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Exhibit 4.1    
  




RIGHTS AGREEMENT  


 between  


 ALKERMES, INC.  


 and  


 EQUISERVE TRUST COMPANY, N.A.  


 as  


 Rights Agent  


 Dated as of February 7, 2003  


 Amended as of April 24, 2003  








  



 
 

TABLE OF CONTENTS    
  



	 
	 	 
	 	Page

	1.	 	Certain Definitions. 	 	1
	2.	 	Appointment of Rights Agent. 	 	5
	3.	 	Issuance of Rights Certificates. 	 	5
	4.	 	Form of Rights Certificates. 	 	6
	5.	 	Countersignature and Registration. 	 	7
	6.	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. 	 	7
	7.	 	Exercise of Rights; Purchase Price; Expiration Date of Rights. 	 	8
	8.	 	Cancellation and Destruction of Rights Certificates. 	 	9
	9.	 	Reservation and Availability of Capital Stock. 	 	10
	10.	 	Preferred Stock Record Date. 	 	11
	11.	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. 	 	11
	12.	 	Certificate of Adjusted Purchase Price or Number of Shares. 	 	18
	13.	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 	 	18
	14.	 	Fractional Rights and Fractional Shares. 	 	20
	15.	 	Rights of Action. 	 	21
	16.	 	Consent and Agreement of Rights Holders. 	 	21
	17.	 	Rights Certificate Holder Not Deemed a Shareholder. 	 	22
	18.	 	Concerning the Rights Agent. 	 	22
	19.	 	Merger or Consolidation or Change of Name of Rights Agent. 	 	22
	20.	 	Duties of Rights Agent. 	 	23
	21.	 	Change of Rights Agent. 	 	24
	22.	 	Issuance of New Rights Certificates. 	 	25
	23.	 	Redemption and Termination. 	 	25
	24.	 	Exchange. 	 	26
	25.	 	Notice of Certain Events. 	 	27
	26.	 	Notices. 	 	28
	27.	 	Supplements and Amendments. 	 	28
	28.	 	Successors. 	 	29
	29.	 	Determinations and Actions by the Board of Directors, etc. 	 	29
	30.	 	Benefits of This Agreement. 	 	29
	31.	 	Severability. 	 	29
	32.	 	Governing Law. 	 	29
	33.	 	Counterparts. 	 	30
	34.	 	Descriptive Headings; Construction. 	 	30





	Exhibit A—	 	Form of Statement of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock
	Exhibit B—	 	Form of Rights Certificate
	Exhibit C—	 	Summary of Rights to Purchase Series A Junior Participating Preferred Stock




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RIGHTS AGREEMENT    
  


        RIGHTS AGREEMENT, dated as of February 7, 2003, as amended as of April 24, 2003 (the "Agreement"),
between Alkermes, Inc., a Pennsylvania corporation (the "Company"), and EquiServe Trust Company, N.A., a national banking association (the
"Rights Agent"). 


RECITALS  



	A.
	On
February 7, 2003 (the "Rights Dividend Declaration Date"), the Board of Directors of the Company authorized and declared a
dividend distribution of one Right (as hereinafter defined) for each share of common stock, par value $0.01 per share, of the Company (the "Common
Stock") outstanding at the close of business on February 20, 2003 (the "Record Date"), and has authorized 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 issued
between the Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date (as hereinafter defined).



	B.
	Each
Right initially represents the right to purchase one one-thousandth (1/1000) of a share (a "Unit") of
Series A Junior Participating Preferred Stock (the "Preferred Stock") of the Company having the rights, powers and preferences substantially as
set forth in the form of Statement of Designation, Preferences and Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights"). 




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



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



        (a)  "Acquiring Person" will mean any Person who or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, but will not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit
plan, or (v) any Exempted Person. 


        (b)  "Affiliate" and "Associate" will have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement (the
"Exchange Act"). 


        (c)  A
Person will be deemed the "Beneficial Owner" of, and will be deemed to "beneficially
own," any securities: 



          (i)  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 or the occurrence of an event) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a Person will 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 issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, (3) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or 





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pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights,
or (4) securities issued or issuable pursuant to any employee benefit plan of the Company or any Subsidiary of the Company or any employment agreement, arrangement or other understanding
between the Company or any Subsidiary of the Company and any Person or any of such Person's Affiliates or Associates; or 


        (ii)  which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person will not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (c)(ii) as a result of (1) an agreement, arrangement or understanding to vote such
security if such agreement, 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 provisions of the General Rules and Regulations under the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report), or (2) securities issued or issuable pursuant to any employee benefit plan of the Company or
any Subsidiary of the Company or any employment agreement, arrangement or other understanding between the Company or any Subsidiary of the Company and any Person or any of such Person's Affiliates or
Associates; or 


        (iii)  which
are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso to subparagraph (c)(ii) above) or disposing of any voting securities of the Company; 







provided, however, that nothing in this  Section 1(c) will 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 


provided, further, however, that any shareholder of the
Company, with Affiliates, Associates or other Persons who may be deemed representatives of such shareholder serving as directors or officers of the Company, will not be deemed to beneficially own
securities held by other Persons as a result of (x) Persons affiliated or otherwise associated with such shareholder serving as directors or officers or taking any action in connection
therewith, (y) discussing the status of its shares with the Company or other shareholders of the Company similarly situated or (z) voting or acting in a manner similar to other
shareholders similarly situated, absent a specific finding by the Board of Directors of an express agreement among such shareholders to act in concert with one another as shareholders so as to cause,
in the good faith judgment of the Board of Directors, each such shareholder to be the Beneficial Owner of the shares held by the other shareholders. 




        (d)  "Business Day" will mean any day other than a Saturday, Sunday or a day on which banking institutions in the Commonwealth
of Massachusetts are authorized or obligated by law or executive order to close. 


        (e)  "Close of business" on any given date will mean 5:00 P.M., Cambridge, Massachusetts time, on such date;  provided, however, that if such date is not a Business Day it will mean 5:00 P.M., Cambridge,
Massachusetts time, on the next succeeding Business Day. 




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        (f)    "Common Stock" will have the meaning set forth in the recital to this Agreement, except that "Common Stock" when used
with reference to any Person other than the Company will 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" will 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 such later date as the Board of Directors of the Company will determine) after the date that a tender
or exchange offer by any Person (other than any Exempted Person, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding. 




