder thereof shall have (i) properly
completed and duly executed the certificate contained in the form of assignment
on the reverse side of such Rights Certificate, (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof and of the Rights evidenced thereby or of the Affiliates or Associates
of such Beneficial Owner (or former Beneficial Owner) as the Company or the
Rights Agent shall reasonably request, and (iii) paid a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates as required by Section 9(e)
hereof.  Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested, registered in such name or names as may be designated by
the surrendering registered holder. The Rights Agent shall promptly forward any
such sum collected by it to the Company or to such Persons as the Company may
specify by written notice.  The Rights Agent shall have no duty or
obligation under any section of this Agreement which requires the payment of
taxes or charges unless and until it is satisfied that all such taxes and/or
charges have been paid.

      
        
           

        

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

       

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

       

      (a)           Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof properly completed and duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (or other securities
or property, as the case may be) as to which such surrendered Rights are then
exercisable, and an amount equal to any tax or charge required to be paid under
Section 9(e) hereof, at or prior to the Expiration Date. Except for those
provisions herein which expressly survive the termination of this Agreement,
this Agreement shall terminate at such time as the Rights are no longer
exercisable hereunder.

       

      (b)           The
Purchase Price for each one one-thousandths of a share of Preferred Stock
pursuant to the exercise of a Right initially shall be $45.00, and shall be
subject to adjustment from time to time as provided in Section 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.

       

      
        
           

        

        
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      (c)           Subject
to Section 7(e) hereof, upon receipt of a Rights Certificate evidencing
exercisable Rights, with the form of election to purchase and the certificate
properly completed and duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-thousandths of a
share of Preferred Stock (or other shares, securities or property, as the case
may be) to be purchased as set forth below and an amount equal to any tax or
charge required to be paid under Section 9(e) hereof, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes each such transfer agent to comply
with all such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs each
such depositary agent to comply with such request, (ii) when necessary to comply
with this Agreement, requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when necessary to comply with this Agreement, after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) and an amount equal
to any tax or charge required to be paid under Section 9(e) hereof, may be made
(x) in cash or by certified bank check, cashier’s check, bank draft or money
order payable to the order of the Company, or (y) by delivery of a certificate
or certificates (with appropriate stock powers executed in blank attached
thereto) evidencing a number of shares of Common Stock equal to the sum of the
then Purchase Price and an amount equal to any tax or charge required to be paid
under Section 9(e) hereof, divided by the closing market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the Trading Date
immediately preceding the date of such exercise. In the event that the Company
is obligated to issue other securities (including Common Stock) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when necessary to comply with this Agreement.  The Company reserves
the right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, such number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.

       

      (d)           In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and, if requested and provided with all necessary information and
documents, delivered to, or upon the order of, the registered holder of such
Rights Certificate or to its duly authorized assigns, registered in such name or
names as may be designated by such holder, subject to the provisions of Section
14 hereof.

      
        
           

        

        
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      (e)           Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person
(or an Associate or Affiliate of an Acquiring Person) other than any such Person
that the Board in good faith determines was not involved in and did not cause or
facilitate, directly or indirectly, such Triggering Event, (ii) a direct or
indirect transferee of such Rights from such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after such Acquiring Person
becomes such (a “Post
Transferee”), or (iii) a direct or indirect transferee of such Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights
pursuant to either a transfer (A) (whether or not for consideration) from such
Acquiring Person (or such Affiliate or Associate) to holders of equity interests
in such Acquiring Person (or such Affiliate or Associate) or to any Person with
whom such Acquiring Person (or such Affiliate or Associate) has any continuing
agreement, plan, arrangement or understanding regarding the transferred Rights
(or any right thereto or interest therein) or (B) that the Board determines is
part of an agreement, plan, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e) (a “Prior Transferee”),
or (iv) any subsequent transferee receiving transferred Rights from a Post
Transferee or a Prior Transferee, either directly, or indirectly through one or
more intermediate transferees, shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall notify the Rights Agent when this Section 7(e)
and/or Section 4(b) hereof applies and shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but neither the Company nor the Rights Agent shall have any
liability or obligation to any holder of Rights Certificates or other Person as
a result of the Company’s failure to make any determinations with respect to an
Acquiring Person or any of its Affiliates, Associates or transferees
hereunder.  Until such notice is received by the Rights Agent, the
Rights Agent shall have no duties, responsibilities or obligations with respect
to this Section 7(e) and Section 4(b) hereof.

       

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

       

      Section
8.          Cancellation and Destruction
of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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 Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.

       

      Section
9.          Reservation and Availability
of Capital Stock.

       

      (a)           The
Company shall cause to be reserved and keep available for issuance out of its
authorized and unissued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that, as
provided in this Agreement, including subject to Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding
Rights.

      
        
           

        

        
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      (b)           So
long as the shares of Preferred Stock (and following the occurrence of a
Triggering Event, Common Stock and/or other securities) issuable and deliverable
upon the exercise of the Rights may be listed on the NASDAQ Global Market
(“NASDAQ GM”)
or any other national securities exchange or traded in the over-the-counter
market and quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”), the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on the
NASDAQ GM or such other exchange or quoted on the NASDAQ upon official notice of
issuance upon such exercise.

       

      (c)           The
Company shall use its best efforts to (i) file with the SEC, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement on an appropriate form under the Securities Act of
1933, as amended (the “Act”), with respect
to the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to be declared effective by the SEC as soon as
practicable after such filing, and (iii) cause such registration statement to
remain so effective (with a prospectus therein at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the Expiration
Date. The Company also shall take such action as may be appropriate under, or to
ensure compliance with, the securities or “blue sky” laws of the various states
in connection with the exercisability of the Rights. The Company temporarily may
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file with the SEC such registration statement and
permit it to become effective. Upon any suspension of the exercisability of the
Rights referred to in this Section 9(c), the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. The Company shall notify the Rights Agent in writing whenever
it makes a public announcement pursuant to this Section 9(c) and furnish the
Rights Agent with a copy of such announcement(s). Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement (if required) has been declared
effective.

       

      (d)           The
Company shall take all such action as may be necessary to ensure that all one
one-thousandths of a share of Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.

      
        
           

        

        
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      (e)           The
Company also shall pay when due and payable any and all taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
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
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder 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 Rights
Certificate at the time of surrender) or until it has been established to the
Company’s or the Rights Agent’s satisfaction that no such tax or charge is
due.

       

      Section
10.          Preferred Stock Record
Date. Each
Person in whose name any certificate evidencing a number of one one-thousandths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
evidenced thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all taxes or charges) was duly made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions (including, without limitation, upon the dissolution or winding up
of the Company) or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as expressly
provided herein.

       

      Section
11.          Adjustment of Purchase
Price, Number and Kind of Shares or Number of Rights.  The
Purchase Price, the number and kind of 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)  If
the Company shall at any time after the Rights Dividend Declaration Date (A)
declare and pay a dividend on the Preferred Stock payable in shares of Preferred
Stock, (B) subdivide or split the outstanding shares of Preferred Stock into a
greater number of shares, (C) combine or consolidate the outstanding shares of
Preferred Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Preferred Stock, or (D) issue, change or alter any of its
shares of capital stock in a reclassification of the Preferred Stock (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) or in Section 7(e) hereof, then, and in each such
case, the Purchase Price in effect at the time of the record date for such
dividend or of the effective time of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable at such time, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or other
capital stock, which, if such Right had been exercisable and was exercised
immediately prior to such date and at a time when the transfer books for the
Preferred Stock (or other capital stock) 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. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, then the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.

       

      
        
           

        

        
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      (ii)           Subject
to Sections 23 and 24 of this Agreement, other than a transaction or
transactions to which the provisions of Section 13(a) apply, if:

       

       (A)           any
Acquiring Person (or any Associate or Affiliate of any Acquiring Person), at any
time after the Rights Dividend Declaration Date, directly or indirectly, shall
(1) consolidate with or merge with and into the Company or any of its
Subsidiaries or otherwise combine with the Company or any of its Subsidiaries,
and as a result thereof the Company or such Subsidiary shall be the continuing
or surviving corporation of such consolidation, merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed into or exchanged for stock or other securities of the Company or of
any other Person or into or for cash or any other property, (2) in one
transaction or a series of transactions, other than in connection with the
exercise of a Right or Rights, and other than in connection with the exchange,
exercise or conversion of securities exchangeable or exercisable for or
convertible into securities of the Company or any Subsidiary of the Company,
transfer any assets or property to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for shares of Common Stock, for shares of other
equity securities of the Company or any Subsidiary of the Company, or for
securities exchangeable or exercisable for or convertible into shares of equity
securities of the Company or any Subsidiary of the Company (Common Stock or
otherwise) or otherwise obtain from the Company or any of its Subsidiaries, with
or without consideration, any additional shares of such equity securities or
securities exchangeable or exercisable for or convertible into shares of such
equity securities (other than pursuant to a pro rata offer or a distribution by
the Company or such Subsidiary to all holders of Common Stock that is made
ratably to all holders of Common Stock), (3) sell, purchase, lease, exchange,
assign, mortgage, pledge, transfer or otherwise acquire (other than as a pro
rata dividend) or dispose of, in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of its Subsidiaries,
assets (including securities) on terms and conditions less favorable to Company
or such Subsidiary than the Company or such Subsidiary would be able to obtain
in an arm’s length negotiation with an unaffiliated third party, (4) receive any
compensation or other remuneration or economic benefit from the Company or any
of the Company’s Subsidiaries for services other than compensation for
employment as a regular full-time or part-time employee, or fees for serving as
a director of the Company or any of its Subsidiaries, at reasonable and
customary rates in accordance with the Company’s (or its Subsidiaries’) past
practices, (5) receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a requirement of
law or governmental regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries, or (6) engage in any transaction with
the Company or any of its Subsidiaries involving the sale, license, transfer,
assignment or grant of any right in, or disclosure of, any patents, copyrights,
trade secrets, trademarks, know-how or any other intellectual or industrial
property rights recognized under any country’s intellectual property laws which
the Company (including its Subsidiaries) owns or has the right to use on terms
and conditions not approved by the Board, or