        (h)  "Exempted Person" will mean any Person who, together with all Affiliates and Associates of such Person, 



          (i)  is
the Beneficial Owner of securities (as disclosed in public filings with the Securities and Exchange Commission on the Rights Dividend Declaration Date), representing
15% or more of the shares of Common Stock outstanding on the Rights Dividend Declaration Date, so long as such Person continues to be the Beneficial Owner of 15% or more of the then outstanding shares
of Common Stock; provided, however, that any such Person described in this  clause (i) will no longer be
deemed to be an Exempted Person and will be deemed an Acquiring Person if (x) such Person, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner, at any time after the Rights Dividend Declaration Date, of securities representing 20% or more of the then outstanding shares of
Common Stock, unless such Person inadvertently becomes the Beneficial Owner of 20% or more of the then outstanding shares of Common Stock and, as soon as practicable, divests itself of a sufficient
amount of such shares so as to Beneficially Own less than 20% of such then outstanding shares of Common Stock, or (y) such Person publishes or sends or gives a tender or exchange offer by such
Person within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding; or 


        (ii)  becomes
the Beneficial Owner of securities representing 15% or more of the shares of Common Stock then outstanding because of a reduction in the number of outstanding
shares of Common Stock then outstanding as a result of the purchase by the Company or a Subsidiary of the Company of shares of Common Stock; provided,  however, that any such Person described in this clause (ii) will no longer be deemed to be an
Exempted Person and will be deemed an Acquiring Person if such Person, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner, at any time after the date such Person
became the Beneficial Owner of (and so long as such Person continues to be the Beneficial Owner of) 15% or more of the then outstanding shares of Common Stock, of additional
securities representing 1,000 or more shares of Common Stock, except (x) pursuant to the exercise of options or warrants to purchase Common 





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Stock outstanding and beneficially owned by such Person as of the date such Person became the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock or as a result of an
adjustment to the number of shares of Common Stock for which such options or warrants are exercisable pursuant to the terms thereof, or (y) as a result of a stock split, stock dividend or the
like. A purchaser, assignee or transferee of the shares of Common Stock (or warrants or options exercisable for Common Stock) from an Exempted Person will not thereby become an Exempted Person, except
that a transferee from the estate of an Exempted Person who receives Common Stock as a bequest or inheritance from an Exempted Person will be an Exempted Person so long as such Person continues to be
the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock. 




        (i)    "Expiration Date" will mean the earlier of (i) the close of business on the Rights Plan Expiration Date, or
(ii) the time at which the Rights are redeemed as provided in Section 23 hereof. 


        (j)    "Flip-in Event" will mean any event described in  Section 11(a)(ii) hereof. 


        (k)  "Flip-over Event" will mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof. 



        (l)    "Person" will mean any individual, corporation (including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity. 


        (m)  "Preferred Stock" will mean shares of Series A Junior Participating Preferred Stock, par value $0.01 per share, of
the Company, and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, par value $0.01 per share, of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock. 


        (n)  "Purchase Price" will mean the exercise price per Unit, as set forth in Sections 4(a), 7,
11 and 13. 


        (o)  "Qualifying Offer" will mean an acquisition of shares of Common Stock pursuant to a tender offer or an exchange offer for
all outstanding shares of Common Stock at a price and on terms determined by at least a majority of the members of the Board of Directors of the Company who are not officers of the Company and who are
not representatives, nominees, Affiliates or Associates of an Acquiring Person, after receiving advice from one or more investment banking firms, to be (i) at a price which is fair to
shareholders (taking into account all factors which such members of the Board deem relevant,
including prices which could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value), and (ii) otherwise in the best interests of
the Company and its shareholders. 


        (p)  "Record Date" will be the date set forth in the recital to this Agreement. 


        (q)  "Rights Plan Expiration Date" will mean February 19, 2013. 


        (r)  "Stock Acquisition Date" will mean the first date of public announcement (which, for purposes of this definition, will
include a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. 




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        (s)  "Subsidiary" will mean, with reference to any Person, any corporation or other entity 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. 



        (t)    "Triggering Event" will mean any Flip-in Event or any Flip-over Event. 




        2.    Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and in no event be liable for, the acts or omissions of any such
co-Rights Agent. 


        3.    Issuance of Rights Certificates.



        (a)  Until
the Distribution Date, 



          (i)  subject
to Section (3)(b) below, the Rights will be evidenced by the certificates for the Common Stock registered
in the names of the holders of the Common Stock (which certificates will be deemed also to be certificates for the Rights) and not by separate certificates, and 



        (ii)  the
Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). 






As
soon as practicable after the Distribution Date, the Rights Agent will 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 shown on the records of the Company, one or more rights certificates, in substantially the form of  Exhibit B hereto (the "Rights Certificates"), evidencing one right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to  Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company will make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. 




        (b)  As
promptly as practicable following the Record Date, the Company will 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 (or such later date as is soonest practicable), at the address of such holder shown on the records of the Company. The registered
holders of the Common Stock as of the Record Date will 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 representing shares of Common Stock in respect of which Rights have been issued will also constitute the transfer of the Rights associated with such shares of Common Stock. 


        (c)  Rights
will be issued in respect of all shares of Common Stock which 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 will also be deemed to be certificates for Rights, and will bear the
following legend: 


"This
certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Alkermes, Inc. (the
"Company") and 




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EquiServe Trust Company, N.A. (the "Rights Agent"), dated as of February 7, 2003, as may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the
Rights Agent. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Rights
Agent will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void." 





With
respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates will likewise be evidenced by such certificates alone and registered holders of Common Stock will also be the registered holders of the associated Rights, and the
transfer of any of such certificates will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. 



        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) will 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 and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of  Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, will be
dated as of the Record Date and on their face will entitle the holders thereof to purchase such number of Units of Preferred Stock as will be set forth therein at the price set forth therein (such
exercise price per Unit, the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price
thereof will be subject to adjustment as provided herein. 


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




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Certificate referred to in this sentence, will contain (to the extent feasible) the following legend: 


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





        5.    Countersignature and Registration.



        (a)  The
Rights Certificates will be executed on behalf of the Company by its Chief Executive Officer, President, Chief Financial Officer or any Vice President, either
manually or by facsimile signature, and will have affixed thereto the Company's seal or a facsimile thereof, which will be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates will be countersigned by the Rights Agent, either manually or by facsimile signature, and will not be valid for any purpose unless so
countersigned. In case any officer of the Company who will have signed any of the Rights Certificates will 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, will be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such
person was not such an officer. 


        (b)  Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal 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 will show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 




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



        (a)  Subject
to the provisions of 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 Units 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
will make such request in writing delivered to the Rights Agent, and will surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company will be obligated to take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder will have completed and signed the certificate contained in the form of assignment on the reverse side of
such Rights Certificate and will have provided such additional evidence of the identity of the Beneficial Owner (or former 




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Beneficial Owner) or Affiliates or Associates thereof as the Company will reasonably request. Thereupon the Rights Agent will, 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. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates. 


        (b)  Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will 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. 




        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 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 duly executed, to the Rights Agent at the principal 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 Units of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered
Rights are then exercisable, at or prior to the Expiration Date. 


        (b)  The
Purchase Price for each Unit of Preferred Stock pursuant to the exercise of a Right will initially be $80.00, and will be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and will be payable in accordance with  paragraph (c) below.



        (c)  Upon
receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment,
with respect to each Right so exercised, of the Purchase Price per Unit of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights Agent will, 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 Units of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the
Company will 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 the
depositary receipts representing such number of Units of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts will be
deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, 


        (ii)  requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with  Section 14 hereof, 





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        (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)  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) will be made in cash or by certified bank
check or bank draft payable to the order of the Company. 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 appropriate. The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a 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 will exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised will be issued by the Rights Agent and 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, subject to the provisions of Section 14 hereof. 


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


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




        8.    Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange will, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the
Rights Agent, will be canceled by it, and no Rights Certificates will 



9





 


be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and retirement, and the Rights Agent
will so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent will deliver all canceled Rights Certificates to
the Company, or will, at the written request of the Company, destroy such canceled Rights Certificates, and in such case will deliver a certificate of destruction thereof to the Company. 


        9.    Reservation and Availability of Capital Stock.



        (a)  The
Company covenants and agrees that it will cause to be reserved and kept available 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  Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding Rights. 


        (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 any national securities exchange, the Company will 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 such exchange upon official notice of issuance upon such exercise. 



        (c)  The
Company will use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Flip-in Event on
which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Securities Act of 1933 (the "Securities Act") with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities,
and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company may temporarily 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 such registration statement and permit it to become effective. Upon any such suspension, the Company will 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. In addition, if the Company will determine that a registration statement
is required following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights will not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction will not have been obtained,
the exercise thereof will not be permitted under applicable law or a registration statement will not have been declared effective. 



        (d)  The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all Units of Preferred Stock (and, following the occurrence of a 




10





 






Triggering Event, Common Stock and/or other securities) delivered upon exercise of Rights will, at the time of delivery of the certificates for such shares (or Units) (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. 



        (e)  The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect
of the issuance or delivery of the Rights Certificates and of any certificates for a number of Units of Preferred Stock (or Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company will not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance
or delivery of a number of Units 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 Units 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 such tax will have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due. 




        10.  Preferred Stock Record Date. Each Person in whose name any certificate for a number of Units of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights will 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) represented thereby on, and such certificate will be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was 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 will be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate will 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 will not be entitled to any rights of a shareholder of the Company with respect to shares for which the Rights will be exercisable, including the right to
vote, to receive dividends or other distributions or to exercise any preemptive rights, and will not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 


        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)    In
the event the Company will at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its 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) and Section 7(e) hereof, the Purchase
Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, will be proportionately adjusted so that the holder of any Right exercised after such time will be entitled to receive, 




11





 



upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 11(a)(i) and  Section 11(a)(ii)
 hereof, the adjustment provided for in this Section 11(a)(i) will be in
addition to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. 



        (ii)  In
the event any Person (other than an Exempted Person, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan), alone or together with its Affiliates and Associates, will, at any time after
the Rights Dividend Declaration Date, become the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, unless the event causing the 15% threshold to be crossed is a
transaction set forth in Section 13(a) hereof or is a Qualifying Offer, then, promptly following the occurrence of such event (a
"Flip-in Event"), proper provision will be made so that each holder of a Right (except as provided below and in  Section 7(e) hereof) will thereafter
have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of Units of Preferred Stock, such number of shares of Common Stock of the Company (the "Adjustment Shares")
as will equal the result obtained by (1) multiplying the then current Purchase Price by the then number of Units of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Flip-in Event, and (2) dividing that product (which, following such first occurrence, will 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. 



        (iii)  In
the event that the number of shares of Common Stock which are authorized by the Company's Articles 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  Section 11(a)(ii) above, the Company will
(1) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value"), and (2) 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, (A) cash, (B) a reduction in the Purchase
Price, (C) Common Stock or other equity securities of the Company (including shares, or units of shares, of preferred stock, such as the Preferred Stock, which the Board of Directors of the
Company has deemed to have essentially the same value or economic rights as shares of Common Stock (such shares of preferred stock being referred to as "Common Stock
Equivalents")), (D) debt securities of the Company, (E) other assets, or (F) any combination of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the Purchase Price), where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment banking
firm selected by the Board; provided, however, that if the Company will not have made adequate provision
to deliver value pursuant to clause (2) of this Section 11(a)(iii) within 30 days
following the later of (x) the first occurrence of a Flip-in 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 "Flip-in
Trigger Date"), then the Company will be 





12





 







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 shares and/or cash have an aggregate value equal to the Spread. For purposes of the preceding sentence, the term "Spread" will mean the excess of
(i) the Current Value over (ii) the Purchase Price. If the Board of Directors of the Company determines 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 after the
Flip-in Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such 30-day period, as it may be extended, is
herein called the "Substitution Period"). To the extent that action is to be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (I) will provide, subject to  Section 7(e) hereof, that such action will apply uniformly to
all outstanding Rights, and (II) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek such shareholder approval for such authorization 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. In the event of any such suspension, the Company will issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this  Section 11(a)(iii), the value of each Adjustment
Share will be the Current Market Price per share of the Common Stock on the Flip-in
Trigger Date and the per share or per unit value of any Common Stock Equivalent will be deemed to equal the Current Market Price per share of the Common Stock on such date. 