      
        
           

        

        
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      (B)           any
Person, alone or together with any Affiliates and Associates of such Person,
shall, at any time after the Rights Dividend Declaration Date, become an
Acquiring Person, or

       

      (C)           during
such time as there is an Acquiring Person after the Rights Dividend Declaration
Date, there shall be any reclassification of securities (including any reverse
stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of an Acquiring Person), or any repurchase
by the Company or any of its Subsidiaries of shares of Common Stock of the
Company or of any other class or series of securities issued by the Company,
which reclassification, recapitalization, merger, consolidation or repurchase
has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
or securities exchangeable or exercisable for or convertible into any class of
equity securities of the Company or any of its Subsidiaries which is directly or
indirectly owned by an Acquiring Person or any Associate or Affiliate of an
Acquiring Person,

       

      then, in
each such case, upon the Close of Business on the 10th day
next following the date of the occurrence of an event described in Section
11(a)(ii)(B) hereof, and immediately upon the occurrence of any event described
in Section 11(a)(ii)(A) or (C) hereof, proper provision shall be made so that
each holder of a Right (except as provided below and as set forth in Section
7(e) hereof) thereafter shall have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of Preferred
Stock, such number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a Right
was or would have been exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event, whether or not such Right was then exercisable, and
(y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the “Adjustment
Shares”).  The Company shall provide the Rights Agent with
written notice of the identity of any Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing, and the Rights Agent may rely on such
notice in carrying out its duties under this Agreement, and shall be deemed not
to have any knowledge of the identity of any such Acquiring Person, Associate or
Affiliate, or the nominee of any of the foregoing unless and until it shall have
received such notice.

      
        
           

        

        
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      (iii)           If
the number of shares of Common Stock which are authorized by the Company’s
Restated Certificate of Incorporation, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current
Value”) over (2) the Purchase Price (such excess, the “Spread”), and (B)
with respect to each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares, upon the exercise of a Right
and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board has deemed to have the same value as shares of Common Stock
(such shares of preferred stock, “common stock equivalents”)), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board and based upon the advice of a
nationally recognized investment banking firm selected by the Board; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which in the aggregate are equal to the Spread. If the Board shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days following the first occurrence of a Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval
for the authorization of the issuance of such additional shares (such period, as
it may be extended, the “Substitution
Period”). To the extent that the Company determines that some action need
be taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution Period
in order to seek any authorization of the issuance of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. If there occurs any such
suspension, the Company shall issue a public announcement (with prompt written
notice thereof to the Rights Agent) stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement (with
prompt written notice thereof to the Rights Agent) at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of the Common Stock on the date of
the first occurrence of a Section 11(a)(ii) Trigger Date and the value of any
“common stock equivalent” shall be deemed to have the same value as the Common
Stock on such date.

      
        
           

        

        
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      (b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock (“equivalent preferred
stock”)) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock 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 shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock 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 shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock 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 the exercise of one Right. In case such subscription price may be
paid by delivery of 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, whose determination shall be described in a written statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock 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 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 a distribution to all holders of
Preferred Stock (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, cash (other than a regular cash
dividend out of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those 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 current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board, whose determination
shall be described in a written statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock; 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 the 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 be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.

      
        
           

        

        
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      (d)           (i)
For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “current market price” per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the 30 consecutive Trading Days
immediately prior to but not including such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the “current market
price” per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 10
consecutive Trading Days immediately following but not including such date;
provided, however, that in the
event that the current market price per share of the Common Stock is determined
during a period following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination or reclassification of
such Common Stock, and prior to, but not including, the expiration of the
requisite 30-Trading-Day or 10-Trading-Day period, as set forth above, after the
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 market price” shall be properly adjusted to take into account the
effect of such dividend, distribution, subdivision, combination or
reclassification. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NASDAQ GM or, if on any such date the
shares of Common Stock are not listed or admitted to trading on the NASDAQ GM,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if on any
such date the shares of Common Stock 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 shares of Common Stock 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 Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be used. The
term “Trading
Day” shall mean a day on which the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common Stock are not listed
or admitted to trading on any national securities exchange, a Business Day. If
the Common Stock is not publicly held or not so listed or traded, “current
market price” per share shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a written
statement filed with the Rights Agent and shall be conclusive for all
purposes.

      
        
           

        

        
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      (ii)           For
the purpose of any computation hereunder, the “current market price”
per share of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(d) (other than the
last sentence thereof). If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause (i) of
this Section 11(d), the “current market price” per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number may
be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, “current market price” per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a written statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the “current market price” of one one-thousandth of a share of
Preferred Stock shall be equal to the “current market price” of one share of
Preferred Stock divided by 1,000.

       

      (iii)           For
the purpose of any computation hereunder, the value of any securities or assets
other than Common Stock or Preferred Stock shall be the fair value as determined
in good faith by the Board or by a nationally recognized investment banking firm
selected by the Board, which determination shall be described in a written
statement filed with the Rights Agent and shall be conclusive for all
purposes.

       

      (e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1.0% 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 ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, 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 mandates such adjustment, or (ii) the Expiration
Date.

       

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

      
        
           

        

        
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      (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 share of Preferred Stock
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), upon
each adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one millionth) obtained by (i)
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 (ii) 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 lieu of any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock 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 written 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 Rights Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and delivered by the Company and countersigned and delivered by the Rights Agent
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the holders
of record of Rights Certificates on the record date specified in the public
announcement.

      
        
           

        

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

       

      (k)          Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then par or stated value, if any, of the number of one one-thousandths
of a share of Preferred Stock 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 such number of one one-thousandths of a share of Preferred Stock
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 written notice
thereof to the Rights Agent) until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock 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 (fractional or
otherwise) or securities 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 in
their good faith judgment the Board shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividend or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such
stockholders.

       

      (n)          The
Company shall not, at any time after the Distribution Date, (i) consolidate with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the “Principal Party” for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously Beneficially Owned by such Person or any of its Affiliates and
Associates.

      
        
           

        

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

       

      (p)           Anything
in this Agreement to the contrary notwithstanding, if the Company shall at any
time after the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.

       

      Section
12.          Certificate of Adjusted
Purchase Price or Number of Shares.
Whenever an adjustment is made or any event affecting the Rights or their
exercisability (including without limitation an event which causes Rights to
become null and void) occurs as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event, and a brief, reasonably detailed statement
of the facts, computations and methodology accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of such adjustment or the force
or effect of the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect to,
and shall not be deemed to have knowledge of, any adjustment or any such event
unless and until it shall have received such a certificate.

      
        
           

        

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

       

      (a)           If,
following the Stock Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with and into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or portion of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or into or for cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o) hereof),
then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, thereafter shall
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradable
shares of Common Stock of the Principal Party, not subject to any liens,
encumbrances, rights of first refusal, preemptive subscription rights or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for
each Right and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d)(i) hereof) per share of the Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party thereafter shall be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term “Company” thereafter
shall be deemed to refer to such Principal Party, it being specifically hereby
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; provided, however, that upon
the subsequent occurrence of any merger, consolidation, sale of all or
substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right thereupon shall be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.

      
        
           

        

        
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      (b)          “Principal Party”
shall mean:

       

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

       

      (ii)           in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares
outstanding;

       

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

       

      (c)           If,
for any reason, the Rights cannot be exercised for Common Stock of such
Principal Party as provided in Section 13(a), then each holder of Rights shall
have the right to exchange its Rights for cash from such Principal Party in an
amount equal to the product of (x) the number of shares of Common Stock that it
would otherwise be entitled to purchase and (y) 50% of the current market price,
as determined pursuant to Section 11(d) hereof, per share of such Common Stock
of such Principal Party. If, for any reason, the foregoing formulation cannot be
applied to determine the cash amount into which the Rights are exchangeable,
then the Board, based upon the advice of one or more nationally recognized
investment banking firms, and based upon the total value of the Company, shall
determine such amount reasonably and with good faith to the holders of Rights.
Any such determination shall be final and binding on the Rights
Agent.

      
        
           

        

        
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      (d)          The
Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such consolidation, merger, sale
or transfer shall have executed and delivered to the Rights Agent an agreement
confirming that the requirements set forth in paragraphs (a) and (b) of this
Section 13 shall promptly be performed in accordance with their terms and that
such consolidation, merger, sale, or transfer of assets shall not result in a
default by the Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after executing
such agreement pursuant to this Section 13, the Principal Party at its own
expense will:

       

      (i)        prepare
and file with the SEC a registration statement on an appropriate form under the
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights, use its best efforts to cause such registration
statement to be declared effective by the SEC as soon as practicable after such
filing and use its best efforts to cause such registration statement to remain
so effective (with a prospectus therein at all times meeting the requirements of
the Act) until the Expiration Date;

       

      (ii)   
   use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the securities or blue
sky laws of such states or jurisdictions as may be necessary or
appropriate;

       

      (iii)      use
its best efforts, if the Common Stock of the Principal Party shall be or become
listed or admitted to trading on the NASDAQ GM or on another national securities
exchange, to list or admit to trading (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on the NASDAQ GM or
on such other national securities exchange, or, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on the NASDAQ GM or
on another national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be authorized for quotation on NASDAQ
GM or on such other system then in use;

       

      (iv)     deliver
to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act;
and

       

      (v)    
  obtain waivers of any rights of first refusal or preemptive rights
in respect of the Common Stock of the Principal Party subject to purchase upon
exercise of the outstanding Rights.