        (b)  In
case the Company will 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 will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, (i) the numerator of which will 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 (ii) the
denominator of which will 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). In case such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value of such consideration will be as determined in good faith by the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent and will 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
will not be deemed outstanding for the purpose of any such computation. Such adjustment will be made successively whenever such a record date is fixed, and in the event that such rights or 




13





 



warrants are not so issued, the Purchase Price will 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 will 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 corporation) of evidences of indebtedness, cash (other than a regular quarterly 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 will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, (i) the numerator of which will 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 of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and (ii) the denominator of which will be such current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock. Such adjustments will be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made, the Purchase Price will be adjusted to be the Purchase Price which would have been in effect if such record date had not
been fixed. 


        (d)  (i)    For
the purpose of any computation hereunder, other than computations made pursuant to  Section 11(a)(iii) above, the Current Market Price per share of Common Stock on any date will 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 such date, and for purposes of computations made pursuant to  Section 11(a)(iii) above, the Current
Market Price per share of Common Stock on any date will 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 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 the ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification will not have occurred prior to the commencement of the requisite 30 Trading Day or 10 Trading Day period, as set forth above, then, and in each such case,
the Current Market Price will be properly adjusted to take into account ex-dividend trading. The closing price for each day will be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to
trading or, if 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 the National Association of Securities Dealers, Inc. Automated Quotation System ("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 




14





 






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 of Directors of the Company. 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 will be used. The term "Trading
Day" will 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 will mean the fair value per share as determined in good faith by the Board, whose determination will be described in a statement filed with the Rights Agent and
will be conclusive for all purposes. 



        (ii)  For
the purpose of any computation hereunder, the Current Market Price per share of Preferred Stock will be determined in the same manner as set forth above for the
Common Stock in Section 11(d)(i) (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  Section 11(d)(i), the Current Market Price per share of Preferred
Stock will 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 will mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent and will
be conclusive for all purposes. For all purposes of this Agreement, the Current Market Price of a Unit will be equal to the Current Market Price of one share of Preferred Stock divided by 1,000. 




        (e)  Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this  Section 11(e) are not required to be made will be carried forward and taken into account in any subsequent adjustment. All calculations under
this Section 11 will be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or
one-ten 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 will 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 will 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 will 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 will apply on like terms to any such other shares. 


        (g)  All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder will evidence the right to purchase, at the adjusted
Purchase 




15





 






Price, the number of Units 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 will 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 will thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Units of Preferred Stock (calculated to the
nearest one-ten millionth) obtained by (i) multiplying (1) the number of Units covered by a Right immediately prior to this adjustment, by (2) 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 Units of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights will be exercisable for the number of Units 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 will 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 will make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, will 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
will, 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 will be entitled as a result of
such adjustment, or, at the option of the Company, will 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 will be entitled after such adjustment. Rights
Certificates so to be distributed will be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and will be
registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. 



        (j)    Irrespective
of any adjustment or change in the Purchase Price or the number of Units 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 Units and the number of Units 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 stated value, if any, of the number of Units of Preferred Stock
issuable upon exercise of the Rights, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue such
number of fully paid and nonassessable Units of Preferred Stock at such adjusted Purchase Price. 




16





 





        (l)    In
any case in which this Section 11 will 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 until the occurrence
of such event the issuance to the holder of any Right exercised after such record date of that number of Units of Preferred Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of Units 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 will 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 will 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 its good faith
judgment the Board of Directors of the Company will determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance solely for cash of
any shares of Preferred Stock at less than the current market price, (iii) issuance solely 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 dividends or (v) issuance of rights, options or warrants referred to in this  Section 11, hereafter made by the Company to holders of
its Preferred Stock will not be taxable to such shareholders. 


        (n)  The
Company covenants and agrees that it will 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 shareholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof will have received a distribution of Rights previously owned by such Person
or any of its Affiliates and Associates. 


        (o)  The
Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23
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, in the event that the Company will 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 shares of Common Stock, or
(iii) combine the outstanding shares of 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,
will be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any 




17





 






such event will 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 which will be the
total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which will be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event. 




        12.  Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in  Section 11 and Section 13 hereof, the Company will (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts 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. The Rights Agent will be fully protected in
relying on any such certificate and on any adjustment therein contained. 


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



        (a)  In
the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company will 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 will 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) will consolidate with,
or merge with or into, the Company, and the Company will be the continuing or surviving corporation
of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock will be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company will sell or otherwise transfer (or one or more of its Subsidiaries will 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 (except as may be contemplated by Section 13(d) hereof) (a "Flip-over
Event"), proper provision will be made so that: 



          (i)  each
holder of a Right, except as provided in Section 7(e) hereof, will thereafter 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, non-assessable and
freely tradeable shares of common stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as will
be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of Units of Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has occurred prior to the first occurrence of a Flip-over Event, multiplying the number
of such Units for which a Right was exercisable immediately prior to the first occurrence of a Flip-in 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 Flip-over Event, will 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 Flip-over Event; 





18





 



        (ii)  such
Principal Party will thereafter be liable for, and will assume, by virtue of such Flip-over Event, all the obligations and duties of the Company
pursuant to this Agreement; 


        (iii)  the
term "Company" will thereafter be deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof will apply only to such Principal Party following the first occurrence of a Flip-over Event; 



        (iv)  such
Principal Party will take such steps (including 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 will thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and 


        (v)  the
provisions of Section 11(a)(ii) hereof will be of no effect following the first occurrence of any
Flip-over Event. 




        (b)  "Principal Party" will mean: 



          (i)  in
the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or 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; provided, however, that in any such case, (A) 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" will refer to
such other Person; and (B) 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" will refer to whichever of such Persons is the issuer of the common stock having the greatest aggregate market value. 




        (c)  The
Company will not consummate any such consolidation, merger, sale or transfer unless the Principal Party will 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 such
Principal Party will have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in Sections 13(a) and 13(b) and further providing that, as
soon as practicable after the date of any consolidation, merger or sale of assets mentioned in Section 13(a), the Principal Party will: 



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





19





 



        (ii)  will
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 under the Exchange Act. 






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




        (d)  Notwithstanding
anything in this Agreement to the contrary, Section 13 will not be applicable to a transaction
described in clauses (x) and (y) of Section 13(a)
if (i) such transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to a Qualifying Offer (or a wholly owned Subsidiary of any such Person or Persons),
(ii) in the event that such transaction follows a tender or exchange offer, the price per share of Common Stock offered in such transaction is not less than the price per share of Common Stock
paid to all holders of shares of Common Stock whose shares were purchased pursuant to such tender offer or exchange offer, and (iii) in the event that such transaction follows a tender or
exchange offer, the form of consideration being offered to the remaining holders of shares of Common Stock pursuant to such transaction is the same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any such transaction contemplated by this Section 13(d), all Rights hereunder will expire. 




        14.  Fractional Rights and Fractional Shares.



        (a)  The
Company will 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 will 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 will 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 of the Rights for any day will be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange, or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or if the
Rights are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use, or, if on any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company will be used. 


        (b)  The
Company will not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of Units 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 Units of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral multiples of Units of Preferred Stock, 




20





 






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 Units of Preferred Stock. For purposes of this Section 14(b), the current market value of Units of Preferred Stock will be one
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 will 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 will 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)  The
holder of a Right by the acceptance of the Rights expressly waives his or her right to receive any fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14. 




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


        16.  Consent and 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 principal office or offices of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; 


        (c)  subject
to 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, 




21





 






and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, will be required to be affected by any notice
to the contrary; and 


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




        17.  Rights Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Rights Certificate will be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of Units 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 will 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
shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting shareholders (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 will have been exercised in accordance with the provisions hereof. 


        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 administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. 


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




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



        (a)  Any
corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent will be a party, or any corporation succeeding to the corporate trust or shareholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be eligible for 




22





 



appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent will succeed
to the agency created by this Agreement, any of the Rights Certificates will 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 will not have been countersigned, any successor Rights Agent may countersign
such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement. 


        (b)  In
case at any time the name of the Rights Agent will be changed and at such time any of the Rights Certificates will 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 will 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 will have the full force
provided in the Rights Certificates and in this Agreement. 




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



        (a)  The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the advice of such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. 



        (b)  Whenever
in the performance of its duties under this Agreement the Rights Agent will deem it necessary or desirable that any fact or matter (including the identity of
any Acquiring Person and the determination of "current market price") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chief Executive Officer, the President, the Chief
Financial Officer, 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 will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate. 


        (c)  The
Rights Agent will be liable hereunder only for its own gross negligence, bad faith or willful misconduct. 


        (d)  The
Rights Agent will 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 will be deemed to have been made by the Company only. 



        (e)  The
Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible for any adjustment required under the provisions of  Section 11 or Section 13 hereof or responsible for the manner, method or amount of any
such adjustment or the 




23





 






ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor will 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 Chief Executive Officer, the
President, the Chief Financial Officer, 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 it will not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. 


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



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


        (j)    No
provision of this Agreement will 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 will be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it. 


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




        21.  Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 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. In the event that the Rights Agent ceases to be the transfer agent for the Company's Common Stock, the Rights Agent will be deemed to resign automatically
on the effective date thereof; and any required notice will be sent by the Company. The Company may, in its sole discretion, remove the Rights Agent or any 



24





 


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 will resign or be removed or will otherwise become incapable of acting,
the Company will appoint a successor to the Rights Agent. If the Company will 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 will, 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 the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, will be either (a) a corporation organized and doing business under the laws of the United States or of any state of the United
States, in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000, or (b) an Affiliate of such a corporation. After appointment, the successor Rights Agent will 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 will 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 will 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, will
not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 


        22.  Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the 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 the redemption or expiration of the Rights, the Company (a) will, 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, granted or awarded as of the Distribution Date, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided,  however, that (i) no such Rights
Certificate will be issued if, and to the extent that, the Company will 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 will be
issued if, and to the extent that, appropriate adjustment will otherwise have been made in lieu of the issuance thereof. 


        23.  Redemption and Termination.



        (a)  The
Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the 10th day following
the Stock Acquisition Date (or, if the Stock Acquisition Date will have occurred prior to the Record Date, the close of business on the 20thday following the Record Date), or
(ii) the Rights Plan Expiration Date, redeem all 




25





 



but not less than all the then outstanding Rights at a redemption price of $0.001 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"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights will not be exercisable after the first occurrence of a Flip-in Event until such time as the Company's right of redemption hereunder
has expired. The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the "Current Market Price," as defined
in Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or any other form of consideration deemed appropriate by the Board of
Directors. 


        (b)  Immediately
upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which will have been filed with the Rights Agent
and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company will give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at each holder's last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided will 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. 




        24.  Exchange.



        (a)  The
Company may, at its option, at any time after the Stock Acquisition Date, upon resolution by the Board of Directors of the Company, exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that have become 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 of this
Agreement (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Company may not effect such
exchange at any time after any Acquiring 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 of Directors of the Company ordering the exchange of any Rights pursuant to  Section 24(a) 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 such holder multiplied by the Exchange Ratio. The Company will
promptly give public notice of any such exchange; provided however, that the failure to give, or any defect in, such notice will not affect the validity
of such exchange. The Company promptly will 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 will be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange will be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights. 




26





 





        (c)  In
the event that there will not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company will make adequate provision to substitute, to the extent that there are
insufficient shares of Common Stock available, (1) cash, (2) other equity securities of the Company, (3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having an aggregate value per Right equal to the then current per share market price (determined pursuant to  Section 11(d) hereof) of the Common Stock multiplied by
the Exchange Ratio, where such aggregate value has been determined by a majority of the
Board of Directors, after receiving advice from a nationally recognized investment banking firm. To the extent that the Company determines that any such substitution must be made, the Company will
provide, subject to Section 7(e) hereof, that such substitution will apply uniformly to all outstanding Rights. 



        (d)  The
Company will 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, the Company will pay to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For the purposes of this  paragraph (d), the current market value of a whole share
of Common Stock will be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d) hereof) for the Trading Day immediately prior to the date of the exchange pursuant to this  Section 24. 