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

      (e)          The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).

       

      (f)           In
case the Principal Party which is to be a party to a transaction referred to in
this Section 13 has a provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument governing its
affairs, which provision would have the effect of (i) causing such Principal
Party to issue (other than to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the current market price per share thereof (determined pursuant to
Section 11(d) hereof) or securities exchangeable or exercisable for, or
convertible into, Common Stock of such Principal Party at less than such then
current market price, or (ii) providing for any special payment, tax, or similar
provision in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been canceled,
waived, or amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

       

      Section
14.          Fractional Rights and
Fractional Shares.

       

      (a)           The
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For 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 each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NASDAQ GM, or, if on any such date the
Rights are not listed or admitted to trading on the NASDAQ GM, 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 on any such date 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. If on any such date no market maker is making a market in the Rights, the
current market value of the Rights on such date shall be the fair value of the
Rights as determined in good faith by the Board.

      
        
           

        

        
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      (b)           The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). In lieu of fractional shares of Preferred Stock that are not
integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be one-thousandth of the
closing price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.

       

      (c)           Following
the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one
share of Common Stock. For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing price of one share of
Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.

       

      (d)           Whenever
a payment for fractional Rights or any fractional shares is to be made by the
Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights
Agent a certificate setting forth in reasonable detail the facts related to such
payments and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments. The Rights Agent shall be fully protected
in relying upon such a certificate and shall have no duty with respect to, and
shall not be deemed to have knowledge of any payment for fractional Rights or
fractional shares under any Section of this Agreement relating to the payment of
fractional Rights or fractional shares unless and until the Rights Agent shall
have received such a certificate and sufficient monies.

       

      (e)           The
holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14.

      
        
           

        

        
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      Section
15.          Rights of
Action. All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 and Section 20 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach by the Company of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations by the Company of the obligations hereunder of any Person
subject to this Agreement. Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment decree or ruling (whether
interlocutory or final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company
must use all reasonable efforts to have any such injunction, order, judgment,
decree or ruling lifted or otherwise overturned as soon as
possible.

       

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

       

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

       

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

       

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

       

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

      
        
           

        

        
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      Section
18.          Concerning the Rights
Agent.

       

      (a)           The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the preparation, negotiation, delivery,
amendment, administration and execution of this Agreement and the exercise and
performance of its duties hereunder. 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 (including,
without limitation, the reasonable fees and expenses of legal counsel) for any
action taken, suffered or omitted to be taken by the Rights Agent in connection
with the acceptance, administration, exercise and performance of its duties
under this Agreement, including the costs and expenses of defending against any
claim of liability in the premises and the costs and expenses of enforcing this
right of indemnification; provided, however, that the
Company shall not be liable under this Section 18(a) to the extent that a court
of competent jurisdiction shall have determined by a final, non-appealable
order, judgment, decree or ruling that such loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement, cost or expense resulted from any
action taken, suffered or omitted to be taken by the Rights Agent through its
own gross negligence, bad faith or willful misconduct. The provisions of this
Section 18 and Section 20 hereof shall survive the termination of this
Agreement, the exercise or expiration of the Rights and the resignation,
replacement or removal of the Rights Agent.

       

      (b)           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 acceptance and administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
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.  The Rights Agent
shall not be deemed to have knowledge of any event of which it was supposed to
receive notice thereof hereunder, and the Rights Agent shall be fully protected
and shall incur no liability for failing to take any action in connection
therewith, unless and until it has received such notice.

       

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

       

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

      
        
           

        

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

       

      Section
20.          Rights and Duties of Rights
Agent. The
Rights Agent undertakes to perform only the duties and obligations expressly
imposed by this Agreement (and no implied duties) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:

       

      (a)           The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or an employee of the Rights Agent), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to, and the Rights Agent shall incur no liability for or in respect of,
any action taken, suffered or omitted to be taken 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 (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent for, and the Rights Agent shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it under the provisions of this Agreement in reliance upon such
certificate.

       

      (c)           The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).  Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but
not  limited to lost  profits), even if the Rights Agent has
been advised of the likelihood of such loss or damage.

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

       

      (d)           The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), 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 have any liability for or be under any responsibility
with respect to the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or with respect to
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11 hereof) or
any change or adjustment in the terms of the Rights required under the
provisions of Sections 3, 11, 23 or 24 hereof or responsible for the manner,
method or amount thereof or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after receipt of the certificate
described in Section 12 hereof, upon which the Rights Agent may rely); nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock or Preferred
Stock to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when so 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 the Chairman of the
Board, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
such instructions shall be full authorization and protection to the Rights Agent
and the Rights Agent shall not be liable for or in respect of any action taken,
suffered or omitted by it in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions. The Rights Agent
shall be fully authorized and protected in relying upon the most recent
instructions received by any such officer. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken, suffered or omitted
by the Rights Agent under this Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken, suffered or omitted to be
taken by it in accordance with a proposal included in any such application on or
after the date specified in such application (which date shall not be less than
five Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken,
suffered or omitted.

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      

       

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

       

      (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 (through its directors,
officers and employees) 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 or any
other Person resulting from any such act, default, neglect or misconduct, absent
gross negligence, bad faith or willful misconduct in the selection and continued
employment thereof (which gross negligence, bad faith or willful misconduct must
be determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction).

       

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

       

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

       

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

       

      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 Stock and Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 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 Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for an appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a Person organized and doing business
under the laws of the United States or of any state of the United States in good
standing, which is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000, or (b) an Affiliate of
such a Person described in clause (a) of this sentence. 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 Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

       

      Section
22.          Issuance of New Rights
Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board 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 Rights Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to any redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

       

      Section
23.          Redemption.

       

      (a)           The
Board may, at its option, at any time prior to the earlier of (i) the first
occurrence of a Section 11(a)(ii) Event and (ii) the Final Expiration Date,
redeem all (but not less than all) of the then outstanding Rights at a
redemption price of $0.0001 per Right, as such amount may be 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”).

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

       

      (b)           The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the “current market value” (as defined in Section 11(d)(i)
hereof) of the Common Stock as of the time of redemption) or any other form of
consideration deemed appropriate by the Board.

       

      (c)           Immediately
upon the action of the Board ordering the redemption of the Rights (or at such
later time as the Board may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to exercise the
Rights shall terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held.  The
Company shall promptly give public notice of any such redemption (with prompt
written notice thereof to the Rights Agent); provided, however, that the failure
to give, or any defect in, such notice shall not affect the legality or validity
of such redemption.  Within 10 days after such action of the Board
ordering the redemption of the Rights (or such later time as the Board may
establish for the effectiveness of such redemption), 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 Stock of the Company.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.  Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.

       

      Section
24.          Exchange.

       

      (a)           Subject
to applicable laws, rules and regulations, and subject to subsection (c) below,
the Company may, at its option, by majority vote of the Board, 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 7(e) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the “Ratio of Exchange”).
Notwithstanding the foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.

       

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

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

       

      (c)           In
any exchange pursuant to this Section 24, the Company, at its option, may
substitute common stock equivalents (as defined in Section 11(a)(iii)) for
shares of Common Stock exchangeable for Rights, at the initial rate of one
common stock equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in dividend, liquidation and voting rights of
common stock equivalents pursuant to the terms thereof, so that each common
stock equivalent delivered in lieu of each share of Common Stock shall have
essentially the same dividend, liquidation and voting rights as one share of
Common Stock of the Company.

       

      (d)           If
the number of shares of Common Stock of the Company which are authorized by the
Company’s Restated Certificate of Incorporation but not outstanding or reserved
for issuance are not sufficient to permit an exchange of Rights as contemplated
by this Section 24, the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock for issuance upon exchange of
Rights.

       

      (e)           The
Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value per share of a whole
share of Common Stock.  For purposes of this Section 24(e), the
current market value of a whole share of Common Stock shall be the closing price
per share of Common Stock (determined pursuant to Section 11(d)(ii) hereof) on
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 propose, at any time after the Distribution Date, (i) to
pay any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other than
a regular cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), 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 transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, consolidation or combination of the Common Stock (by
reclassification or otherwise than by payment in dividends in Common Stock),
then, in each such case, the Company shall give to the Rights Agent and to the
extent feasible to each holder of a Rights 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, 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 shares of Preferred Stock,
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 shares of Preferred Stock 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 shares of Preferred Stock whichever
shall be the earlier.

       

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

     

    (b)           In
case any of the events set forth in Section 11(a)(ii) hereof shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter give
to the Rights Agent and to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.  Until such
notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that no such event set forth in Section 11(a)(ii)
has occurred.

     

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

     

    Vitacost.com,
Inc.

    5400
Broken Sound Blvd. - NW, Suite 500

    Boca
Raton, Florida 33487-3521

    Attn:
Chief Executive Officer

    Facsimile
No.: (561)

     

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

     

    Mellon
Investor Services LLC

    300
Galleria Parkway

    Suite
1020

    Atlanta,
GA 30339

    Attn:  Judy
Hsu

    Facsimile:
(770) 818-1160

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    with a
copy to:

     

    Mellon
Investor Services LLC

    480
Washington Boulevard

    Jersey
City, NJ 07310

    Attention:  Legal
Department

    Facsimile:
(201) 680-4610

     

    Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing shares of Common
Stock) 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. Subject
to this Section 27, this Agreement may be supplemented or amended at the times
and for the purposes set forth below. Prior to the date any Person becomes an
Acquiring Person, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the date any Person becomes an Acquiring Person, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided, however, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company, which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment;
provided, that, the Rights
Agent may, but shall not be obligated to, enter into any supplement or amendment
that affects the Rights Agent’s own rights, duties, obligations or immunities
under this Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.