        25.  Notice of Certain Events.



        (a)  In
case the Company will 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 quarterly 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, then, in each such case, the Company will give to each holder of a Rights Certificate, to the extent feasible and in accordance with  Section 26 hereof, a notice of such proposed action,
which will 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 will be so given in the case of any action covered by  clause (i) or (ii)
 above at least 20 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 20 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 will be the earlier. 




27





 


        (b)  In
case any of the events set forth in Section 11(a)(ii) hereof will occur, then, in any such case, (i) the
Company will as soon as practicable thereafter give 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 will 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 will be deemed thereafter to refer
to Common Stock and/or, if appropriate, other securities. 




        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 will 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: 


Alkermes, Inc.

88 Sidney Street

Cambridge, MA 02139

Attention: Chief Executive Officer 




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 will 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: 



EquiServe
Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention: Client Administration 




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) will be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on
the registry books of the Company. 



        27.  Supplements and Amendments.



        (a)  Prior
to the Distribution Date and subject to Section 27(d), the Company and the Rights Agent will, 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. If there are uncertainties about the
appropriate treatment of accounting or other matter, the parties may wish to discuss the issue with the SEC Staff prior to the filing. If a pre-filing conference is arranged, it is
desirable to submit a written statement of the issues in advance, so that the conference can be more focused. 


        (b)  From
and after the Distribution Date and subject to Section 27(d), the Company and the Rights Agent will, 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 will 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); provided, however, this
Agreement may not be supplemented or amended to lengthen a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable. 




28





 





        (c)  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 will execute such supplement or amendment. 


        (d)  Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment will be made which changes the Redemption Price, the Rights Plan
Expiration Date, the Purchase Price or the number of Units of Preferred Stock for which a Right is exercisable. 



        (e)  Prior
to the Distribution Date, the interests of the holders of Rights will be deemed coincident with the interests of the holders of Common Stock. 




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


        29.  Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is
the Beneficial Owner, will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of
Directors of the Company will have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board in good faith, will (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the
Board to any liability to the holders of the Rights. 


        30.  Benefits of This Agreement. Nothing in this Agreement will 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 will 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). 


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


        32.  Governing Law. This Agreement, each Right and each Rights Certificate issued hereunder will be deemed to be a contract
made under the laws of the Commonwealth of Pennsylvania and 



29





 





for all purposes will 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. 


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


        34.  Descriptive Headings; Construction. Descriptive headings of the several sections of this Agreement are inserted for
convenience only and will not control or affect the meaning or construction of any of the provisions hereof. All words used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 



[REMAINDER
OF PAGE INTENTIONALLY BLANK] 


30





 

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



	 	 	ALKERMES, INC.
	

 	
 	

By:	

/s/  JAMES M. FRATES      
 James M. Frates, Vice President and Chief Financial Officer
	

 	
 	

EQUISERVE TRUST COMPANY, N.A.
	

 	
 	

By:	

/s/  TYLER HAYNES      
 Tyler Haynes, Managing Director




31






  



 
 

Exhibit A    
  


 
 

FORM OF
  STATEMENT OF DESIGNATION, PREFERENCES AND RIGHTS OF
  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
  
    of
  
    Alkermes, Inc.    
  


        Pursuant to Section 1522(c) of the Pennsylvania Business Corporation Law of 1988, the undersigned officers of Alkermes, Inc., a Pennsylvania
corporation (the "Corporation"), DO HEREBY CERTIFY: 



        That
pursuant to the authority conferred upon the Board of Directors by the Third Amended and Restated Articles of Incorporation of the Corporation, the Board of Directors on
February 7, 2003 adopted the following resolution creating a series of 110,000 shares of Preferred Stock designated as Series A Junior Participating Preferred Stock: 


        RESOLVED,
that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of Article FOURTH of its Third Amended and Restated
Articles of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: 


        Section 1. Designation and Amount. The shares of such series will be designated as "Series A Junior
Participating Preferred Stock" and the number of shares constituting such series will be 110,000. 


        Section 2. Dividends and Distributions.



        (A)  The
holders of shares of Series A Junior Participating Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December 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 cent) equal to the greater of (a) $0.01 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, par value $0.01 per share, of the Corporation (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 will at any time after February 7, 2003 (the "Rights Declaration Date") (i) declare any dividend on the Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the 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 will be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares 



A-1





 


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)  The
Corporation will declare a dividend or distribution on the outstanding shares of Series A Junior Participating Preferred Stock as provided in  Section 2(A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution will 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 $0.01 per share on the outstanding shares of Series A Junior Participating Preferred Stock will nevertheless be payable on such subsequent
Quarterly Dividend Payment Date. 


        (C)  Dividends
will 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 will 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 will begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends will 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 will 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 will be no more
than 30 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 will have the following
voting rights: 



        (A)  Subject
to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock will entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation will at any time after the Rights Declaration Date (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event will 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 and the holders of shares of Common Stock
will vote together as one class on all matters submitted to a vote of shareholders of the Corporation. 


        (C)  (i)
If at any time dividends on any Series A Junior Participating Preferred Stock will be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency will mark the beginning of a period (herein called a "default period") which will 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
will have been declared and paid or set apart for payment. During each default 



A-2





 





period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon,
voting as a class, irrespective of series, will have the right to elect two Directors. 



        (ii)  During
any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting
called pursuant to Section 3(C)(iii) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that
such voting right will not be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding will be present in person or by proxy. The absence of a quorum of the holders of
Common Stock will not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock will exercise such voting right initially
during an existing default
period, they will have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised
at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock will have the
right to make such increase in the number of Directors as will be necessary to permit the election by them of the required number. After the holders of the Preferred Stock will have exercised their
right to elect Directors in any default period and during the continuance of such period, the number of Directors will not be increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating
Preferred Stock. 


        (iii)  Unless
the holders of Preferred Stock will, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may
order, or any shareholder or shareholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which meeting will thereupon be called by the Chief Executive Officer, the President, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Section 3(C)(iii) will be given
to each holder of record of Preferred Stock by mailing a copy of such notice to such holder at such holder's last address as the same appears on the books of the Corporation. Such meeting will be
called for a time not earlier than 20 days and not later than 60 days after such order or request, or in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this Section 3(C)(iii), no such special meeting will be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the shareholders. 


        (iv)  In
any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, will continue to be entitled to elect the whole number
of Directors until the holders of Preferred Stock will have exercised their right to elect two Directors voting as a class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock will continue in office until their successors will have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board
of Directors may (except as provided in Section 3(C)(ii)) be filled by vote of a majority of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director whose office will have become vacant. References in this Section 3(C) to Directors
elected by the holders of a particular class of stock will include Directors elected by such Directors to fill vacancies as provided in  clause (y) of the foregoing sentence. 




A-3





 





        (v)  Immediately
upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors will cease, (y) the term
of any Directors elected by the holders of Preferred Stock as a class will terminate, and (z) the number of Directors will be such number as may be provided for in the Articles of Incorporation
or Bylaws of the Corporation irrespective of any increase made pursuant to the provisions of Section 3(C)(ii) (such number being subject,
however, to change thereafter in any manner provided by law or in the Articles of Incorporation or Bylaws of the Corporation). Any
vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors. 




        (D)  Except
as set forth herein, holders of Series A Junior Participating Preferred Stock will have no special voting rights and their consent will 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 hereof 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 will have been paid in full, the Corporation will not: 



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


        (ii)  declare
or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A 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 are then entitled; 



        (iii)  redeem
or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; or 


        (iv)  purchase
or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) 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, will determine in good faith will result in fair and equitable treatment among the respective series or classes. 




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



A-4





 

        Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares will 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 will be made to the holders of shares of stock 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 will have received an amount equal to $80,000 per share of Series A Junior Participating Preferred Stock, 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"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions will be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock will 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 Section 6(C) below to reflect such events
as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii) being referred to as the
"Adjustment Number"). 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 will receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to one with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively. 


        (B)  In
the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating
Preferred Stock, then such remaining assets will be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets will be distributed ratably to the holders of Common Stock. 


        (C)  In
the event the Corporation will at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event will 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. 




        Section 7. Consolidation, Merger, etc. In case the Corporation will enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock will at the same time be similarly exchanged or 


A-5





 


changed in 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 changed or exchanged. In the event the Corporation will at any time after the Rights Declaration Date
(i) declare any dividend on the Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock
will 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 will not be redeemable. 


        Section 9. Amendment. The Articles of Incorporation of the Corporation will not be further 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 a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class. 


        Section 10. Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which
will entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of
holders of Series A Junior Participating Preferred Stock. 


        IN
WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this    day of      , 2003. 



	

 	
 	

ALKERMES, INC.









	

 	
 	
By:	

 (Name, Title)




A-6






  



 
 

Exhibit B    
  


 
 

[Form of Rights Certificate]    




	Certificate No. R-_______	 	            _______Rights







        NOT
EXERCISABLE AFTER FEBRUARY 19, 2013 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1 




	1
	The portion of the legend in brackets will be inserted only if applicable and will replace the preceding sentence. 


 
 

Rights Certificate
  
  
ALKERMES, INC.    
  



        This certifies that [            ], or registered assigns, is the registered owner of the number of Rights set forth above,
each of
which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of February 7, 2003, as may be amended from time to time (the
"Rights Agreement"), between Alkermes, Inc., a Pennsylvania corporation (the "Company"), and EquiServe Trust Company, N.A., a national banking
association (the "Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M. (Cambridge, Massachusetts time) on
February 19, 2013 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
$80.00 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 February 20, 2003 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. 


        Upon
the occurrence of a Flip-in Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate of any Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any Acquiring Person, Associate or
Affiliate, 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 Affiliate or Associate of
an Acquiring Person, such Rights will become null and void and no holder hereof will have any right with respect to such Rights from and after the occurrence of such Flip-in Event. 


B-1





 



        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 above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent. 



        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 "Units" (each Unit representing one
one-thousandth of a share) of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered will have entitled such holder to purchase. If this
Rights Certificate will be exercised in part, the holder will 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 its option at a redemption price of $0.001 per Right at any
time prior to the earlier of the close of business on (i) the 10th day following the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement),
and (ii) the Rights Plan Expiration Date. In addition, the Rights may be exchanged, in whole or in part, for shares of the Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately upon the action of the Board of Directors of the Company authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights which are not subject to such exchange) will terminate and the Rights will only enable holders to receive the shares issuable upon such exchange. 


        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 Units of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. 


        No
holder of this Rights Certificate will 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 will anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting shareholders (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 will have been exercised as provided in the Rights Agreement. 



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


B-2





 



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



	Dated as of ______________, ____	 	 
	

ATTEST:	
 	

ALKERMES, INC.
	

By:	
 	

By:
	
 Secretary	 	
 Name:

Title:
	

Countersigned:	
 	

 
	

EquiServe Trust Company, N.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 as of ______________, ____	
 	

 	
 	

 Signature
	

Signature Guaranteed:

	
 	

 	
 	

 




Certificate



The
undersigned hereby certifies by checking the appropriate boxes that: 


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


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



	Dated as of ______________, ____	 	 	 	
 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. 


B-4





 
 
 

FORM OF ELECTION TO PURCHASE
  (To be executed if holder desires to exercise Rights
  represented by the Rights Certificate.)    



To:
Alkermes, Inc.: 


        The
undersigned hereby irrevocably elects to exercise ______________ Rights represented by this Rights Certificate to purchase the shares 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 will not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights will be registered in the name of and
delivered to: 


Please
insert social security

or other identifying number ___________________ 



	
(Please print name and address)







	

Dated ______________, ____	
 	

 	
 	

 
	

 	
 	

 	
 	

 Signature
	

Signature Guaranteed:

	
 	

 	
 	

 




Certificate



The
undersigned hereby certifies by checking the appropriate boxes that: 


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


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


B-5






  



 
 

Exhibit C    
  


 
 

SUMMARY OF RIGHTS TO PURCHASE
  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK    



        On
February 7, 2003, the Board of Directors of Alkermes, Inc. (the "Company") adopted a Shareholder Rights Plan, providing
that one right (a "Right") will be attached to each share of common stock, par value $0.01 per share, of the Company (the
"Common Stock"). Each Right entitles the registered holder to purchase from the Company a unit (a
"Unit") consisting of one one-thousandth (1/1000) of a share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the "Preferred Stock"), at a Purchase Price of $80.00 per Unit (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement (the "Rights
Agreement"), dated as of February 7, 2003, and as may be amended from time to time, between the Company and EquiServe Trust Company, N.A., a national banking
association, as Rights Agent (the "Rights Agent"). 