     

    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.

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    Section
29.           Determinations and Actions
by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations that are done or made by the Board in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties. The Rights Agent shall be entitled to assume the
Board acted in good faith and shall be fully protected and incur no liability in
the Rights Agent’s reliance thereon.

     

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

     

    Section
31.           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, null and 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; and provided further, that if
any such excluded term, provision, covenant or restriction shall adversely
affect the rights, immunities, duties or obligations of the Rights Agent, the
Rights Agent shall be entitled to resign upon ten (10) days’ notice in writing
to the Company.

     

    Section
32.           Governing
Law. This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely within such
State; provided, however, that all
provisions regarding the rights, duties, obligations and liabilities of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such State.

     

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

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

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

     

    [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

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

     

    
      
        
          
            
              
                
                  	
                          ATTEST:

                        	 	
                          VITACOST.COM,
      INC.,

                          a
      Delaware corporation

                        
	 
      	 	 
      
	
                          By:

                        	
                          /s/ Sonya Lambert

                        	 	
                          By:

                        	
                          /s/ Mary L. Marbach

                        
	
                          Name:
      Sonya Lambert

                        	 	
                          Name:
      Mary L. Marbach

                        
	
                          Title:
      Chief Marketing Officer

                        	 	
                          Title:
      General Counsel

                        
	 
      	 	 
      
	
                          ATTEST:

                        	 	
                          MELLON
      INVESTOR SERVICES LLC,

                          a
      New Jersey limited liability company, as

                          Rights
      Agent

                        
	 
      	 	 
      
	
                          By:

                        	
                          /s/ Carmen Anderson

                        	 	
                          By:

                        	
                          /s/ Judy Hsu

                        
	
                          Name:
      Carmen Anderson

                        	 	
                          Name:
      Judy Hsu

                        
	
                          Title:
      Vice President – Relationship Manager

                        	 	
                          Title:
      Vice President – Relationship
Manager

                        

                

              

            

          

        

      

    

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    CERTIFICATE
OF DESIGNATION

     

    SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK

     

    ______________

     

    ($0.00001
Par Value)

    of

    VITACOST.COM,
INC.

    Pursuant
to Section 151 of the

    General
Corporation Law of the State of Delaware

     

    ______________

     

    VITACOST.COM,
INC., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Corporation”), in
accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:

     

    FIRST:                  That
pursuant to the authority conferred upon the Board of Directors by the Restated
Certificate of Incorporation, as amended, of the Corporation, the Board of
Directors of the Corporation adopted the following resolutions creating a series
of One Hundred Thousand (100,000) shares of Preferred Stock, $0.00001 par value
per share, designated as Series A Junior Participating Preferred Stock (the
“Series A Junior
Participating Preferred Stock”):

     

    
      
        
          
            
              
                	
                        RESOLVED:

                      	 
      	
                        That
      pursuant to the authority expressly vested in the Board of Directors of
      this Corporation in accordance with the provisions of Article FOURTH of
      its Restated Certificate of Incorporation, as amended, a series of
      Preferred Stock, par value $0.00001 per share, of the Corporation be, and
      it hereby is, created, and that the designation and number thereof and the
      voting powers, preferences and relative, participating, optional and other
      special rights of the shares of the Series A Junior Participating
      Preferred Stock, and the qualifications, limitations or restrictions
      thereof, shall be as set forth in Appendix A attached hereto and
      incorporated herein by reference (the “Certificate of
      Designation”).

                      
	 	 	 
	
                        RESOLVED:

                      	 
      	
                        That
      the Chairman, the President and Chief Executive Officer, the Chief
      Financial Officer, and the Secretary or any Assistant Secretary of the
      Corporation be, and they hereby are, authorized and directed, in the name
      and on behalf of the Corporation, to execute, acknowledge and file the
      Certificate of Designation in accordance with the provisions of the
      General Corporation Law of the state of Delaware and to take such actions
      as they may deem necessary or appropriate to carry out the intent of the
      foregoing
resolution.

                      

              

            

          

        

      

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    SECOND:     That
the aforesaid resolutions were duly and validly adopted in accordance with the
applicable provisions of Section 151 of the General Corporation Law of the State
of Delaware, and the Restated Certificate of Incorporation, as amended, and
By-Laws of the Corporation.

     

    THIRD:        That
the aforesaid designation shall become effective on March 24, 2010.

     

    IN
WITNESS WHEREOF, said Vitacost.com, Inc. has caused this Certificate to be
executed and acknowledged, this 24th day of March, 2010.

     

    
      
        
          	
                  VITACOST.COM,
      INC.

                
	 
      
	
                     

                
	
                  Name:

                
	
                  Title:

                

        

      

    

    

    
      
        
          	
                  ATTEST:

                
	 
      
	
                     

                
	
                  Name:

                
	
                  Title:

                

        

      

    

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    
 

    Section
1.             
Designation and
Amount.  There
shall be a series of Preferred Stock that shall be designated as “Series A
Junior Participating Preferred Stock” and the number of shares constituting such
series shall be One Hundred Thousand (100,000).  Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Participating Preferred Stock.

     

    Section
2.             
Dividends and
Distributions.

     

    (A)           Subject
to the rights of the holders of any shares of any class or series of capital
stock of the Corporation ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock, in preference to the
holders of Common Stock, $0.00001 par value per share (the “Common Stock”), of
the Corporation, and of any class or series of capital stock of the Corporation
ranking junior to the Series A Junior Participating Preferred Stock with respect
to dividends, shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds of the Corporation legally available for the
payment of dividends, quarterly dividends payable in cash on March 31, June 30,
September 30 and December 31 in each year (each such date being referred to
herein as a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per share (rounded
to the nearest whole cent) equal to the greater of (a) $1.00 or (b) subject to
the provision for adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock.  In the event the Corporation shall at
any time after the date of filing of this Certificate of Designation declare or
pay any dividend on Common Stock payable in shares of Common Stock or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    (B)           The
Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock) and the Corporation shall pay such
dividend or distribution on the Series A Junior Participating Preferred Stock
before the dividend or distribution declared on the Common Stock is paid or set
apart; provided, however, that, in the event that no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

     

    (C)           Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Junior Participating
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than sixty (60) days prior to the
date fixed for the payment thereof.

     

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

     

    (A)           Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation.  In the event the Corporation shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock or effect
a subdivision, combination of consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Junior Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

     

    (B)           Except
as otherwise provided herein or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

    (C)           (i)           If
at any time dividends on any Series A Junior Participating Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a “default
period”), which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and paid or set apart
for payment.  During each default period, the number of directors
constituting the Board of Directors shall automatically be increased by two (2)
immediately prior to an annual or special meeting of stockholders called in
accordance with this Section 3(C) to effect the election of such directors, and
the holders of record of the Series A Junior Participating Preferred Stock,
shall, voting together with the holders of any other series of Preferred Stock
entitled to vote thereon, voting together as a single class, shall have the
right, to elect two (2) directors.

     

    (ii)          During
any default period, the voting rights of the holders of Series A Junior
Participating Preferred Stock provided in this Section 3(C) may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders.  The absence of a quorum of the holders of
Common Stock at any annual or special meeting of stockholders shall not affect
the exercise by the voting rights provided to the holders of Series A Junior
Participating Preferred Stock by this Section 3(C).  For so long as
there shall be any shares of Series A Junior Participating Preferred Stock then
outstanding, and during the continuance of any default period, the number of
directors constituting the Board of Directors may not be increased or decreased
without the affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Series A Junior Participating Preferred Stock
and any other series of Preferred Stock entitled to vote thereon, voting
together as a single class.

     

    (iii)         Unless
the holders of the Series A Junior Participating Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
directors as provided in this Section 3(C), the Board of Directors shall
immediately call a special meeting of the holders of Series A Junior
Participating Preferred Stock upon the request of the holders of at least ten
percent (10%) in number of shares of Series A Junior Participating Preferred
Stock and any other series of Preferred Stock entitled to vote thereon then
outstanding, which such meeting shall be called for a date not earlier than 10
days and not later than 60 days after the Corporation’s receipt of such
request.  Notwithstanding the provisions of this Section 3(C), no such
special meeting shall be called during the period sixty (60) days immediately
preceding the date fixed for the next annual meeting of the
stockholders.  Notice of such special meeting and of any annual
meeting at which holders of Series A Junior Participating Preferred Stock are
entitled to vote pursuant to this Section 3(C) shall be given to each holder of
record of Series A Junior Participating Preferred Stock by mailing a copy of
such notice to such holder at his last address as the same appears on the books
of the Corporation.

     

    (iv)        Immediately
upon the expiration of a default period, (x) the right of the holders of Series
A Junior Participating Preferred Stock to elect directors as provided in this
Section 3(C) shall cease, (y) the term of any directors elected by the holders
of Series A Junior Participating Preferred Stock and any other series of
Preferred Stock entitled to vote thereon shall terminate, and (z) the number of
directors constituting the Board of Directors shall automatically be reduced by
two (2).

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

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

     

    Section
4.             
Certain
Restrictions.

     

    (A)           Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall
not:

     

    (i)           declare
or pay dividends on or make any other distributions on any shares of capital
stock of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock;

     

    (ii)          declare
or pay dividends on or make any other distributions on any shares of capital
stock of the Corporation ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares and then entitled;

     

    (iii)         redeem,
purchase or otherwise acquire for consideration shares of any capital stock of
the Corporation ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any capital
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior Participating
Preferred Stock or, with the consent of the Board of Directors, purchase or
otherwise acquire shares from employees upon their termination of
employment;

     

    (iv)         purchase
or otherwise acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of capital stock of the Corporation
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.

     

    (B)           The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of capital stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.

    
      
         

      

      
        A-6

        
          

        

      

      
         

      

    

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

     

    Section
6.              Liquidation, Dissolution or
Winding Up.

     

    (A)           Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of capital
stock of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the “Series A Liquidation
Preference”).  In the event, however, that there are not
sufficient assets of the Corporation available to permit payment in full of the
Series A Liquidation Preference and the liquidation preferences of all other
series of Preferred Stock then outstanding, if any, which rank on a parity with
the Series A Junior Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.  Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the “Common Adjustment”),
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(C) below) (such number in clause (ii), the “Adjustment
Number”).  In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common
Stock.

     

    (B)           Following
the payment of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders of Series
A Junior Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets of
the Corporation legally available to be distributed to stockholders of the
Corporation in the ratio of the Adjustment Number to 1 with respect to such
Series A Junior Participating Preferred Stock and Common Stock, on a per share
basis, respectively.

     

    (C)           In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

    
      
         

      

      
        A-7

        
          

        

      

      
         

      

    

    (D)          Neither
the consolidation, merger or other combination of the Corporation with or into
any other corporation or the sale, lease, exchange or conveyance of all or any
part of the property, assets or business of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for purposes of
this Section 6.

     

    Section
7.              Consolidation, Merger,
Etc. In case
the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for, converted
into or changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged for, converted into or
changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is exchanged for,
converted into or changed into.  In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     

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

     

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

     

    Section
10.            Amendment. For so
long as there shall be any shares of Series A Junior Participating Preferred
Stock then outstanding, the certificate of incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least seventy-five percent (75%) of the outstanding shares of
Series A Junior Participating Preferred Stock, voting separately as a single
class.

     

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

    
      
         

      

      
        A-8

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    [FORM OF
RIGHTS CERTIFICATE]

     

    
      	
              Certificate
      No. R-

            	
              _________
      Rights

            
	 
      	 
      

    

    NOT
EXERCISABLE AFTER THE FINAL EXPIRATION DATE OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.0001 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE MAY BE OR MAY HAVE
BEEN BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE OR BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.

     

    Rights
Certificate

     

    VITACOST.COM,
INC.

     

    This
Rights Certificate certifies that _____________________, or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the holder thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated March 24, 2010 (the “Rights Agreement”),
between Vitacost.com, Inc., a Delaware corporation (the “Company”), and Mellon
Investor Services LLC (operating with the service name BNY Mellon Shareowner
Services), a New Jersey limited liability company, as rights agent (the “Rights Agent”), to
purchase from the Company after the Distribution Date (as such term is defined
in the Rights Agreement) and at any time prior to the Expiration Date (as such
term is defined in the Rights Agreement) at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock (the “Preferred Stock”) of
the Company, at a purchase price of $45.00 per one one-thousandth of a share
(the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of
________, 20__, based on the Preferred Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that a number of Rights
be exercised so that only whole shares of Preferred Stock will be
issued.

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Rights Agreement.

     

    Upon the
occurrence of a Triggering Event, if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate of an Acquiring Person), or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person (or an Associate or Affiliate of
an Acquiring Person), such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Triggering Event.

     

    As
provided in the Rights Agreement, the Purchase Price and the number and kind of
shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events.

     

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

     

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

     

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at the option of the Board at a
redemption price of $0.0001 per Right at any time prior to the earlier of (i)
the first occurrence of a Section 11(a)(ii) Event and (ii) the Final Expiration
Date.

     

    No
fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are
integral-multiples of one one-thousandth of a share of Preferred Stock), but in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

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

     

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

     

    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal by its authorized officers.

     

    Dated:

     

    
      
        
          
            
              	
                      ATTEST:

                    	 
      	
                      VITACOST.COM,
      INC.,

                    
	 
      	 
      	 
      	
                      a
      Delaware corporation

                    
	 
      	 
      	 
      	 
      	 
      
	
                         

                    	 
      	
                      By:

                    	
                         

                    
	 
      	 
      	 
      	
                      Name:

                    
	
                      Its

                    	 
      	 
      	
                      Its:

                    
	 
      	 
      	 
      	 
      
	
                      Countersigned:

                    	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                      MELLON
      INVESTOR SERVICES LLC,

                    	 
      	 
      	 
      
	
                      a
      ________________________________

                    	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                      By:

                    	
                         

                    	 
      	 
      	 
      
	 
      	
                      Authorized
      Signature

                    	 
      	 
      	 
      

            

          

        

      

    

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

    [Form of
Reverse Side of Rights Certificate]

     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Rights Certificate.)

     

    FOR VALUE RECEIVED                                                                                                                                                                  

    

    hereby
sells, assigns and transfers unto                                                                                                                                          

    

    
      
        

      
(Please print name and address of transferee)

     

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

    

    
      
        	
                Dated:

              	 
      
	 
      	 
      
	 
      	
                   

              
	 
      	
                Signature

              
	 
      	 
      
	
                Signature
      Guaranteed:

              	 
      

      

    

    

    NOTICE:  The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    
      
         

      

      
        B-4

        
          

        

      

      
         

      

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    
      
        	
                Dated:

              	 
      
	 
      	 
      
	 
      	
                   

              
	 
      	
                Signature

              
	 
      	 
      
	
                Signature
      Guaranteed:

              	 
      

      

    

    

    NOTICE

     

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

     

    The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    
      
         

      

      
        B-5

        
          

        

      

      
         

      

    

    FORM OF
ELECTION TO PURCHASE

     

    (To be
executed if holder desires to

    exercise
Rights represented by the

    Rights
Certificate.)

     

    To:         VITACOST.COM,
INC.:

     

    The
undersigned hereby irrevocably elects to exercise ______ Rights represented by
this Rights Certificate to purchase the shares or portion thereof of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:

     

    Please
insert social security

    or other
identifying number

     

    

      
        

      

    
      

    

    (Please
print name and address)

     

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

     

    Please
insert social security

    or other
identifying number

    

    
      

        
          

        

      
        

      

      (Please
print name and address)

    

    
      
        
          	 	 
	
                  Dated:

                	 
      
	 
      	 
      
	 
      	
                     

                
	 
      	
                  Signature

                

        

      

    

    
      
         

      

      
        B-6

        
          

        

      

      
         

      

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

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

     

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

     

    
      
        	
                Dated:

              	 
      
	 
      	 
      
	 
      	
                   

              
	 
      	
                Signature

              
	 
      	 
      
	
                Signature
      Guaranteed:

              	 
      

      

    

     

    NOTICE

     

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

     

    The
signature(s) must be guaranteed by a participant in a Medallion Signature Guarantee
Program at a guarantee level acceptable to the Company’s transfer
agent.

    
      
         

      

      
        B-7

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    VITACOST.COM,
INC.

     

    SUMMARY
OF RIGHTS TO PURCHASE PREFERRED STOCK

     

    On March
24, 2010, the Board of Directors of Vitacost.com, Inc. (the “Company”) declared a
dividend distribution of one preferred stock purchase right (a “Right”) for each
outstanding share of common stock, $0.00001 par value, of the Company (the
“Common
Stock”).  Each Right entitles the registered holder to purchase
from the Company, after the Distribution Date described below, one
one-thousandth of a share of its Series A Junior Participating Preferred Stock,
$0.00001 par value (the “Preferred Stock”), at
a price of $45.00 per one one-thousandth share of Preferred Stock (the “Purchase Price”),
subject to adjustment.  Each share of Preferred Stock is designed to
be the economic equivalent of 1,000 shares of Common Stock.  The
distribution of Rights is payable to the holders of record of Common Stock at
the close of business on March 24, 2010 (the “Record
Date”).  One Right will also be issued for each share of Common
Stock issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date described below.

     

    Exercisability of the
Rights.  The Rights are not exercisable until the “Distribution Date”,
which is defined as the earlier of:

     

    
      	
               
      

            	
              ·

            	
              the
      close of business on the 10th
      day after the date of the first public announcement that a person or group
      of affiliated or associated persons (with certain exceptions discussed
      below, an “Acquiring
      Person”) has acquired, or obtained the right to acquire, beneficial
      ownership of 15% or more of the outstanding Common Stock (which includes
      Common Stock referenced in derivative transactions and securities), or
      such earlier date as a majority of the Board shall become aware of such
      acquisition of Common Stock (the “Stock Acquisition
      Date”), or

            

    

     

    
      	
               
      

            	
              ·

            	
              the
      close of business on the 10th
      business day, or such specified or unspecified later date on or after the
      Record Date as may be determined by action of the Board of Directors of
      the Company, following the commencement of, or announcement of an
      intention to make, a tender offer or exchange offer the consummation of
      which would result in the beneficial ownership by a person or group of 15%
      or more of the Company’s outstanding Common
  Stock.

            

    

     

    Exceptions to Definition of
Acquiring Person. An “Acquiring Person” will not include:

     

    
      	
               
      

            	
              ·

            	
              the
      Company or any subsidiary of the Company, in each case including, without
      limitation, in its fiduciary capacity, any employee benefit or
      compensation plan of the Company or of any subsidiary of the Company, or
      any person or entity holding Common Stock for or pursuant to the terms of
      any such plan or for the purpose of funding any such plan or funding other
      employee benefits for employees of the Company or any subsidiary of the
      Company (an “Exempt
      Person”),

            

    

    
      
         

      

      
        C-1

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              ·

            	
              any
      person who, as of March 24, 2010, is the Beneficial Owner of 15% or more
      of the Common Stock then outstanding, provided that if such person
      thereafter becomes the beneficial owner of additional shares of Common
      Stock representing 1% or more of the shares of Common Stock then
      outstanding without the prior written consent of the Company (with certain
      exceptions) and then beneficially owns more than 15% of the Common Stock
      then outstanding, such Person will no longer be exempted from the
      definition of Acquiring Person, or

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      person or group of affiliated or associated persons that have
      inadvertently become the beneficial owner of 15% or more of the
      outstanding Common Stock of the Company, or have become such solely as a
      result of a reduction in the outstanding shares of Common Stock of the
      Company, provided that if such person or group of affiliated or associated
      persons shall become the beneficial owner of one or more additional shares
      of Common Stock of the Company without the prior written consent of the
      Company (with certain exceptions) and thereafter beneficially owns more
      than 15% of the Common Stock of the Company then outstanding, then such
      person or group of affiliated or associated persons will no longer be
      exempted from the definition of Acquiring
  Person.

            

    

     

    “Flip-In”
Events.  If, after March 24, 2010, (i) any person becomes an
Acquiring Person, (ii) any Acquiring Person engages in certain “self-dealing”
transactions with the Company (described below) or (iii) while there exists an
Acquiring Person, an event occurs which results in such Acquiring Person’s
ownership interest in any class of securities of the Company being increased by
more than 1% (e.g., a reverse stock split), in each case which would not
otherwise trigger a “flip-over” event as described below, each holder of a Right
would thereafter have the right to receive, upon exercise of the Right, that
number of shares of Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) which equals the Purchase Price divided by
50% of the “current market price” (as defined in the Rights Agreement) of the
Common Stock at the date of the occurrence of the
event.  Notwithstanding the foregoing, following the occurrence of any
of such events, any Rights beneficially owned by any Acquiring Person would
immediately become null and void.

     

    “Self-dealing”
transactions are defined to include (i) a consolidation, merger or other
combination of any Acquiring Person with the Company or any subsidiary of the
Company in which the Company or such subsidiary is the surviving corporation and
the Common Stock of the Company remains outstanding and no shares are changed
into or exchanged for stock or other securities or cash or any other property,
(ii) the transfer of assets or property to the Company or any subsidiary of the
Company in exchange (in whole or in part) for securities of the Company or any
of its subsidiaries, (iii) the acquisition of securities of the Company (other
than in a pro rata distribution payable ratably to all stockholders), (iv) the
sale, purchase, transfer, distribution, lease, mortgage, pledge or acquisition
of assets by the Acquiring Person to, from or with the Company, other than on an
arm’s length basis, (v) the receipt of any compensation by an Acquiring Person
for services (other than for employment as a regular full-time or part-time
employee or director on a basis consistent with the Company’s past practice),
(vi) the receipt of the benefit of a loan or provision of other financial
assistance (except proportionately as a stockholder) by an Acquiring Person, or
(vii) the licensing, sale or other transfer of proprietary technology or
know-how from the Company to the Acquiring Person on terms not approved by the
Board.

    
      
         

      

      
        C-2

        
          

        

      

      
         

      

    

    “Flip-Over”
Events.  If, after the Stock Acquisition Date, the Company is
acquired in a merger or other business combination in which the Common Stock is
exchanged or converted or in which the Company is not the surviving corporation,
or 50% or more of its assets or earning power are sold, each holder of a Right
thereafter shall have the right to purchase, upon payment of the then current
Purchase Price, such number of shares of common stock of the acquiring company
which equals the Purchase Price divided by 50% of the “current market price” (as
defined in the Rights Agreement) of such common stock at the date of the
occurrence of the event. Notwithstanding the foregoing, following the occurrence
of any of such events, any Rights beneficially owned by any Acquiring Person
would immediately become null and void.

     

    Exchange
Option.  The Company may, at its option, by majority vote of
the Board, at any time after any person becomes an Acquiring Person, mandate the
exchange of all or part of the then outstanding and exercisable Rights for
shares of Common Stock at an exchange ratio of one share of Common Stock per
Right (subject to adjustment).  The Board, however, may not effect an
exchange at any time after any person (other than an Exempt Person), together
with all affiliates of such person, becomes the beneficial owner of 50% or more
of the Common Stock then outstanding.  Immediately upon the action of
the Board ordering the exchange of any Rights and without any further action and
without any notice, the right to exercise such Rights will terminate and the
only right thereafter of a holder of such Rights will be to receive that number
of shares of Common Stock equal to the number of such Rights held by the
holder.

     

    Transferability of
Rights.  Until the Distribution Date, the Rights will be
evidenced by the stock certificates representing outstanding Common Stock, no
separate certificates evidencing the Rights will be distributed, and the
transfer of certificates representing outstanding Common Stock will constitute a
transfer of the Rights. After the Distribution Date, separate certificates
evidencing the Rights will be mailed to holders of record of the Company’s
Common Stock as of the close of business on the Distribution Date, and such
separate Rights certificates alone will evidence the Rights.

     

    Redemption.  The
Board of Directors may, at its option, at any time prior to the earlier of (i)
the first occurrence of a “flip-in” event and (ii) the Final Expiration Date (as
defined below), redeem the Rights at a redemption price of $0.0001 per Right
(the “Redemption
Price”), payable, at the option of the Company, in cash, shares of Common
Stock or such other form of consideration as the Board of Directors of the
Company shall determine.  Immediately upon such redemption, the right
to exercise the Rights will terminate, and the holders of Rights will become
entitled only to receive the Redemption Price.

     

    
      Expiration of
Rights.  The Rights will expire on the earliest of (i) the
close of business on the Final Expiration Date, (ii) the time at which the
Rights are redeemed, or (iii) the time at which the Board mandates the exchange
of the Rights (the “Expiration Date”).
The “Final Expiration
Date” is the earlier of (i) the thirtieth (30th) day
following the Company’s 2012 annual meeting, if the approval of the Company’s
stockholders does not occur at such meeting.

    

    
      
         

      

      
        C-3

        
          

        

      

      
         

      

    

    Anti-Dilution
Adjustment.  The Purchase Price, the redemption price, the
exchange ratio and the number of shares of the Preferred Stock or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution under the following
circumstances:

     

    
      	
               
      

            	
              ·

            	
              in
      the event of a stock dividend on, or a subdivision, combination or
      reclassification of the Preferred Stock,
or

            

    

     

    
      	
               
      

            	
              ·

            	
              upon
      the grant to holders of the Preferred Stock of certain rights or warrants
      to subscribe for shares of the Preferred Stock or convertible securities
      at less than the current market price of the Preferred Stock,
      or

            

    

     

    
      	
               
      

            	
              ·

            	
              upon
      the distribution to holders of the Preferred Stock of evidences of
      indebtedness or assets (excluding regular cash dividends out of the
      earnings or retained earnings of the Company and dividends payable in
      shares of Preferred Stock) or of subscription rights or warrants (other
      than those referred to above).

            

    

     

    The
number of Rights associated with each share of Common Stock is also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

     

    With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such
price.  At the Company’s option, cash (based on the market price on
the last trading date prior to the date of the exercise) will be paid instead of
issuing fractional shares of any securities (other than fractional shares of
Preferred Stock in integral multiples of one one-thousandth of a
share).

     

    No Shareholder
Rights.  The Rights themselves do not entitle the holder
thereof to any rights as a stockholder of the Company, including, without
limitation, the right to vote or receive dividends.

     

    Preferred
Stock.  Shares of Preferred Stock issued upon exercise of the
Rights would not be redeemable. Each share of Preferred Stock, if so issued upon
exercise, would be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of the greater of (a) $1.00 per share and (b) an
amount equal to 1,000 times the dividend declared and payable in respect of one
whole share of Common Stock. In the event of any liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock would be entitled
to a minimum preferential payment equal to $1,000 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon.  Each
issued and outstanding share of Preferred Stock would have 1,000 votes, voting
together with the Common Stock.  Finally, in the event of any merger,
consolidation or other transaction in which outstanding shares of Common Stock
were converted or exchanged, each share of Preferred Stock would be entitled to
receive 1,000 times the amount received in respect of one whole share of Common
Stock. The rights of the Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary anti-dilution provisions. Because of the nature of the Preferred
Stock’s dividend, liquidation and voting rights, the value of one one-thousandth
of a share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.

    
      
         

      

      
        C-4

        
          

        

      

      
         

      

    

    Amendments.  Any
of the provisions of the Rights Agreement may be amended by the Board prior to
the date any person or group becomes an Acquiring Person without the approval of
any holders of the Rights.  After such date, the Board may amend the
Rights Agreement to cure any ambiguity, to correct or supplement any provision
which may be defective or inconsistent with any other provisions, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement, provided that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights are
not redeemable.

     

    Tax
Matters.  While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.

     

    Rights
Agreement.  The terms of the Rights are set forth in a Rights
Agreement dated March 24, 2010 (the “Rights Agreement”),
between the Company and Mellon Investor Services LLC (operating with the service
name BNY Mellon Shareowner Services), as Rights Agent.  A copy of the
Rights Agreement is an Exhibit to a Current Report on Form 8-K dated March 24,
2010, filed with the Securities and Exchange Commission on such
date.  A copy of the Rights Agreement is available free of charge from
the Rights Agent at the following address:

     

    Mellon
Investor Services LLC

    300
Galleria Parkway

    Suite
1020

    Atlanta,
GA.  30339

    Attention:  Relationship
Manager

    (Vitacost.com,
Inc. Rights Agreement)

     

    This
summary does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated in this summary by
reference.

    
      
         

      

      
        C-5SECURITIES
PURCHASE AGREEMENT

    

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of March 23, 2010, between AutoChina International Limited, a corporation
incorporated under the laws of the Cayman Islands (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this
Agreement.

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:

     

    ARTICLE
I.

    DEFINITIONS

     

    1.1           Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings set forth in this Section
1.1:

     

    “Acquiring Person”
shall have the meaning ascribed to such term in Section 4.4.

     

    “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 405 under the Securities Act.

     

    “Board of Directors”
means the board of directors of the Company.

     

    “Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.

     

    “Closing” means the
closing of the purchase and sale of the Shares pursuant to Section
2.1.

     

    “Closing Date” means
the Trading Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Shares, in each case, have been satisfied
or waived, but in no event later than the third Trading Day following the date
hereof.

     

    “Commission” means the
United States Securities and Exchange Commission.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “Common Stock” means
the common stock of the Company, par value $0.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed.

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

     

    “Company Counsel”
means Loeb & Loeb LLP, with offices located at 345 Park Avenue, New York, NY
10022 and [Cayman Islands counsel].

     

    “Disclosure Schedules”
means the Disclosure Schedules of the Company delivered concurrently
herewith.

     

    “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).

     

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

    

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose and (b) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

     

    “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

     

    “Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(z).

     

    “Intellectual Property
Rights” shall have the meaning ascribed to such term in Section
3.1(o).

     

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

     

    “Material Adverse
Effect” shall have the meaning assigned to such term in Section
3.1(b).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

     

    “Per Share Purchase
Price” equals $35.00, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

     

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Pre-Notice” shall
have the meaning ascribed to such term in Section 4.9(b).

     

    “Pro Rata Portion”
shall have the meaning ascribed to such term in Section 4.9(e).

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

     

    “Prospectus” means the
final prospectus filed for the Registration Statement.

     

    “Prospectus
Supplement” means the supplement to the Prospectus complying with Rule
424(b) of the Securities Act that is filed with the Commission and delivered by
the Company to each Purchaser at the Closing.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.7.

     

    “Registration
Statement” means the effective registration statement with Commission
file No. 333-164628 which registers the sale of the Shares.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

     

     “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “Shares” means the
shares of Common Stock issued or issuable to each Purchaser pursuant to this
Agreement.

     

    “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock). 

     

     “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares
purchased hereunder as specified below such Purchaser’s name on the signature
page of this Agreement and next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.

     

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a), and
shall, where applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

     

    “Trading Day” means a
day on which the principal Trading Market is open for trading.

     

    “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).

     

    “Transaction
Documents” means this Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.

     

    “Transfer Agent” means
American Stock Transfer & Trust Company, the current transfer agent of the
Company, with a mailing address of 59 Maiden Lane, Plaza Level, New York, NY
10038, and any successor transfer agent of the Company.

     

    “WS” means Weinstein
Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York,
New York 10170-0002.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1          Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by
the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly,  agree to purchase, up to an aggregate of
$100,000,000 of Shares.  Each Purchaser shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to
such Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser and the Company shall deliver to each Purchaser its
respective Shares, and the Company and each Purchaser shall deliver the other
items set forth in Section 2.2 deliverable at the Closing.  Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3,
the Closing shall occur at the offices of WS or such other location as the
parties shall mutually agree.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    2.2          Deliveries.

     

    (a)          On
or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following:

     

    (i)           this
Agreement duly executed by the Company;

     

    (ii)          legal
opinions of Company Counsel and of [Cayman Islands counsel], substantially in
the form of Exhibit
A attached hereto;

     

    (iii)         a
copy of the irrevocable instructions to the Company’s transfer agent instructing
the transfer agent to deliver via the Depository Trust Company Deposit
Withdrawal Agent Commission System (“DWAC”) Shares equal
to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser; and

     

    (iv)         the
Prospectus and Prospectus Supplement (which may be delivered in accordance with
Rule 172 under the Securities Act).

     

    (b)          On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

     

    (i)           this
Agreement duly executed by such Purchaser; and

     

    (ii)          such
Purchaser’s Subscription Amount by wire transfer to the account as specified in
writing by the Company.

     

    2.3          Closing
Conditions.

     

    (a)          The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     

    (i)           the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Purchasers contained herein (unless as of a specific date
therein);

     

    (ii)          all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and

     

    (iii)         the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

     

    (b)          The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

    
      
         

      

      
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    (i)           the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

     

    (ii)          all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed;

     

    (iii)         the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

     

    (iv)         there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and

     

    (v)          from
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any national or international calamity of such magnitude in
its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of each Purchaser, makes it impracticable
or inadvisable to purchase the Shares at the Closing.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1          Representations and
Warranties of the Company.  Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation made herein to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company
hereby makes the following representations and warranties to each
Purchaser:

     

    (a)           Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are as set forth in the
Prospectus.  The Company owns equity interests of each Subsidiary as
set forth in the Prospectus, free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights of
others to subscribe for or purchase securities.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (b)          Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

     

    (c)          Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals.  Each
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

     

    (d)          No
Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents, the issuance and sale of the Shares and
the consummation by it of the transactions contemplated hereby and thereby to
which it is a party do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (e)          Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.3 of this Agreement, (ii)
the filing with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of the Shares
for trading thereon in the time and manner required thereby and (iv) such
filings as are required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).

     

    (f)          Issuance of the Shares;
Registration.  The Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company.  The Company has prepared and filed the
Registration Statement in conformity with the requirements of the Securities
Act, which became effective on February 22, 2010 (the “Effective Date”),
including the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement.  The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission.  The Company, if required
by the rules and regulations of the Commission, proposes to file the Prospectus,
with the Commission pursuant to Rule 424(b).  At the time the
Registration Statement and any amendments thereto became effective, at the date
of this Agreement and at the Closing Date, the Registration Statement and any
amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Prospectus and any amendments or supplements thereto, at time the Prospectus
or any amendment or supplement thereto was issued and at the Closing Date,
conformed and will conform in all material respects to the requirements of the
Securities Act and did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (g)          Capitalization.  The
capitalization of the Company is as set forth on Schedule
3.1(g).  The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other than pursuant
to the exercise of employee stock options under the Company’s stock option
plans, the issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act.  No Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents.  Except as a result of the purchase and sale of the Shares
and as disclosed in the SEC Reports, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents.  The issuance and sale of the Shares will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of
the Company are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Shares.  Except as disclosed
in the SEC Reports, there are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders.

     

    (h)          SEC Reports; Financial
Statements.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and the
Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing.  Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (i)           Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the
date hereof, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans.  The Company does not have pending before the Commission
any request for confidential treatment of information.  Except for the
issuance of the Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has occurred or
exists or is reasonably expected to occur or exist with respect to the Company
or its Subsidiaries or their respective business, prospects, properties,
operations, assets or financial condition that would be required to be disclosed
by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least 1 Trading
Day prior to the date that this representation is made.

     

    (j)           Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Shares or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.  There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The Commission has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (k)           Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a
party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good.  No
executive officer, to the knowledge of the Company, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     

    (l)    
       Compliance.  Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree or
order of any court, arbitrator or governmental body or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

     

    (m)          Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.

     

    (n)           Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property,
do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries, and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under
lease by the Company and the Subsidiaries which is material to the business of
the Company and Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.

    
      
         

      

      
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    (o)           Patents and
Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”).  None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement.  Neither the Company nor any Subsidiary has received, since
the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as would not have a Material Adverse Effect.  To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights.  The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

    (p)           Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged.  Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.

     

    (q)           Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than for (i) payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.

    
      
         

      

      
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    (r)        
   Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of the date
hereof and as of the Closing Date.  The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms.  The
Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

     

    (s)           Certain
Fees.  Except as set forth in the Prospectus Supplement, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents.  The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.

     

    (t)          
 Investment
Company. The Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the Shares, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.  The Company shall conduct its business in a manner so
that it will not become an “investment company” subject to registration under
the Investment Company Act of 1940, as amended.

     

    (u)           Registration
Rights.  Except as disclosed in the SEC Reports, no Person has
any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company.

    
      
         

      

      
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    (v)           Listing and Maintenance
Requirements.  The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration.  The Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

     

    (w)          Application of Takeover
Protections.  The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Shares and the
Purchasers’ ownership of the Shares.

     

    (x)           Disclosure.  Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information which is not otherwise
disclosed in the Prospectus Supplement.   The Company understands
and confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company.  All of the
disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Disclosure Schedules to this Agreement, is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made and when made, not misleading.  The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.

     

    (y)           No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Shares to be integrated with prior offerings by the Company for purposes of any
applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

    
      
         

      

      
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    (z)           Solvency.  Based
on the consolidated financial condition of the Company as of the Closing Date,
after giving effect to the receipt by the Company of the proceeds from the sale
of the Shares hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be
paid.  The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).  The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date.  Schedule 3.1(z) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

     

    (aa)         Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary (i) has made or filed all United States
federal and state income and all foreign income and franchise tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to
which such returns, reports or declarations apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any Subsidiary know of
no basis for any such claim.

    
      
         

      

      
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    (bb)         Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

     

    (cc)         Accountants.  The
Company’s accounting firm is set forth on Schedule 3.1(cc) of
the Disclosure Schedules.  To the knowledge and belief of the Company,
such accounting firm is a registered public accounting firm as required by the
Exchange Act.

     

    (dd)       
Acknowledgment
Regarding Purchasers’ Purchase of Shares.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Shares.  The
Company further represents to each Purchaser that the Company’s decision to
enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by
the Company and its representatives.

     

    (ee)         Acknowledgement Regarding
Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere
herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.11
hereof), it is understood and acknowledged by the Company that: (i) none of the
Purchasers have been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Shares for any specified term; (ii) past or future open
market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the
closing of this or future private placement transactions, may negatively impact
the market price of the Company’s publicly-traded securities; (iii) any
Purchaser, and counter-parties in “derivative” transactions to which any such
Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) each Purchaser shall not be deemed to
have any affiliation with or control over any arm’s length counter-party in any
“derivative” transaction.  The Company further understands and
acknowledges that (y) one or more Purchasers may engage in hedging activities at
various times during the period that the Shares are outstanding, and (z) such
hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

    
      
         

      

      
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    (ff)          Regulation M
Compliance.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent in connection with the placement of the
Shares.

     

    (gg)        [RESERVED]

     

    (hh)         Office of Foreign Assets
Control.  Neither the Company nor, to the Company's knowledge,
any director, officer, agent, employee or affiliate of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

     

    (ii)           U.S. Real Property Holding
Corporation.  The Company is not and has never been a U.S. real
property holding corporation within the meaning of Section 897 of the Internal
Revenue Code of 1986, as amended, and the Company shall so certify upon
Purchaser’s request.

     

    (jj)           Bank Holding Company
Act.  Neither the Company nor any of its Subsidiaries or
Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to
regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”).  Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

     

    (kk)         Money
Laundering.  The operations of the Company are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable
rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

    
      
         

      

      
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    3.2  Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a specific date
therein):

     

    (a)       Organization;
Authority.  Such Purchaser is either an individual or an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of such Purchaser.  Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

     

    (b)       [RESERVED]

     

    (c)       Purchaser
Status.  At the time such Purchaser was offered the Shares, it
was, and as of the date hereof it is, an “accredited investor” as defined in
Rule 501(a) under the Securities Act.  Such Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange
Act.

     

    (d)       Experience of Such
Purchaser.  Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment.  Such Purchaser is able to bear the economic
risk of an investment in the Shares and, at the present time, is able to afford
a complete loss of such investment.

     

    (e)       Certain Transactions and
Confidentiality.  Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person acting on
behalf of or pursuant to any understanding with such Purchaser, directly or
indirectly executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that such
Purchaser first received a term sheet (written or oral) as of the Company or any
other Person representing the Company setting forth the material terms of the
transactions contemplated hereunder and ending immediately prior to the
execution hereof.  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares covered by this Agreement.  Other than to other
Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability of,
or securing of, available shares to borrow in order to effect Short Sales or
similar transactions in the future.

    
      
         

      

      
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    The
Company acknowledges and agrees that the representations contained in Section
3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated
hereby.

     

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1  Furnishing of
Information.  For a period of 2 years from the Closing Date,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act even if the
Company is not then subject to the reporting requirements of the Exchange
Act.

     

    4.2  Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Shares for purposes
of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.

     

    4.3  Securities Laws Disclosure;
Publicity.  The Company shall (a) by 8:30 a.m. (New York City
time) on the Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby
and (b) file a Current Report on Form 6-K with the Commission, including the
Transaction Documents as exhibits thereto, within two Trading Days following the
date hereof.  From and after the issuance of such press release, the
Company shall have publicly disclosed all material, non-public information
delivered to any of the Purchasers by the Company or any of its subsidiaries, or
any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents.  The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or
communication.  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b).

    
      
         

      

      
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    4.4  Shareholder Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Shares under the Transaction Documents or
under any other agreement between the Company and the Purchasers.

     

    4.5  Non-Public
Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, and each
Purchaser agrees, and shall direct its agents and counsel not to, request any
material non-public information from the Company or any Person acting on its
behalf, unless prior thereto such Purchaser shall have executed a written
agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser
shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.

     

    4.6  Use of
Proceeds.  Except as set forth on Schedule 4.6 attached
hereto, the Company shall use the net proceeds from the sale of the Shares
hereunder for working capital purposes and shall not use such proceeds for: (a)
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents,
(c) the settlement of any outstanding litigation or (d) in violation of the FCPA
or OFAC regulations.

    
      
         

      

      
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    4.7  Indemnification of
Purchasers.   Subject to the provisions of this Section
4.7, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by such Purchaser of state or federal securities laws or any conduct
by such Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance).  If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel.  The Company will not be
liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.7 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are incurred. The
indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others,
and (y) any liabilities the Company may be subject to pursuant to
law.

     

    4.8  Listing of Common
Stock. The Company hereby agrees to use best efforts to maintain the
listing or quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with or prior to the Closing, the Company
shall apply to list or quote all of the Shares on such Trading Market and
promptly secure the listing of all of the Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will then include in such application all of the
Shares, and will take such other action as is necessary to cause all of the
Shares to be listed or quoted on such other Trading Market as promptly as
possible.  The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

     

    4.9  Subsequent Equity
Sales.  From the date hereof until 30 days after the Closing
Date, neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of any shares
of Common Stock or Common Stock Equivalents; provided, however, that the 30
day period set forth in this Section 4.9 shall be extended for the number of
Trading Days during such period in which (i) trading in the Common Stock is
suspended by any Trading Market, or (ii) the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be
used by the Purchasers for the resale of the Shares.  Notwithstanding
the foregoing, this Section 4.9 shall not apply in respect of an Exempt
Issuance.

    
      
         

      

      
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    4.10  Equal Treatment of
Purchasers.  No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents.  For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Shares or otherwise.

     

    4.11  Certain Transactions and
Confidentiality. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or sales,
including Short Sales of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.3.  Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in
Section 4.3, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Disclosure
Schedules.  Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release as described
in Section 4.3, (ii) no Purchaser shall be restricted or prohibited from
effecting any transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.3 and (iii) no Purchaser shall
have any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.3. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this
Agreement.

     

    4.12  Capital
Changes.  Until the one year anniversary of the Closing Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares.

    
      
         

      

      
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    ARTICLE
V.

    MISCELLANEOUS

     

    5.1  Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before March 26, 2010;
provided, however, that no such
termination will affect the right of any party to sue for any breach by the
other party (or parties).

     

    5.2  Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Shares to the Purchasers.

     

    5.3  Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, the Prospectus and the Prospectus Supplement,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

     

    5.4  Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    5.5  Amendments;
Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least 67% in
interest of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is
sought.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

     

    5.6  Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

    
      
         

      

      
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    5.7  Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each Purchaser (other
than by merger).  Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Shares, provided that such transferee agrees in writing to be bound, with
respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

     

    5.8  No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.7.

     

    5.9  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.  If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then, in
addition to the obligations of the Company under Section 4.7, the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.

     

    5.10  Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Shares.

     

    5.11  Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original
thereof.

    
      
         

      

      
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    5.12  Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    5.13  Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

     

    5.14  Replacement of
Shares.  If any certificate or instrument evidencing any Shares
is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction.  The applicant for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance
of such replacement Shares.

     

    5.15  Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

     

    5.16  Payment Set
Aside.  To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    5.17  Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  Each Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents.  For reasons of
administrative convenience only, each Purchaser and its respective counsel have
chosen to communicate with the Company through WS.  WS does not
represent any of the Purchasers and only represents Rodman & Renshaw, LLC,
the placement agent.  The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by any of the
Purchasers.  It is expressly understood and agreed that each provision
contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the
Purchasers collectively and not between and among the Purchasers.

     

    5.18  Saturdays, Sundays,
Holidays, etc.   If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    5.19  Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement but prior to
Closing.

     

    5.20  WAIVER OF
JURY TRIAL.  IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    (Signature
Pages Follow)

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated
above.

    

    
      
        
          
            
              	
                      AUTOCHINA
      INTERNATIONAL LIMITED

                    	 	
                      Address for Notice:

                    
	 
      	 	 
      
	
                      By: 

                    	 
      	 	
                      Fax:

                    
	 
      	
                      Name:

                    	 	 
      
	 
      	
                      Title:

                    	 	 
      
	
                      With
      a copy to (which shall not constitute notice):

                    	 	 
      

            

          

        

      

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    [PURCHASER
SIGNATURE PAGES TO AUTC SECURITIES PURCHASE AGREEMENT]

    

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    Name of
Purchaser: ________________________________________________________

     

    Signature of Authorized Signatory of
Purchaser: _________________________________

     

    Name of
Authorized Signatory:
_______________________________________________

     

    Title of
Authorized Signatory:
________________________________________________

     

    Email
Address of Authorized
Signatory:_________________________________________

     

    Facsimile
Number of Authorized Signatory:
__________________________________________

     

    Address
for Notice of Purchaser:

     

    

    Address
for Delivery of Shares for Purchaser (if not same as address for
notice):

     

    

    Subscription
Amount: $_________________

    

    Shares:
_________________

    

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    

    o  Notwithstanding
anything contained in this Agreement to the contrary, by checking this box (i)
the obligations of the above-signed to purchase the securities set forth in this
Agreement to be purchased from the Company by the above-signed, and the
obligations of the Company to sell such securities to the above-signed, shall be
unconditional and all conditions to Closing shall be disregarded, (ii) the
Closing shall occur on the third (3rd)
Trading Day following the date of this Agreement and (iii) any condition to
Closing contemplated by this Agreement (but prior to being disregarded by clause
(i) above) that required delivery by the Company or the above-signed of any
agreement, instrument, certificate or the like or purchase price (as applicable)
shall no longer be a condition and shall instead be an unconditional obligation
of the Company or the above-signed (as applicable) to deliver such agreement,
instrument, certificate or the like or purchase price (as applicable) to such
other party on the Closing Date.

    

    [SIGNATURE
PAGES CONTINUE]

    
      
         

      

      
        29

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