        Initially,
the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights Certificate will be distributed. The Rights will
separate from the Common Stock on a date (the "Distribution Date"), which will occur upon the earlier of 




        (i)    10 days
following a public announcement that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or 


        (ii)  10
business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of such
outstanding shares of Common Stock. 





The
definition of Acquiring Person excludes any Exempted Person (as described below). Until the Distribution Date, (x) the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (y) new Common Stock certificates will contain a notation incorporating the Rights Agreement by reference, and (z) the
surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. 


        An
"Exempted Person" will be any person who, together with all affiliates and associates of such person, is the beneficial owner of Common
Stock, options and/or warrants exercisable for shares of Common Stock representing 15% or more of the shares of Common Stock outstanding on February 7, 2003, the date the Board of Directors
declared the rights dividend (the "Rights Dividend Declaration Date"), provided,  however, that any such
person will generally no longer be an Exempted Person and will be deemed an Acquiring Person if (x) such person, together
with all affiliates and associates of such person, becomes the beneficial owner, at any time after the Rights Dividend Declaration Date, of securities representing 20% or more of the then outstanding
shares of Common Stock, or (y) such person commences a tender or exchange offer for additional securities of the Company. In addition, an "Exempted
Person" will also be any person who, together with all affiliates and associates of such person, becomes the beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 15% or more of the shares of Common Stock then outstanding as a result of a purchase by the Company or any of its Subsidiaries of shares of Common
Stock, provided, however, that such person will no longer be an Exempted Person and will be deemed to be
an Acquiring Person if such person, together with all affiliates and associates of such person, becomes the beneficial owner, at any time after the date such person became the beneficial owner of 15%
or more of the then outstanding shares of Common Stock, of additional securities representing 1,000 or more 


C-1





 




shares of Common Stock (unless such additional securities are acquired (x) pursuant to the exercise of options or warrants to purchase Common Stock outstanding and beneficially owned by such
person as of the date such person became the beneficial owner of 15% or more of the then outstanding shares of Common Stock or as a result of an adjustment to the number of shares of Common Stock for
which such options or warrants are exercisable pursuant to the terms thereof, or (y) as a result of a stock split, stock dividend or the like). A purchaser, assignee or transferee of the shares
of Common Stock (or options or warrants exercisable for Common Stock) from an Exempted Person will not thereby become an Exempted Person, except that a transferee from the estate of an Exempted Person
who receives Common Stock as a bequest or inheritance from an Exempted Person will be an Exempted Person so long as such transferee continues to be the beneficial owner of 15% or more of the then
outstanding shares of Common Stock. 


        The
Rights are not exercisable until the Distribution Date and will expire at the close of business on February 19, 2013 unless earlier redeemed by the Company as described below.
At no time will the Rights have any voting power. 


        As
soon as practicable after the Distribution Date, Rights Certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent the Rights. Except as otherwise determined by the Board of Directors, only shares of Common Stock issued prior to the Distribution
Date will be issued with Rights. 


        In
the event that an Acquiring Person, other than an Exempted Person, becomes the beneficial owner of 15% or more of the then outstanding shares of Common Stock (unless such acquisition
is made pursuant to a tender or exchange offer for all outstanding shares of the Company, at a price determined by a majority of the independent directors of the Company who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person, to be fair and otherwise in the best interest of the Company and its shareholders, after receiving advice from one or more investment banking
firms (a "Qualifying Offer")), each holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company), having a value equal to two times the exercise price of the Right. The exercise price (the "Exercise
Price") is the Purchase Price times the number of Units associated with each Right (initially, one). Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph (the "Flip-in Events"), all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and void. However, Rights are not exercisable following the occurrence of any of the Flip-in Events set forth above
until such time as the Rights are no longer redeemable by the Company as set forth below. 


        In
the event that following the Stock Acquisition Date, (i) the Company engages in a merger or business combination transaction in which the Company is not the surviving
corporation (other than a merger consummated pursuant to a Qualifying Offer); (ii) the Company engages in a merger or business combination transaction in which the Company is the surviving
corporation and the Common Stock is changed into or exchanged for stock, securities or other property of another entity; or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which have previously been voided as set forth above) will thereafter have the right to receive, upon exercise of the Right, common stock of the
acquiring company having a value equal to two times the Exercise Price of the Right. 


        The
Purchase Price payable, and the number of Units of Preferred Stock or other securities or property issuable upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred 


C-2





 




Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). 


        With
certain exceptions, no adjustments in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Units will be
issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. 


        At
any time after the Stock Acquisition Date but prior to such time as an Acquiring Person acquires 50% or more of the then outstanding shares of Common Stock, the Board of Directors of
the
Company may exchange the Rights (other than Rights owned by an Acquiring Person), in whole or in part, at an exchange ratio equal to one share of Common Stock per Right (subject to adjustment). 


        At
any time until 10 days following the Stock Acquisition Date (subject to extension by the Board of Directors), the Company may redeem the Rights in whole, but not in part, at a
price of $0.001 per Right. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price. 


        Until
a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to shareholders or to the Company, shareholders 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 as set forth above or in the event the Rights are redeemed. 



        Other
than those provisions relating to the principal economic terms of the Rights, any of the provisions of the Rights Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be amended by the Board in order to cure any ambiguity, 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, however, that no amendment to adjust the time period governing redemption will be made once
the Rights are no longer redeemable. 


        A
copy of the Rights Agreement is being filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company. This Summary of Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference. 


C-3











QuickLinks



Exhibit 4.1



TABLE OF CONTENTS


RIGHTS AGREEMENT



Exhibit A


FORM OF STATEMENT OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK of Alkermes, Inc.




Exhibit B


[Form of Rights Certificate]

Rights Certificate ALKERMES, INC.

[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.)

FORM OF ELECTION TO PURCHASE (To be executed if holder desires to exercise Rights represented by the Rights Certificate.)



Exhibit C


SUMMARY OF RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK