Document:

<PAGE>

                                                                    EXHIBIT 4.19

                               EL PASO CORPORATION

                                       AND

                             _____________________,

                                AS WARRANT AGENT

                              ---------------------

                                WARRANT AGREEMENT

                          DATED AS OF ________________

                              ---------------------

                          WARRANTS TO PURCHASE _______

                              ---------------------

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                                TABLE OF CONTENTS

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<Caption>

                                                                                                               PAGE
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                                                     ARTICLE 1
                                       ISSUANCE OF WARRANTS AND EXECUTION AND
                                          DELIVERY OF WARRANT CERTIFICATES

SECTION 1.01             Issuance of Warrants....................................................................2
SECTION 1.02             Execution and Delivery of Warrant Certificates..........................................2
SECTION 1.03             Issuance of Warrant Certificates........................................................3

                                                     ARTICLE 2
                                  WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

SECTION 2.01             Warrant Price...........................................................................4
SECTION 2.02             Duration of Warrants....................................................................4
SECTION 2.03             Exercise of Warrants....................................................................4

                                                     ARTICLE 3
                             OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT

SECTION 3.01             No Rights as Warrant Securityholder Conferred by Warrant or Warrant
                         Certificates............................................................................5
SECTION 3.02             Lost, Mutilated, Stolen, or Destroyed Warrant Certificates..............................6
SECTION 3.03             Enforcement of Rights...................................................................6
SECTION 3.04             Merger, Consolidation, Conveyance or Transfer...........................................6

                                                     ARTICLE 4
                                               EXCHANGE AND TRANSFER

SECTION 4.01             Exchange and Transfer...................................................................7
SECTION 4.02             Treatment of Holders of Warrant Certificates............................................8
SECTION 4.03             Cancellation of Warrant Certificates....................................................8

                                                     ARTICLE 5
                                            CONCERNING THE WARRANT AGENT

SECTION 5.01             Warrant Agent...........................................................................9
SECTION 5.02             Conditions of Warrant Agent's Obligations...............................................9
SECTION 5.03             Resignation and Appointment of Successor...............................................10
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<S>                                                                                                             <C>
                                                     ARTICLE 6
                                                   MISCELLANEOUS

SECTION 6.01             Amendment..............................................................................12
SECTION 6.02             Notices and Demands to the Company and Warrant Agent...................................12
SECTION 6.03             Addresses..............................................................................12
SECTION 6.04             Applicable Law.........................................................................12
SECTION 6.05             Delivery of Prospectus.................................................................12
SECTION 6.06             Obtaining of Governmental Approval.....................................................12
SECTION 6.07             Persons Having Rights under Warrant Agreement..........................................13
SECTION 6.08             Headings...............................................................................13
SECTION 6.09             Counterparts...........................................................................13
SECTION 6.10             Inspection of Agreement................................................................13
SECTION 6.11             Notices to Holders of Warrants.........................................................13

TESTIMONIUM......................................................................................
SIGNATURES.......................................................................................

EXHIBIT A - Form of Warrant Certificate
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                                      -ii-
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                              WARRANT AGREEMENT(1)

                  THIS AGREEMENT dated as of between EL PASO CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(the "Company"), and ___________________, a [bank] [trust company] duly
incorporated and existing under the laws of ________________, as Warrant Agent
(the "Warrant Agent"),

                  Bracketed language here and throughout this Agreement should
be inserted as follows:

                  1.       If Warrants are immediately detachable from the
                           Offered Securities; and

                  2.       If Warrants are detachable from the Offered
                           Securities only after the Detachable Date.

                                   WITNESSETH:

                  [WHEREAS, the Company has entered into an Indenture dated as
of _____________ (the "Senior Indenture") between the Company and
______________, as Trustee (the "Senior Indenture Trustee"), and an Indenture
dated as of ____________ (the "Subordinated Indenture") between the Company and
_____________, as Trustee (the "Subordinated Indenture Trustee") (together, the
"Trustees" or "Trustee" and "Indentures" or "Indenture"), providing for the
issuance from time to time of its unsecured debt securities to be issued in one
or more series as provided in the Indenture; and]

                  WHEREAS, the Company proposes to sell [title of such
securities being offered] (the "Offered Securities") with one or more warrants
(the "Warrants") representing the right to purchase [title of such securities
purchasable through exercise of Warrants] (the "Warrant Securities"), the
Warrants to be evidenced by Warrant certificates issued pursuant to this
Agreement (the "Warrant Certificates"); and

                  WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company in connection with the issuance, transfer, exchange,
exercise and replacement of the Warrant Certificates, and in this Agreement
wishes to set forth, among other things, the form and provisions of the Warrant
Certificates and the terms and conditions on which they may be issued,
transferred, exchanged, exercised and replaced;

                  NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:

--------
(1) Complete or modify the provisions of this form as appropriate to reflect the
terms of the Warrants and Warrant Securities. Monetary amounts may be in U.S.
dollars in a foreign currency.

<PAGE>

                                   ARTICLE 1
                       ISSUANCE OF WARRANTS AND EXECUTION
                      AND DELIVERY OF WARRANT CERTIFICATES

                  SECTION 1.01 Issuance of Warrants. The Warrants shall be
evidenced by one or more Warrant Certificates. Each Warrant evidenced thereby
shall represent the right, subject to the provisions contained herein and
therein, to purchase [_____ shares of the Warrant Securities] [ aggregate
principal amount of Warrant Securities ] and shall be initially issued in
connection with the issuance of the Offered Securities [1: and shall be
separately transferable immediately thereafter] [2: but shall not be separately
transferable until on and after , (the "Detachable Date")]. The Warrants shall
be initially issued [in units] with the Offered Securities, and each Warrant
[included in such a unit] shall evidence the right, subject to the provisions
contained herein and in the Warrant Certificates, to purchase [_____ shares of
the Warrant Securities] [ aggregate principal amount of Warrant Securities]
[included in such a unit].

                  SECTION 1.02 Execution and Delivery of Warrant Certificates.
Each Warrant, whenever issued, shall be evidenced by a Warrant Certificate in
registered form, substantially in the form set forth in Exhibit A hereto, shall
be dated and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve (execution
thereof to be conclusive evidence of such approval) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be signed on behalf of the
Company by its chairman or vice chairman of the Board of Directors, the
president, any managing director or the treasurer of the Company, in each case
under its corporate seal, which may but need not be, attested by its Secretary
or one of its Assistant Secretaries. Such signatures may be manual or facsimile
signatures of such authorized officers and may be imprinted or otherwise
reproduced on the Warrant Certificates. The corporate seal of the Company may be
in the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.

                  No Warrant Certificate shall be valid for any purpose, and no
Warrant evidenced thereby shall be exercisable, until such Warrant Certificate
has been countersigned by the Warrant Agent by manual signature. Such signature
by the Warrant Agent upon any Warrant Certificate executed by the Company shall
be conclusive evidence, and the only evidence, that the Warrant Certificate so
countersigned has been duly issued hereunder.

                  In case any officer of the Company who shall have signed any
of the Warrant Certificates either manually or by facsimile signature shall
cease to be such officer before the Warrant Certificates so signed shall have
been countersigned and delivered by the Warrant Agent as provided herein, such
Warrant Certificates may be countersigned and delivered notwithstanding that the
person who signed such Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although at the date
of the execution of this Agreement any such person was not such officer.

                                      -2-
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                  The term "Holder", when used with respect to any Warrant
Certificate, shall mean any person in whose name at the time such Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose [2: or, prior to the Detachable Date, any person in whose
name at the time the Offered Security to which such Warrant Certificate is
attached is registered upon the register of the Offered Securities. Prior to the
Detachable Date, the Company will, or will cause the registrar of the Offered
Securities to, make available at all times to the Warrant Agent such information
as to holders of the Offered Securities with Warrants as may be necessary to
keep the Warrant Agent's records up to date.]

                  SECTION 1.03 Issuance of Warrant Certificates. Warrant
Certificates evidencing the right to purchase [_____ shares of the Warrant
Securities] [an aggregate principal amount not exceeding aggregate principal
amount of Warrant Securities] (except as provided in Sections 2.03, 3.02 and
4.01) may be executed by the Company and delivered to the Warrant Agent upon the
execution of this Warrant Agreement or from time to time thereafter. The Warrant
Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the
Company, countersign Warrant Certificates evidencing ___________ Warrants
representing the right to purchase up to [_____shares of the Warrant Securities]
[______________ aggregate principal amount of Warrant Securities] and shall
deliver such Warrant Certificates to or upon the order of the Company.
Subsequent to such original issuance of the Warrant Certificates, the Warrant
Agent shall countersign a Warrant Certificate only if the Warrant Certificate is
issued in exchange or substitution for one or more previously countersigned
Warrant Certificates or in connection with their transfer as hereinafter
provided or as provided in the antepenultimate paragraph of Section 2.03.

                  Pending the preparation of definitive Warrant Certificates
evidencing Warrants, the Company may execute and the Warrant Agent shall
countersign and deliver temporary Warrant Certificates evidencing such Warrants
(printed, lithographed, typewritten or otherwise produced, in each case in form
satisfactory to the Warrant Agent). Such temporary Warrant Certificates shall be
issuable substantially in the form of the definitive Warrant Certificates but
with such omissions, insertions and variations as may be appropriate for
temporary Warrant Certificates, all as may be determined by the Company with the
concurrence of the Warrant Agent. Such temporary Warrant Certificates may
contain such reference to any provisions of this Warrant Agreement as may be
appropriate. Every such temporary Warrant Certificate shall be executed by the
Company and shall be countersigned by the Warrant Agent upon the same conditions
and in substantially the same manner, and with like effect, as the definitive
Warrant Certificates. Without unreasonable delay, the Company shall execute and
shall furnish definitive Warrant Certificates and thereupon such temporary
Warrant Certificates may be surrendered in exchange therefor without charge
pursuant to and subject to the provisions of Section 4.01, and the Warrant Agent
shall countersign and deliver in exchange for such temporary Warrant
Certificates definitive Warrant Certificates of authorized denominations
evidencing a like aggregate number of Warrants evidenced by such temporary
Warrant Certificates. Until so exchanged, such temporary Warrant Certificates
shall be entitled to the same benefits under this Warrant Agreement as
definitive Warrant Certificates.

                                      -3-
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                                    ARTICLE 2
                WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

                  SECTION 2.01 Warrant Price. On ______________, _________ the
exercise price of each Warrant will be ______________. During the period from
______________, ______________ through and including ______________,
______________, the exercise price of each Warrant will be [plus [accrued
amortization of the original issue discount] [accrued interest] from
______________,.] On ______________, the exercise price of each Warrant will be
______________. During the period from ______________, through and including
______________, ______________, the exercise price of each Warrant will be
______________ [plus [accrued amortization of the original issue discount]
[accrued interest] from ______________, .] [In each case, the original issue
discount will be amortized at a % annual rate, computed on an annual basis using
the "interest" method and using a 360-day year consisting of twelve 30-day
months]. Such exercise price of Warrant Securities is referred to in this
Agreement as the "Warrant Price". [The original issue discount for each
principal amount of Warrant Securities is ].

                  SECTION 2.02 Duration of Warrants. Subject to Section 4.03(b),
each Warrant may be exercised [in whole but not in part] [in whole or in part]
[at any time, as specified herein, on or after [the date thereof]
[______________,] and at or before [time, location] on ______________, (each day
during such period may hereinafter be referred to as an "Exercise Date")] [on
[list of specific dates] (each, an "Exercise Date")], or such later date as the
Company may designate by notice to the Warrant Agent and the Holders of Warrant
Certificates [in registered form and to the beneficial owners of the Global
Warrant Certificate] (the "Expiration Date"). Each Warrant not exercised at or
before [time, location] on the Expiration Date shall become void, and all rights
of the Holder [and any beneficial owners] of the Warrant Certificate evidencing
such Warrant under this Agreement shall cease.

                  SECTION 2.03 Exercise of Warrants. During the period specified
in Section 2.02, any whole number of Warrants may be exercised by providing
certain information as set forth on the reverse side of the Warrant Certificates
evidencing such Warrants and by paying in full [in lawful money of the United
States of America] [in applicable currency] [in cash] [by certified check or
official bank check or by bank wire transfer, in each case,] [by bank wire
transfer] [in immediately available funds,] the Warrant Price for each Warrant
exercised [(plus accrued interest, if any, on the Warrant Securities to be
issued upon exercise of such Warrant from and including the Interest Payment
Date (as defined in the Indenture), if any, in respect of such Warrant
Securities immediately preceding the Exercise Date to and including the Exercise
Date (unless the Exercise Date is after the Regular Record Date (as defined in
the Indenture), if any, for such Interest Payment Date, but on or before the
immediately succeeding Interest Payment Date for such Warrant Securities, in
which event no such accrued interest shall be payable in respect of Warrant
Securities to be issued in registered form))] to the Warrant Agent at its
corporate trust office at [address] [or at ], provided that such exercise is
subject to receipt within five business days of such [payment] [wire transfer]
by the Warrant Agent of the Warrant Certificate evidencing each Warrant
exercised with the form of election to purchase Warrant Securities set forth on
the reverse side of the Warrant Certificate properly completed and duly
executed. [Cashless Exercise Option]

                                      -4-
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                  The date on which payment in full of the Warrant Price (plus
any such accrued interest) is received by the Warrant Agent shall, subject to
receipt of the Warrant Certificate as aforesaid, be deemed to be the date on
which the Warrant is exercised. The Warrant Agent shall deposit all funds
received by it in payment for the exercise of Warrants in an account of the
Company maintained with it (or in such other account as may be designated by the
Company) and shall advise the Company, by telephone or by facsimile transmission
or other form of electronic communication available to both parties, at the end
of each day on which a payment for the exercise of Warrants is received of the
amount so deposited to its account. The Warrant Agent shall promptly confirm
such advice to the Company in writing.

                  If a day on which Warrants may be exercised in the city in
which such Warrants are to be exercised shall be a Saturday or Sunday or a day
on which banking institutions in such city are authorized or required to be
closed, then, notwithstanding any other provision of this Agreement or the
Warrant Certificate evidencing such Warrants, but subject to the limitation that
no Warrant may be exercised after the Expiration Date, the Warrants shall be
exercisable on the next succeeding day which in such city is not a Saturday or
Sunday or a day on which banking institutions in such city are authorized or
required to be closed.

                  The Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company and the Trustee in writing of (i) the number of
Warrants exercised, (ii) the instructions of each Holder of the Warrant
Certificates evidencing such Warrants with respect to delivery of the Warrant
Securities to be issued upon such exercise, (iii) delivery of any Warrant
Certificates evidencing the balance, if any, of the Warrants remaining after
such exercise, and (iv) such other information as the Company or the Trustee
shall reasonably require.

                  As soon as practicable after the exercise of any Warrant, but
subject to receipt by the Warrant Agent of the Warrant Certificate evidencing
such Warrant as provided in this Section, the Company shall issue[, pursuant to
the Indenture, in authorized denominations to or upon the order of the Holder of
the Warrant Certificate evidencing each Warrant,] the Warrant Securities to
which such Holder is entitled, in fully registered form, registered in such name
or names as may be directed by such Holder. If fewer than all of the Warrants
evidenced by such Warrant Certificate are exercised, the Company shall execute,
and an authorized officer of the Warrant Agent shall manually countersign and
deliver, a new Warrant Certificate evidencing the number of such Warrants
remaining unexercised.

                  The Company shall not be required to pay any stamp or other
tax or other governmental charge required to be paid in connection with any
transfer involved in the issuance of the Warrant Securities, and in the event
that any such transfer is involved, the Company shall not be required to issue
or deliver any Warrant Security until such tax or other charge shall have been
paid or it has been established to the Company's satisfaction that no such tax
or other charge is due.

                                   ARTICLE 3
            OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT

                  SECTION 3.01 No Rights as Warrant Securityholder Conferred by
Warrant or Warrant Certificates. No Warrant Certificate or Warrant evidenced
thereby shall entitle the

                                      -5-
<PAGE>

Holder or any beneficial owner thereof to any of the rights of a holder or
beneficial owner of Warrant Securities, including, without limitation, [the
right to receive the payment of principal of (premium, if any) or interest, if
any, on Warrant Securities or to enforce any of the covenants in the Indenture]
[the right to receive dividend payments on the Warrant Securities or any voting
rights].

                  SECTION 3.02 Lost, Mutilated, Stolen, or Destroyed Warrant
Certificates. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to it and the Company of the ownership of and the loss, mutilation,
theft or destruction of any Warrant Certificate and of such security or
indemnity as may be required by the Company and the Warrant Agent to hold each
of them and any agent of them harmless and, in the case of mutilation of a
Warrant Certificate, upon surrender thereof to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or the Warrant Agent
that such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, in exchange for or in lieu of the lost,
mutilated, stolen or destroyed Warrant Certificate, a new Warrant Certificate of
the same tenor and evidencing a like number of Warrants. Upon the issuance of
any new Warrant Certificate under this Section, the Company may require the
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent) in connection
therewith. Every substitute Warrant Certificate executed and delivered pursuant
to this Section in lieu of any lost, mutilated, stolen or destroyed Warrant
Certificate shall represent an additional contractual obligation of the Company,
whether or not the lost, stolen or destroyed Warrant Certificate shall be at any
time enforceable by anyone, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other rights
and remedies with respect to the replacement of lost, mutilated, stolen or
destroyed Warrant Certificates.

                  SECTION 3.03 Enforcement of Rights. Notwithstanding any of the
provisions of this Agreement, any Holder of a Warrant Certificate, without the
consent of the Warrant Agent, the Trustee, the holder of any Offered Securities
or the Holder of any other Warrant Certificate, may, in its own behalf and for
its own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in respect of,
its right to exercise its Warrants in the manner provided in its Warrant
Certificate and in this Agreement.

                  SECTION 3.04 Merger, Consolidation, Conveyance or Transfer.
(a) If at any time there shall be a merger or consolidation of the Company or a
conveyance or transfer of its property and assets substantially as an entirety
[as permitted under the Indenture], then in any such event the successor or
assuming corporation referred to therein shall succeed to and be substituted for
the Company, with the same effect[, subject to the Indenture,] as if it had been
named herein and in the Warrant Certificates as the Company; the Company shall
thereupon, except in the case of a transfer by way of lease, be relieved of any
further obligation hereunder and under the Warrants and the Warrant
Certificates, and the Company as the predecessor corporation, except in the case
of a transfer by way of lease, may thereupon or at any time thereafter be
dissolved, wound up or liquidated. Such successor or assuming corporation may

                                      -6-
<PAGE>

thereupon cause to be signed, and may issue either in its own name or in the
name of the Company, Warrant Certificates evidencing any or all of the Warrants
issuable hereunder which theretofore shall not have been signed by the Company,
and may execute and deliver Warrant Securities in its own name [,pursuant to the
Indenture,] in fulfillment of its obligations to deliver Warrant Securities upon
exercise of the Warrants. All the Warrants so issued shall in all respects have
the same legal rank and benefit under this Agreement as the Warrants theretofore
or thereafter issued in accordance with the terms of this Agreement as though
all of such Warrants had been issued at the date of the execution hereof. In any
case of any such merger, consolidation, conveyance or transfer, such changes in
phraseology and form (but not in substance) may be made in the Warrant
Certificates representing the Warrants thereafter to be issued as may be
appropriate.

                  (b) The Warrant Agent may receive a written opinion of legal
counsel (who shall be acceptable to the Warrant Agent) as conclusive evidence
that any such merger, consolidation, conveyance or transfer complies with the
provisions of this Section and the Indenture.

                  [Add Anti-Dilution provisions as necessary.]

                                   ARTICLE 4
                              EXCHANGE AND TRANSFER

                  SECTION 4.01 Exchange and Transfer. (a) [1: Upon] [2: Prior to
the Detachable Date, a Warrant Certificate may be exchanged or transferred only
together with the Offered Security to which such Warrant Certificate was
initially attached, and only for the purpose of effecting, or in conjunction
with, an exchange or transfer of such Offered Security. Prior to any Detachable
Date, each transfer of the Offered Security, shall operate also to transfer the
related Warrant Certificates. On or after the Detachable Date, upon] surrender
at the corporate trust office of the Warrant Agent at [address] [or], Warrant
Certificates evidencing Warrants may be exchanged for Warrant Certificates in
other authorized denominations evidencing such Warrants or the transfer thereof
may be registered in whole or in part; provided, however, that such other
Warrant Certificates shall evidence the same aggregate number of Warrants as the
Warrant Certificates so surrendered.

                  (b) The Warrant Agent shall keep, at its corporate trust
office at [address] [and at ], books in which, subject to such reasonable
regulations as it may prescribe, it shall register Warrant Certificates and
exchanges and transfers of outstanding Warrant Certificates upon surrender of
such Warrant Certificates to the Warrant Agent at its corporate trust office at
[address] [or ] for exchange or registration of transfer, properly endorsed [or
accompanied by appropriate instruments of registration of transfer and written
instructions for transfer, all in form satisfactory to the Company and the
Warrant Agent.]

                  (c) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection with any such exchange or
registration of transfer.

                                      -7-
<PAGE>

                  (d) Whenever any Warrant Certificates, are so surrendered for
exchange or registration of transfer, an authorized officer of the Warrant Agent
shall manually countersign and deliver to the person or persons entitled thereto
a Warrant Certificate or Warrant Certificates, duly authorized and executed by
the Company, as so requested. The Warrant Agent shall not effect any exchange or
registration of transfer which will result in the issuance of a Warrant
Certificate, evidencing a fraction of a Warrant or a number of full Warrants and
a fraction of a Warrant

                  (e) All Warrant Certificates, issued upon any exchange or
registration of transfer of Warrant Certificates shall be the valid obligations
of the Company, evidencing the same obligations, and entitled to the same
benefits under this Agreement, as the Warrant Certificates surrendered for such
exchange or registration or transfer.

                  SECTION 4.02 Treatment of Holders of Warrant Certificates.
Each Holder of a Warrant Certificate, by accepting the same, consents and agrees
with the Company, the Warrant Agent and every subsequent Holder of such Warrant
Certificate that until the transfer of such Warrant Certificate is registered on
the books of such Warrant Agent [2: or, prior to the Detachable Date, until the
transfer of the Offered Security to which such Warrant Certificate is attached,
is registered in the register of the Offered Securities], the Company and the
Warrant Agent may treat the registered Holder of such Warrant Certificate as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by the Warrants evidenced thereby, any notice to the
contrary notwithstanding.

                  SECTION 4.03 Cancellation of Warrant Certificates. [(a)] Any
Warrant Certificate surrendered for exchange or registration of transfer or
exercise of the Warrants evidenced thereby shall, if surrendered to the Company,
be delivered to the Warrant Agent, and all Warrant Certificates surrendered or
so delivered to the Warrant Agent shall be promptly cancelled by the Warrant
Agent and shall not be reissued and, except as expressly permitted by this
Agreement, no Warrant Certificate shall be issued hereunder in exchange therefor
or in lieu thereof. The Warrant Agent shall cause all cancelled Warrant
Certificates to be destroyed and shall deliver a certificate of such destruction
to the Company.

                  (b) If the Company notifies the Trustee of its election to
redeem [2: prior to the Detachable Date] [, as a whole but not in part,] [2: the
Offered Securities [or] [and]] the Warrant Securities pursuant to the Indenture
or the terms thereof, the Company may elect, and shall give notice to the
Warrant Agent of its election, to cancel the unexercised Warrants, the Warrant
Certificates and the rights evidenced thereby. Promptly after receipt of such
notice by the Warrant Agent, the Company shall, or, at the Company's request,
the Warrant Agent shall in the name of and at the expense of the Company, give
notice of such cancellation to the Holders of the Warrant Certificates, such
notice to be so given not less than 30 nor more than 60 days prior to the date
fixed for the redemption of [2: the Offered Securities [or] [and]] the Warrant
Securities pursuant to the Indenture or the terms thereof. The unexercised
Warrants, the Warrant Certificates and the rights evidenced thereby shall be
cancelled and become void on the 15th day prior to such date fixed for
redemption.]

                                      -8-
<PAGE>

                                   ARTICLE 5
                          CONCERNING THE WARRANT AGENT

                  SECTION 5.01 Warrant Agent. The Company hereby appoints as
Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein and in the
Warrant Certificates set forth; and hereby accepts such appointment. The Warrant
Agent shall have the powers and authority granted to and conferred upon it in
the Warrant Certificates and herein and such further powers and authority to act
on behalf of the Company as the Company may hereafter grant to or confer upon
it.

All of the terms and provisions with respect to such powers and authority
contained in the Warrant Certificates are subject to and governed by the terms
and provisions hereof.

                  SECTION 5.02 Conditions of Warrant Agent's Obligations. The
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof, including the following, to all of which the Company agrees
and to all of which the rights hereunder of the Holders from time to time of the
Warrant Certificates shall be subject:

                  (a) Compensation and Indemnification. The Company agrees
promptly to pay the Warrant Agent the compensation to be agreed upon with the
Company for all services rendered by the Warrant Agent and to reimburse the
Warrant Agent for reasonable out-of-pocket expenses (including reasonable
attorneys' fees) incurred by the Warrant Agent without negligence, bad faith or
breach of this Agreement on its part in connection with the services rendered
hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant
Agent for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Warrant Agent,
arising out of or in connection with its acting as Warrant Agent hereunder, as
well as the reasonable costs and expenses of defending against any claim of such
liability.

                  (b) Agent for the Company. In acting under this Agreement and
in connection with the Warrants and the Warrant Certificates, the Warrant Agent
is acting solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with any of the Holders of Warrant
Certificates or beneficial owners of Warrants.

                  (c) Counsel. The Warrant Agent may consult with counsel
satisfactory to it in its reasonable judgment, and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
the advice of such counsel.

                  (d) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.

                  (e) Certain Transactions. The Warrant Agent, and its officers,
directors and employees, may become the owner of, or acquire any interest in,
Warrants, with the same rights that it or they would have if it were not the
Warrant Agent hereunder, and, to the extent

                                      -9-
<PAGE>

permitted by applicable law, it or they may engage or be interested in any
financial or other transaction with the Company and may act on, or as
depositary, trustee or agent for, any committee or body of holders of Warrant
Securities or other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. [Nothing in this Warrant Agreement shall be deemed to
prevent the Warrant Agent from acting as Trustee under the Indenture.]

                  (f) No Liability for Interest. The Warrant Agent shall have no
liability for interest on any monies at any time received by it pursuant to any
of the provisions of this Agreement or of the Warrant Certificates.

                  (g) No Liability for Invalidity. The Warrant Agent shall not
be under any responsibility with respect to the validity or sufficiency of this
Agreement or the execution and delivery hereof (except the due authorization to
execute this Agreement and the due execution and delivery hereof by the Warrant
Agent) or with respect to the validity or execution of any Warrant Certificates
(except its countersignature thereof).

                  (h) No Liability for Recitals. The recitals contained herein
shall be taken as the statements of the Company and the Warrant Agent assumes no
liability for the correctness of the same.

                  (i) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are herein and in the Warrant
Certificates specifically set forth and no implied duties or obligations shall
be read into this Agreement or the Warrant Certificates against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the payment
of which within a reasonable time is not, in its reasonable opinion, assured to
it. The Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any of the Warrant Certificates
countersigned by the Warrant Agent and delivered by it to the Company pursuant
to this Agreement or for the application by the Company of the proceeds of the
Warrant Certificates. The Warrant Agent shall have no duty or responsibility in
case of any default by the Company in the performance of its covenants or
agreements contained herein or in the Warrant Certificates or in the case of the
receipt of any written demand from a Holder of a Warrant Certificate with
respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 6.02, to make
any demand upon the Company.

                  SECTION 5.03 Resignation and Appointment of Successor. (a) The
Company agrees, for the benefit of the Holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder until
all the Warrants have been exercised or are no longer exercisable.

                  (b) The Warrant Agent may at any time resign as such by giving
written notice of its resignation to the Company, specifying the desired date on
which its resignation shall become effective; provided, however, that such date
shall be not less than 90 days after the date on which such notice is given
unless the Company agrees to accept shorter notice. Upon receiving such notice
of resignation, the Company shall promptly appoint a successor Warrant Agent
(which shall be a bank or trust company in good standing, authorized under the
laws of the

                                      -10-
<PAGE>

jurisdiction of its organization to exercise corporate trust powers) by written
instrument in duplicate signed on behalf of the Company, one copy of which shall
be delivered to the resigning Warrant Agent and one copy to the successor
Warrant Agent. The Company may, at any time and for any reason, remove the
Warrant Agent and appoint a successor Warrant Agent (qualified as aforesaid) by
written instrument in duplicate signed on behalf of the Company and specifying
such removal and the date when it is intended to become effective, one copy of
which shall be delivered to the Warrant Agent being removed and one copy to the
successor Warrant Agent. Any resignation or removal of the Warrant Agent and any
appointment of a successor Warrant Agent shall become effective upon acceptance
of appointment by the successor Warrant Agent as provided in this subsection
(b). In the event a successor Warrant Agent has not been appointed and accepted
its duties within 90 days of the Warrant Agent's notice of resignation, the
Warrant Agent may apply to any court of competent jurisdiction for the
designation of a successor Warrant Agent. Upon its resignation or removal, the
Warrant Agent shall be entitled to the payment by the Company of the
compensation and to the reimbursement of all reasonable out-of-pocket expenses
(including reasonable attorneys' fees) incurred by it hereunder as agreed to in
Section 5.02(a).

                  (c) The Company shall remove the Warrant Agent and appoint a
successor Warrant Agent if the Warrant Agent (i) shall become incapable of
acting, (ii) shall be adjudged bankrupt or insolvent, (iii) shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, (iv) shall consent to, or shall have had
entered against it a court order for, any such relief or to the appointment of
or taking possession by any such official in any involuntary case or other
proceedings commenced against it, (v) shall make a general assignment for the
benefit of creditors or (vi) shall fail generally to pay its debts as they
become due. Upon the appointment as aforesaid of a successor Warrant Agent and
acceptance by it of such appointment, the predecessor Warrant Agent shall, if
not previously disqualified by operation of law, cease to be Warrant Agent
hereunder.

                  (d) Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, immunities, duties and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor shall thereupon become obligated to transfer,
deliver and pay over, and such successor Warrant Agent shall be entitled to
receive, all monies, securities and other property on deposit with or held by
such predecessor as Warrant Agent hereunder.

                  (e) Any corporation into which the Warrant Agent hereunder may
be merged or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any corporation to
which the Warrant Agent shall sell or otherwise transfer all or substantially
all the assets and business of the Warrant Agent, provided that it shall be
qualified as aforesaid, shall be the successor Warrant 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.

                                      -11-
<PAGE>

                                   ARTICLE 6
                                  MISCELLANEOUS

                  SECTION 6.01 Amendment. This Agreement and the terms of the
Warrants and the Warrant Certificates may be amended by the parties hereto,
without the consent of the Holder of any Warrant Certificate or the beneficial
owner of any Warrant, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provision contained
herein or in the Warrant Certificates, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable, provided that such action
shall not affect adversely the interests of the Holders of the Warrant
Certificates or the beneficial owners of Warrants in any material respect.

                  SECTION 6.02 Notices and Demands to the Company and Warrant
Agent. If the Warrant Agent shall receive any notice or demand addressed to the
Company by the Holder of a Warrant Certificate pursuant to the provisions of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.

                  SECTION 6.03 Addresses. Any communication from the Company to
the Warrant Agent with respect to this Agreement shall be addressed to ,
Attention: , and any communication from the Warrant Agent to the Company with
respect to this Agreement shall be addressed to El Paso Corporation, El Paso
Building, 1001 Louisiana Street, Houston, Texas 77002, Attention: ____________
(or such other address as shall be specified in writing by the Warrant Agent or
by the Company).

                  SECTION 6.04 Applicable Law. The validity, interpretation and
performance of this Agreement and each Warrant Certificate issued hereunder and
of the respective terms and provisions hereof and thereof shall be governed by,
and construed in accordance with, the laws of the State of New York.

                  SECTION 6.05 Delivery of Prospectus. The Company will furnish
to the Warrant Agent sufficient copies of a prospectus relating to the Warrant
Securities deliverable upon exercise of Warrants (the "Prospectus"), and the
Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent
will deliver to the Holder of the Warrant Certificate evidencing such Warrant,
prior to or concurrently with the delivery of the Warrant Securities issued upon
such exercise, a Prospectus. The Warrant Agent shall not, by reason of any such
delivery, assume any responsibility for the accuracy or adequacy of such
Prospectus.

                  SECTION 6.06 Obtaining of Governmental Approval. The Company
will from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities and securities acts filings under United States federal and
state laws (including without limitation a registration statement in respect of
the Warrants and Warrant Securities under the Securities Act of 1933), which may
be or become requisite in connection with the issuance, sale, transfer and
delivery of the Warrant Certificates, the exercise of the Warrants, the
issuance, sale, transfer and delivery of the Warrant Securities issued upon
exercise of the Warrants or upon the expiration of the period during which the
Warrants are exercisable.

                                      -12-
<PAGE>

                  SECTION 6.07 Persons Having Rights under Warrant Agreement.
Nothing in this Agreement shall give to any person other than the Company, the
Warrant Agent and the Holders of the Warrant Certificates any right, remedy or
claim under or by reason of this Agreement.

                  SECTION 6.08 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.

                  SECTION 6.09 Counterparts. This Agreement may be executed in
any number of counterparts, each of which as so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.

                  SECTION 6.10 Inspection of Agreement. A copy of this Agreement
shall be available at all reasonable times at the principal corporate trust
office of the Warrant Agent for inspection by the Holder of any Warrant
Certificate. The Warrant Agent may require such Holder to submit his Warrant
Certificate for inspection by it.

                  SECTION 6.11 Notices to Holders of Warrants. Any notice to
Holders of Warrants evidenced by Warrant Certificates which by any provisions of
this Warrant Agreement is required or permitted to be given shall be given by
first class mail prepaid at such Holder's address as it appears on the books of
the Warrant Agent.

                  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 date first above written.

                                              EL PASO CORPORATION

                                              By:
                                                  ------------------------------
                                              Name:
                                              Title:

                                              [WARRANT AGENT]

                                              By
                                                  ------------------------------
                                              Name:
                                              Title:

                                      -13-
<PAGE>
                                                                       EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

                                     [FACE]

                                                     Prior to _______________,
                                                     this Warrant Certificate
                                                     may be transferred or
                                                     exchanged if and only if
                                                     the [Title of Offered
                                                     Security] to which it was
                                                     initially attached is so
                                                     transferred or exchanged.

                                                     [Prior to ________________,
                                                     Warrants are not
                                                     immediately exercisable.
Form of Legend if
Warrants evidenced by this Warrant
Certificate cannot be exercised.]

                EXERCISABLE ONLY IF AUTHENTICATED BY THE WARRANT
                            AGENT AS PROVIDED HEREIN

               VOID AFTER THE CLOSE OF BUSINESS ON _________, ____
                               EL PASO CORPORATION

                        WARRANT CERTIFICATE REPRESENTING
                              WARRANTS TO PURCHASE
                          [TITLE OF WARRANT SECURITIES]
                               AS DESCRIBED HEREIN

                                 --------------

No. _______________ Warrants

                  This certifies that [_____________________] or registered
assigns is the registered owner of the above indicated number of Warrants, each
Warrant entitling such registered owner to purchase, at any time [after the
close of business on _________, ____, and] on or before the close of business on
____________, ____, [____ shares of the [Title of Warrant Securities]]
[$________ aggregate principal amount of [Title of Warrant Securities]] (the
"Warrant Securities") of El Paso Corporation (the "Company")[, issued or to be
issued under the

                                      A-1
<PAGE>

Indenture (as hereinafter defined),] on the following basis.(2) [During the
period from ________, ____ through and including ___________, ____, each Warrant
shall entitle the Holder thereof, subject to the provisions of this Agreement,
to purchase from the Company the [principal] amount of Warrant Securities stated
above in this Warrant Certificate at the exercise price of [___] [___% of the
principal amount thereof [plus accrued amortization, if any, of the original
issue discount of the Warrant Securities][plus accrued interest, if any, from
the most recent date from which interest shall have been paid on the Warrant
Securities or, if no interest shall have been paid on the Warrant Securities,
from ___________, ____]; [in each case, the original issue discount ($_______
for each $1,000 principal amount of Warrant Securities) will be amortized at a
___% annual rate, computed on a[n] [semi-]annual basis[, using a 360-day year
constituting of twelve 30-day months]] (the "Exercise Price"). The Holder of
this Warrant Certificate may exercise the Warrants evidenced hereby, in whole or
in part, by surrendering this Warrant Certificate, with the purchase form set
forth hereon duly completed, accompanied [by payment in full, in lawful money of
the United States of America, [in cash or by certified check or official bank
check in New York Clearing House funds] [by bank wire transfer in immediately
available funds]], the Exercise Price for each Warrant exercised, to the Warrant
Agent (as hereinafter defined), at the corporate trust office of [name of
Warrant Agent], or its successor as warrant agent (the "Warrant Agent") [or at
____________,] at the addresses specified on the reverse hereof and upon
compliance with and subject to the conditions set forth herein and in the
Warrant Agreement (as hereinafter defined). This Warrant Certificate may be
exercised only for the purchase of [ shares of ] Warrant Securities [in the
principal amount of ] or any integral multiple thereof. [Cashless Exercise
Option]

                  The term "Holder" as used herein shall mean, prior to
_________, ____ (the "Detachable Date"), the registered owner of the Company's
[title of Offered Securities] to which such Warrant Certificate was initially
attached, and after such Detachable Date, the person in whose name at the time
such Warrant Certificate shall be registered upon the books to be maintained by
the Warrant Agent for that purpose pursuant to Section 3.01 of the Warrant
Agreement.

                  Any whole number of Warrants evidenced by this Warrant
Certificate may be exercised to purchase Warrant Securities in registered form.
Upon any exercise of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall be issued to the registered owner hereof a new Warrant
Certificate evidencing the number of Warrants remaining unexercised.

                  This Warrant Certificate is issued under and in accordance
with the Warrant Agreement dated as of __________, ____ (the "Warrant
Agreement"), between the Company and the Warrant Agent and is subject to the
terms and provisions contained in the Warrant Agreement, to all of which terms
and provisions the Holder of this Warrant Certificate consents by acceptance
hereof. Copies of the Warrant Agreement are on file at the above-mentioned
office of the Warrant Agent [and at _______________].

--------
(2) Complete and modify the following provisions as appropriate to reflect the
terms of the Warrants and the Warrant Securities.

                                      A-2
<PAGE>

                  [The Warrant Securities to be issued and delivered upon the
exercise of Warrants evidenced by this Warrant Certificate will be issued under
and in accordance with an Indenture, dated as of ________________ (the
"Indenture"), between the Company and ________________, a [corporation]
[national banking association] organized under the laws of the State of
__________, as trustee (such trustee, and any successors to such trustee, the
"Trustee") and will be subject to the terms and provisions contained in the
Warrant Securities and in the Indenture. Copies of the Indenture, including the
form of the Warrant Securities, are on file at the corporate trust office of the
Trustee [and at ___________________].]

                  Prior to ___________, ____ (the "Detachable Date"), this
Warrant Certificate may be exchanged or transferred only together with the
[title of Offered Security] (the "Offered Security") to which this Warrant
Certificate was initially attached, and only for the purpose of effecting, or in
conjunction with, an exchange or transfer of such Offered Security.
Additionally, on or prior to the Detachable Date, each transfer of such Offered
Security on the register of the Offered Securities shall operate also to
transfer this Warrant Certificate. After the Detachable Date, this Warrant
Certificate, and all rights hereunder, may be transferred when surrendered at
the corporate trust office of the Warrant Agent [or _________] by the registered
owner or his assigns, in person or by an attorney duly authorized in writing, in
the manner and subject to the limitations provided in the Warrant Agreement.

                  Except as provided in the immediately preceding paragraph,
after authentication by the Warrant Agent and prior to the expiration of this
Warrant Certificate, this Warrant Certificate may be exchanged at the corporate
trust office of the Warrant Agent [or at _____________] for Warrant Certificates
representing the same aggregate number of Warrants.

                  This Warrant Certificate shall not entitle the registered
owner hereof to any of the rights of a registered holder of the Warrant
Securities, including, without limitation, [the right to receive payments of
principal of (and premium, if any) or interest, if any, on the Warrant
Securities or to enforce any of the covenants of the Indenture] [the right to
receive dividend payments on the Warrant Securities or any voting rights].

                  Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.

                  This Warrant Certificate shall not be valid or obligatory for
any purpose until authenticated by the Warrant Agent.

                                      A-3
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.

Dated:
        ----------------------
                                                     EL PASO CORPORATION

                                                     By
Attest:                                                 ------------------------

----------------------

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Warrant Certificates referred to in the
within-mentioned Warrant Agreement.

         [Insert Warrant Agent]
---------------------------------------
               As Warrant Agent

By
   --------------------------
      Authorized Signatory

                                      A-4
<PAGE>

                     [REVERSE] [FORM OF WARRANT CERTIFICATE]
                     (INSTRUCTIONS FOR EXERCISE OF WARRANTS)

                  To exercise any Warrants evidenced hereby, the Holder of this
Warrant Certificate must pay [in cash or by certified check or official bank
check in New York Clearing House funds or by bank wire transfer in immediately
available funds], the Exercise Price in full for each of the Warrants exercised,
to _________, Corporate Trust Department, _______________, Attn: ___________ [or
________________], which payment should specify the name of the Holder of this
Warrant Certificate and the number of Warrants exercised by such Holder. In
addition, the Holder of this Warrant Certificate should complete the information
required below and present in person or mail by registered mail this Warrant
Certificate to the Warrant Agent at the addresses set forth below.

                               [FORM OF EXERCISE]
                   (TO BE EXECUTED UPON EXERCISE OF WARRANTS.)

                  The undersigned hereby irrevocably elects to exercise
_________ Warrants, represented by this Warrant Certificate, to purchase [______
shares of [Title of Warrant Securities]] [$_________ aggregate principal amount
of the [Title of Warrant Securities]] (the "Warrant Securities") of EL PASO
CORPORATION and represents that he has tendered payment for such Warrant
Securities [in cash or by certified check or official bank check in New York
Clearing House funds or by bank wire transfer in immediately available funds] to
the order of El Paso Corporation, c/o Treasurer in the amount of $___________ in
accordance with the terms hereof. The undersigned requests that said [principal]
amount of Warrant Securities be in fully registered form, in the authorized
denominations, registered in such names and delivered, all as specified in
accordance with the instructions set forth below.

                  If said [principal] amount of Warrant Securities is less than
all of the Warrant Securities purchasable hereunder, the undersigned requests
that a new Warrant Certificate representing the remaining balance of the
Warrants evidenced hereby be issued and delivered to the undersigned unless
otherwise specified in the instructions below.

Dated:

                                       Name
                                            ------------------------------------
                                       (Please Print)
                                                      --------------------------

--------------------------------       Address:
(Insert Social Security or Other                 -------------------------------
Identifying Number of Holder)
                                                 -------------------------------

                                       Signature
                                                 -------------------------------
                                                 (signed exactly as name appears
                                                 on the other side of this
                                                 Warrant Certificate)

                                      A-5
<PAGE>

                  This Warrant may be exercised at the following addresses:

                  By hand at
                              -----------------------

                              -----------------------

                              -----------------------

                  By mail at

                              -----------------------

                              -----------------------

                              -----------------------

   (Instructions as to form and delivery of Warrant Securities and/or Warrant
                                 Certificates):

                                      A-6

<PAGE>

                              [[FORM OF ASSIGNMENT]
              (TO BE EXECUTED TO TRANSFER THE WARRANT CERTIFICATE)

                  FOR VALUE RECEIVED __________________ hereby sells, assigns
and transfers unto

                                                            Please insert social
                                                            security or other
                                                            identifying number

                                                            --------------------
-----------------------------------
(Please print name and address
including zip code)

____________________________________________________________ the right
represented by the within Warrant Certificate and does hereby irrevocably
constitute and appoint _________________, Attorney, to transfer said Warrant
Certificate on the books of the Warrant Agent with full power of substitution.

Dated:

                                                 -------------------------------
                                                            Signature

                                         Signature
                                                   -----------------------------
                                                   (signed exactly as name
                                                   appears on the other side of
                                                   this Warrant Certificate)
Signature Guarantee:
                                     ]
-------------------------------------
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Warrant Agent)

                                      A-7<PAGE>

                                                                     EXHIBIT 4.1
-------------------------------------------------------------------------------

                             THE STANLEY WORKS, LTD.

                                       and

                                  [__________],

                                 as Rights Agent

                                Rights Agreement

                         Dated as of [Month, Day], 2002

-------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

Section                                                                 Page

Section 1.        Certain Definitions                                      1

Section 2.        Appointment of Rights Agent                              4

Section 3.        Issuance of Rights Certificates                          4

Section 4.        Form of Rights Certificates                              6

Section 5.        Countersignature and Registration                        6

Section 6.        Transfer, Split Up, Combination and Exchange of Rights
                  Certificates;  Mutilated, Destroyed, Lost or Stolen
                  Rights Certificates                                      7

Section 7.        Exercise of Rights; Purchase Price; Expiration
                  Date of Rights                                           8

Section 8.        Cancellation and Destruction of Rights Certificates     10

Section 9.        Reservation and Availability of Capital Stock           10

Section 10.       Preferred Shares Record Date                            12

Section 11.       Adjustment of Purchase Price, Number and Kind of
                  Shares or Number of Rights                              12

Section 12.       Certificate of Adjusted Purchase Price or Number of
                  Shares                                                  20

Section 13.       Consolidation, Merger or Sale or Transfer of Assets
                  or Earning Power                                        20

Section 14.       Fractional Rights and Fractional Shares                 23

Section 15.       Rights of Action                                        24

Section 16.       Agreement of Rights Holders                             24

Section 17.       Rights Certificate Holder Not Deemed a Shareholder      25

Section 18.       Concerning the Rights Agent                             25

Section 19.       Merger or Consolidation or Change of Name of Rights
                  Agent                                                   26

Section 20.       Duties of Rights Agent                                  27

Section 21.       Change of Rights Agent                                  28

Section 22.       Issuance of New Rights Certificates                     29

                                       i

<PAGE>

Section 23.       Redemption and Termination                              30

Section 24.       Exchange                                                30

Section 25.       Notice of Certain Events                                32

Section 26.       Notices                                                 33

Section 27.       Supplements and Amendments                              33

Section 28.       Successors                                              34

Section 29.       Determinations and Actions by the Board, etc.           34

Section 30.       Benefits of this Agreement                              35

Section 31.       Severability                                            35

Section 32.       Governing Law                                           35

Section 33.       Counterparts                                            35

Section 34.       Descriptive Headings                                    35

Exhibit A         Board of Directors
                  Resolution                                             A-1

Exhibit B         Form of Rights
                  Certificate                                            B-1

                                       ii

<PAGE>

                                RIGHTS AGREEMENT

     RIGHTS AGREEMENT, dated as of [month day], 2002 (this "Agreement"), between
The Stanley Works, Ltd., a Bermuda company (the "Company"), and [      ],
as Rights Agent (the "Rights Agent").

                               W I T N E S S E T H

     WHEREAS, on [month day], 2002, the Board of Directors of the Company (the
"Board") approved and adopted the Agreement and Plan of Merger, dated as of
February 8, 2002, among the Company, The Stanley Works, Stanley US Holdings,
Inc. and Stanley Mergerco, Inc. pursuant to which Stanley Mergerco, Inc., will
be merged with and into The Stanley Works (the "Merger"), and pursuant to which
each issued and outstanding share of common stock, par value $2.50 per share, of
The Stanley Works (together with the associated preferred stock purchase rights
issued pursuant to the Rights Agreement, dated as of January 31, 1996, between
The Stanley Works and the Rights Agent named therein) will automatically convert
into the right to receive one of the Company's common shares, par value US$.01
per share (the "Common Shares") (together with a Right issued hereunder) such
that The Stanley Works will become an indirect, wholly-owned subsidiary of the
Company; and

     WHEREAS, the shares of common stock of The Stanley Works that will be
converted into the right to receive Common Shares have certain rights attached;

     WHEREAS, the Board of the Company desires to replace the rights attached to
the common stock of The Stanley Works such that such holders shall have
substantially the same rights before and after the Merger; and

     WHEREAS the Board authorized the distribution of one Right (as hereinafter
defined) for each Common Share outstanding at the close of business on the
effective date of the Merger (the "Record Date") and authorized the issuance of
one Right (as such number may hereinafter be adjusted pursuant to the provisions
of Section 11(p) hereof) for each Common Share issued between the Record Date
and the Distribution Date (as hereinafter defined, each Right initially
representing the right to purchase one two-hundredths of a Series A Junior
Participating Preferred Share, US$.01 per share, of the Company, having the
rights, powers and preferences set forth in the Resolution of the Board of
Directors of the Company 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 hereby agree as follows:

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

          (a) "Acquiring Person" shall mean any Person who or which, together
     with all Affiliates and Associates of such Person, shall be the Beneficial
     Owner of ten

<PAGE>

     percent (10%) or more of the Common Shares then outstanding, but shall 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 or entity organized, appointed or established by the
     Company for or pursuant to the terms of any such plan or (v) any Person who
     becomes the Beneficial Owner of ten percent (10%) or more of the Common
     Shares then outstanding as a result of a reduction in the number of Common
     Shares then outstanding due to the repurchase of Common Shares by the
     Company unless and until such Person, after becoming aware that such Person
     has become the Beneficial Owner of ten percent (10%) or more of the then
     outstanding Common Shares, acquires beneficial ownership of additional
     Common Shares representing one percent (1%) or more of the then outstanding
     Common Shares.

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

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

               (i) which such Person or any of such Person's Affiliates or
          Associates, directly or indirectly, has the right to acquire (whether
          such right is exercisable immediately or only after the passage of
          time) 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 shall not be deemed the "Beneficial Owner" of, or to
          "beneficially own," (A) 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, (B) securities issuable upon exercise of Rights at any
          time prior to the occurrence of a Triggering Event or (C) 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 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;

               (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 shall not
          be deemed the "Beneficial Owner" of, or to "beneficially own," any
          security under this subparagraph (ii) as a result of an agreement,
          arrangement or

                                       2

<PAGE>

          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 reportable by
          such Person on Schedule 13D under the Exchange Act (or any comparable
          or successor report); or

               (iii) which are beneficially owned, directly or indirectly, by
          any other Person (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 (ii) of
          this paragraph (c)) or disposing of any voting securities of the
          Company;

     provided, however, that nothing in this paragraph (c) shall cause a Person
     engaged in business as an underwriter of securities to be the "Beneficial
     Owner" of, or to "beneficially own," any securities acquired through such
     Person's participation in good faith in a firm commitment underwriting
     until the expiration of forty (40) days after the date of such acquisition.

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

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

          (f) "Common Shares" shall mean the Common Shares, par value US$.01 per
     share, of the Company, except that "Common Shares" when used with reference
     to any Person other than the Company shall mean the capital stock of such
     Person with the greatest voting power, or the equity securities or other
     equity interest having power to control or direct the management, of such
     Person.

          (g) "Person" shall mean any individual, firm, corporation, partnership
     or other entity.

          (h) "Preferred Shares" shall mean Series A Junior Participating
     Preferred Shares, par value US$.01 per share, of the Company and, to the
     extent that there are not a sufficient number of Series A Junior
     Participating Preferred Shares authorized to permit the full exercise of
     the Rights, any other series of Preferred Shares of the Company designated
     for such purpose containing terms substantially similar to the terms of the
     Series A Junior Participating Preferred Shares.

                                       3

<PAGE>

          (i) "Section 11(a)(ii) Event" shall mean any event described in
     Section 11(a)(ii) hereof.

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

          (k) "Stock Acquisition Date" shall mean the first date of public
     announcement (which, for purposes of this definition, shall include,
     without limitation, a report filed or amended pursuant to Section 13(d)
     under the Exchange Act) by the Company or an Acquiring Person that an
     Acquiring Person has become such.

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

          (m) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
     Section 13 Event.

     Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-rights agents as it may deem necessary or
desirable.

     Section 3. Issuance of Rights Certificates.

     (a) Until the earlier of (i) the close of business on the tenth day after
the Stock Acquisition Date (or, if the tenth 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 tenth business day (or such later date as the
Board shall determine) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if
upon consummation thereof, such Person would be the Beneficial Owner of ten
percent (10%) or more of the Common Shares then outstanding (the earlier of (i)
and (ii) being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (c) of this Section 3)
by the certificates for the Common Shares registered in the names of the holders
of the Common Shares (which certificates for Common Shares shall be deemed also
to be certificates for Rights) and not by separate certificates and (y) the
Rights will be transferable only in connection with the transfer of the
underlying Common Shares (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 Common

                                       4

<PAGE>

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

     (b) With respect to certificates for the Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Common Shares and the registered holders of the Common
Shares shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date (as hereinafter
defined), the transfer of any certificates representing Common Shares in respect
of which Rights have been issued shall also constitute the transfer of the
Rights associated with such Common Shares.

     (c) Rights shall be issued in respect of all Common Shares which are issued
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights, and shall bear the following legend:

          This certificate also evidences and entitles the holder hereof to
     certain Rights as set forth in the Rights Agreement, date as of [month,
     date], 2002, between The Stanley Works, Ltd. (the "Company") and the Rights
     Agent thereunder (the "Rights Agreement"), the terms of which are hereby
     incorporated herein by reference and a copy of which is on file at the
     principal offices of the Company. Under certain circumstances, as set forth
     in the Rights Agreement, such Rights will be evidenced by separate
     certificates and will no longer be evidenced by this certificate. The
     Company will mail 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 Shares represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Shares represented by such certificates.

                                       5

<PAGE>

     Section 4. Form of Rights Certificates.

     (a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit B hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate 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, shall be dated as of the Record
Date and on their face shall entitle the holders thereof to purchase such number
of one two-hundredths of a Preferred Share as shall be set forth therein at the
price set forth therein (such exercise price per one two-hundredths of a share,
the "Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

     (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) 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 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 Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:

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

     Section 5. Countersignature and Registration.

     (a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, the Deputy Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and shall have
affixed

                                       6

<PAGE>

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

     (b) Following the Distribution Date, 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 shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

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

     (a) Subject to the provisions of 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 (other than Rights Certificates representing Rights that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of one two-hundredths of a
Preferred Share (or, following a Triggering Event, Common Shares, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24
hereof, countersign and deliver to

                                       7

<PAGE>

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.

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

     (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof 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 one two-hundredths of a Preferred Share (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 earliest of (i) the
close of business on March 10, 2006 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof, or (iii) the
time at which such Rights are exchanged pursuant to Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the "Expiration
Date").

     (b) The Purchase Price for each one two-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be US$220.00, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall 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 one two-hundredths of a Preferred Share (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 shall, subject
to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of one
two-hundredths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if

                                       8

<PAGE>

the Company shall have elected to deposit the total number of Preferred Shares
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one two-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent 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, (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) shall 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 Shares) 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 Shares would be issued.

     (d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and 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 Section 11(a)(ii) 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 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), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other

                                       9

<PAGE>

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 shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

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

     Section 9. Reservation and Availability of Capital Stock.

     (a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares and/or other securities), the number of Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares 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 Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

     (c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) 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 "Act"),
with respect to the securities

                                       10

<PAGE>

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 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 ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating 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 shall 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 shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, the exercise thereof is not permitted under applicable law or a
registration statement shall 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 one two-hundredths of a Preferred Share
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.

     (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 one two-hundredths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of
one two-hundredths of a Preferred Share (or Common Shares and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
two-hundredths of a Preferred Share (or Common Shares 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 shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.

                                       11

<PAGE>

     Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for a number of one two-hundredths of a Preferred Share (or Common
Share and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such fractional Preferred Shares (or Common Shares and/or other securities,
as the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the 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 Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

     Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.

     The Purchase Price, the number and kind of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

          (a) (i) In the event the Company shall at any time after the date of
     this Agreement (A) declare a dividend on the Preferred Shares payable in
     Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
     combine the outstanding Preferred Shares into a smaller number of shares or
     (D) issue any shares of its capital stock in a reclassification of the
     Preferred Shares (including any such reclassification in connection with a
     consolidation or merger in which the Company is the continuing or surviving
     corporation), except as otherwise provided in this Section 11(a) 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 Preferred
     Shares or capital stock, as the case may be, issuable on such date, shall
     be proportionately adjusted so that the holder of any Right exercised after
     such time shall be entitled to receive, upon payment of the Purchase Price
     then in effect, the aggregate number and kind of Preferred Shares 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 Share
     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)
     shall

                                       12

<PAGE>

     be in addition to, and shall be made prior to, any adjustment required
     pursuant to Section 11(a)(ii) hereof.

          (ii) Subject to Section 24 of this Agreement, in the event any Person,
     alone or together with its Affiliates and Associates, shall, becomes an
     Acquiring Person, unless the event causing such Person to become an
     Acquiring Person is a transaction set forth in Section 13(a) hereof, or is
     an acquisition of Common Shares pursuant to a tender offer or an exchange
     offer for all outstanding Common Shares at a price and on terms determined
     by at least a majority of the members of the Board 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 (a) at a price which is fair to
     shareholders (taking into account all factors which such members of the
     Board deem relevant including, without limitation, prices which could
     reasonably be achieved if the Company or its assets were sold on an orderly
     basis designed to realize maximum value) and (b) otherwise in the best
     interests of the Company and its shareholders, then, promptly following the
     occurrence of such event, proper provision shall be made so that each
     holder of a Right (except as provided below and in Section 7(e) hereof)
     shall 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 one two-hundredths of a Preferred Share, such number
     of Common Shares of the Company as shall equal the result obtained by (x)
     multiplying the then current Purchase Price by the then number of one
     two-hundredths of a Preferred Share for which a Right was exercisable
     immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
     (y) dividing that product (which, following such first occurrence, shall
     thereafter be referred to as the "Purchase Price" for each Right and for
     all purposes of this Agreement) by fifty percent (50%) of the Current
     Market Price (determined pursuant to Section 11(d) hereof) per Common Share
     on the date of such first occurrence (such number of shares, the
     "Adjustment Shares").

          (iii) In the event that the number of Common Shares which are
     authorized by the Company's Memorandum of Association but not outstanding
     or reserved for issuance for purposes other than upon exercise of the
     Rights are not sufficient to permit the exercise in full of the Rights in
     accordance with the foregoing subparagraph (ii) of this Section 11(a), the
     Company shall (A) determine the value of the Adjustment Shares issuable
     upon the exercise of a Right (the "Current Value"), and (B) with respect to
     each Right (subject to Section 7(e) hereof), make adequate provision to
     substitute for the Adjustment Shares, upon the exercise of a Right and
     payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
     Purchase Price, (3) Common Shares or other equity securities of the Company
     (including, without limitation, preferred shares,

                                       13

<PAGE>

     or units of preferred shares which the Board has deemed to have essentially
     the same value or economic rights as Common Shares (such preferred shares
     being referred to as "Common Share Equivalents")), (4) debt securities of
     the Company, (5) other assets or (6) any combination of the foregoing,
     having an aggregate value equal to the Current Value (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 shall not have made adequate provision to deliver value
     pursuant to clause (B) above within thirty (30) days following the later of
     (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on
     which the Company's right of redemption pursuant to Section 23(a) expires
     (the later of (x) and (y) being referred to herein as the "Section
     11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver,
     upon the surrender for exercise of a Right and without requiring payment of
     the Purchase Price, Common Shares (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" shall
     mean the excess of (i) the Current Value over (ii) the Purchase Price. If
     the Board determines in good faith that it is likely that sufficient
     additional Common Shares could be authorized for issuance upon exercise in
     full of the Rights, the thirty (30) day period set forth above may be
     extended to the extent necessary, but not more than ninety (90) days after
     the Section 11(a)(ii) Trigger Date, in order that the Company may seek
     shareholder approval for the authorization of such additional shares (such
     thirty (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
     (1) shall provide, subject to Section 7(e) hereof, that such action shall
     apply uniformly to all outstanding Rights and (2) 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 shall issue a public
     announcement stating that the exercisability of the Rights has been
     temporarily suspended, as well as a public announcement at such time as the
     suspension is no longer in effect. For purposes of this Section 11(a)(iii),
     the value of each Adjustment Share shall be the current market price per
     Common Share on the Section 11(a)(ii) Trigger Date and the per share or per
     unit value of any Common Share Equivalent shall be deemed to equal the
     current market price per Common Share on such date.

     (b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such

                                       14

<PAGE>

record date) Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("Equivalent Preferred Shares")) or
securities convertible into Preferred Shares or Equivalent Preferred Shares at a
price per Preferred Share or per Equivalent Preferred Share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Preferred Shares) less than the Current Market Price (as determined
pursuant to Section 11(d) hereof) per Preferred Share on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
Equivalent Preferred Shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of Preferred Shares outstanding on such record date, plus the number of
additional Preferred Shares and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). 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 shall be as determined in good faith by
the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

     (c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Shares (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 Shares, but including any dividend
payable in shares other than Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d) hereof) per Preferred Share on such record
date, less the fair market value (as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a Preferred
Share and the denominator of which shall be such Current Market Price (as
determined pursuant to Section 11(d) hereof) per Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.

                                       15

<PAGE>

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

                                       16

<PAGE>

          (ii) For the purpose of any computation hereunder, the Current Market
     Price per Preferred Share shall be determined in the same manner as set
     forth above for the Common Shares in clause (i) of this Section 11(d)
     (other than the last sentence thereof). If the Current Market Price per
     Preferred Share cannot be determined in the manner provided above or if the
     Preferred Shares are not publicly held or listed or traded in a manner
     described in clause (i) of this Section 11(d), the Current Market Price per
     Preferred Share shall be conclusively deemed to be an amount equal to 200
     (as such number may be appropriately adjusted for such events as stock
     splits, stock dividends and recapitalizations with respect to the Common
     Shares occurring after the date of this Agreement) multiplied by the
     Current Market Price per Common Share. If neither the Common Shares nor the
     Preferred Shares are publicly held or so listed or traded, Current Market
     Price per Preferred Share shall mean the fair value per share as determined
     in good faith by the Board, whose determination shall be described in a
     statement filed with the Rights Agent and shall be conclusive for all
     purposes.

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

     (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares 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 Shares shall apply on
like terms to any such other shares.

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

                                       17

<PAGE>

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

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

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

                                       18

<PAGE>

     (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 one
two-hundredths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one two-hundredths of a Preferred
Share at such adjusted Purchase Price.

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

     (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
Current Market Price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders.

     (n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than fifty percent (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,

                                       19

<PAGE>

merger or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
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 26 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 shall at any time after the Record Date and prior to the
Distribution Date (i) declare a dividend on the outstanding Common Shares
payable in Common Shares, (ii) subdivide the outstanding Common Shares or (iii)
combine the outstanding Common Shares into a smaller number of shares, the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator which shall be the total number
of Common Shares outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.

     Section 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 shall (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 Shares and the Common Shares, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 26 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained.

     Section 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 shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding Common Shares shall be changed into or exchanged
for stock or other securities of any other Person or cash or any

                                       20

<PAGE>

other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets or earning power aggregating more
than fifty percent (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), proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at 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 Common Shares 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 shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one two-hundredths
of a Preferred Share for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such one two-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) fifty percent (50%) of the Current Market
Price (determined pursuant to Section 11(d)(i) hereof) per Common Share of such
Principal Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.

     (b) "Principal Party" shall mean:

          (i) in the case of any transaction described in clause (x) or (y) of
     the first sentence of Section 13(a), the Person that is the issuer of any
     securities into which Common Shares 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)

                                       21

<PAGE>

     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, (1) if the Common Shares of such
Person is not at such time and has not been continuously over the preceding
twelve (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
Shares of which are and have been so registered, "Principal Party" shall refer
to such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value.

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

          (i) prepare and file a registration statement under the 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 Act) until the Expiration Date; and

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

     (d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who

                                       22

<PAGE>

acquired Common Shares pursuant to a tender offer or exchange offer for all
outstanding Common Shares which complies with the provisions of Section
11(a)(ii) hereof (or a wholly owned subsidiary of any such Person or Persons),
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such tender offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of Common Shares 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 shall expire.

     Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed 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.
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
shall be used.

     (b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one two-hundredths
of a Preferred Share, and then only to the extent permitted under Bermuda law)
upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one two-hundredths of a Preferred Share, and then only to the extent
permitted under Bermuda). In lieu of fractional Preferred Shares (or, to the
extent fractional Preferred Shares are permitted under Bermuda law, in lieu of
fractional Preferred Shares that are not integral multiples of one
two-hundredths of a Preferred Share), the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in

                                       23

<PAGE>

cash equal to the same fraction of the current market value of one
two-hundredths of a Preferred Share. For purposes of this Section 14(b), the
current market value of one two-hundredths of a Preferred Share shall be one
two-hundredths of the closing price of a Preferred Share (as determined pursuant
to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise.

     (c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of Common Shares upon exercise of the Rights or
to distribute certificates which evidence fractional Common Shares. In lieu of
fractional Common Shares, 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 (1)
Common Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of one Common Share (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 right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.

     Section 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 Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and that it is the Company's intention that
such holders shall 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.

     Section 16. Agreement of Rights Holders.

     Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:

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

          (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

                                       24

<PAGE>

     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
     Shares certificate) is registered as the absolute owner thereof and of the
     Rights evidenced thereby (notwithstanding any notations of ownership or
     writing on the Rights Certificates or the associated Common Shares
     certificate made by anyone other than the Company or the Rights Agent) for
     all purposes whatsoever, and neither the Company nor the Rights Agent,
     subject to the last sentence of Section 7(e) hereof, shall 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 shall have any liability to any
     holder of a Right or other Person as a result of its inability to perform
     any of its obligations under this Agreement by reason of any preliminary or
     permanent injunction or other order, decree or ruling issued by a court of
     competent jurisdiction or by a governmental, regulatory or administrative
     agency or commission, or any statute, rule, regulation or executive order
     promulgated or enacted by any governmental authority, prohibiting or
     otherwise restraining performance 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.

     Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of one two-hundredths of a
Preferred Share or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a 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 shall have been exercised and shares
shall have been issued by the Company in accordance with the provisions hereof.

     Section 18. Concerning the Rights Agent.

     (a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and 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

                                       25

<PAGE>

expense, incurred without 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 shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.

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

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

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

     Section 20. Duties of Rights Agent.

     The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and

                                       26

<PAGE>

the holders of Rights Certificates, by their acceptance thereof, shall be bound:

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

     (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking 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
Chairman of the Board, the Deputy Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

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

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

     (e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11,
Section 13 or Section 24 hereof or responsible for the manner, method or amount
of any such adjustment or the 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 shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares or
Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares or Preferred Shares 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

                                       27

<PAGE>

further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

     (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Deputy Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall 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 Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

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

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

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

     Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Shares and Preferred Shares, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the

                                       28

<PAGE>

Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his 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, shall be a
corporation organized and doing business under the laws of the United States or
of any State thereof, 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 US$50,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and the
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

     Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, 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, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be

                                       29

<PAGE>

issued, and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.

     Section 23. Redemption and Termination.

     (a) The Board may, at its option, at any time prior to the earlier of (i)
the close of business on the tenth day following the Stock Acquisition Date (or,
if the Stock Acquisition Date shall have occurred prior to the Record Date, the
close of business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of US$.01 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 shall not be exercisable after the
first occurrence of a Section 11(a)(ii) 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, Common Shares (based on the Current Market Price,
as defined in Section 11(d)(i) hereof, of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by the Board.

     (b) Immediately upon the action of the Board ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights 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 Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.

     Section 24. Exchange.

     (a) The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the

                                       30

<PAGE>

Beneficial Owner of fifty percent (50%) or more of the Common Shares then
outstanding.

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

     (c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.

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

     Section 25. Notice of Certain Events.

     (a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (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 Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with any other

                                       31

<PAGE>

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 fifty percent
(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 shall 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 shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares whichever shall be
the earlier.

     (b) In case any of the events set forth in Section 11(a)(ii) hereof shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Shares shall be deemed thereafter to refer to
Common Shares and/or, if appropriate, other securities.

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

                 The Stanley Works, Ltd.
                 1000 Stanley Drive
                 New Britain, Connecticut  06053
                 Attention:  Corporate Secretary

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

                                       32

<PAGE>

                 Attention:

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

     Section 27. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date and subject to
the penultimate sentence of this Section 27, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates; provided, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of two-hundredths of a Preferred Share for which a Right is
exercisable; provided, however, that at any time prior to (i) a Stock
Acquisition Date or (ii) the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of Rule
14d-2 of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 10% or more
of the Common Shares then outstanding, the Board may amend this Agreement to
increase the Purchase Price or extend the Final Expiration Date. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.

     Section 28. Successors. All the covenants and provisions of this Agreement
by

                                       33

<PAGE>

or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.

     Section 29. Determinations and Actions by the Board, etc. For all purposes
of this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board or to
the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board to any liability to the holders of
the Rights.

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

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

     Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of Bermuda and for all purposes shall be governed by and construed in
accordance with the laws of Bermuda.

     Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an

                                       34

<PAGE>

original, and all such counterparts shall together constitute but one and the
same instrument.

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

                                       35

<PAGE>

         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.

Attest:                                    THE STANLEY WORKS, LTD.

By:____________________________            By:_____________________________
    Name:   Bruce H. Beatt, Esq.              Name:    John M. Trani
    Title:  Vice President,                   Title:   Chairman and
            General Counsel and                        Chief Executive Officer
            Secretary

Attest:                                    [__________________________]

By:_________________________               By:________________________
   Name:                                      Name:
   Title:                                     Title:

                                       36

<PAGE>

                                                                       Exhibit A

               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                OF SERIES A JUNIOR PARTICIPATING PREFERRED SHARES

                                       of

                             THE STANLEY WORKS, LTD.

     Pursuant to Section 1.C of the Bye-laws of The Stanley Works, Ltd., a
Bermuda company (the "Company"),

     I, Bruce H. Beatt, Esq., Vice President, General Counsel and Secretary of
the Company, DO HEREBY CERTIFY:

          That pursuant to the authority conferred upon the Board of Directors
     by Section 1.C of the Bye-laws of the Company, the Board of Directors of
     the Company on [month day], 2002, adopted the following resolution creating
     a series of 250,000 Preferred Shares designated as "Series A Junior
     Participating Preferred Shares".

          RESOLVED: that, pursuant to the authority vested in the Board of
     Directors of the Company in accordance with the provisions of its Bye-laws
     and Memorandum of Association, a series of Preferred Shares of the Company
     be and it hereby is created, and 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:

     (a) Designation and Amount. The shares of such series shall be designated
as "Series A Junior Participating Preferred Shares" and the number of shares
constituting such series shall be 250,000, par value US$.01 per share.

     (b) Dividends and Distributions.

          (1) Subject to the prior and superior rights of the holders of any
     shares of any series of Preferred Shares ranking prior and superior to the
     shares of Series A Junior Participating Preferred Shares with respect to
     dividends, the holders of shares of Series A Junior Participating Preferred
     Shares in preference to the holders of common shares, par value US$.01 per
     share, of the Company (the "Common Shares"), and any other junior shares
     shall be entitled to receive, when, as and if declared by the Board of
     Directors out of funds legally available for the purpose, including capital
     surplus, quarterly dividends payable in cash on the last day of February,
     May, August and November in each year (each such date being referred to
     herein as a "Quarterly Dividend Payment Date"), commencing

                                       A-1

<PAGE>

     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
     Shares, in an amount per share (rounded to the nearest cent) equal to the
     greater of (a) US$20.00 or (b) subject to the provision for adjustment
     hereinafter set forth, 200 times the aggregate per share amount of all cash
     dividends, and 200 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 Shares or a subdivision of the outstanding
     shares of Common Shares (by reclassification or otherwise), declared on the
     Common Shares, 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 Shares. In the event the Company shall at any time
     (i) declare any dividend on Common Shares payable in Common Shares, (ii)
     subdivide the outstanding Common Shares, (iii) combine the outstanding
     Common Shares into a smaller number of shares, or (iv) issue any shares of
     its capital stock in a reclassification of the outstanding Common Shares,
     then in each such case the amount to which holders of Series A Junior
     Participating Preferred Shares were entitled immediately prior to such
     event under clause (a) and clause (b) of the preceding sentence shall be
     adjusted by multiplying each such amount by a fraction the numerator of
     which is the number of shares of Common Shares outstanding immediately
     after such event and the denominator of which is the number of Common
     Shares that were outstanding immediately prior to such event.

          (2) The Company shall declare a dividend or distribution on the Series
     A Junior Participating Preferred Shares as provided in paragraph (1) above
     immediately after it declares a dividend or distribution on the Common
     Shares (other than a dividend payable in shares of Common Shares); provided
     that, in the event no dividend or distribution shall have been declared on
     the Common Shares during the period between any Quarterly Dividend Payment
     Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
     US$20.00 per Series A Junior Participating Preferred Share shall
     nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

          (3) Dividends shall begin to accrue and be cumulative on outstanding
     Series A Junior Participating Preferred Shares from the Quarterly Dividend
     Payment Date next preceding the date of issue of such shares unless the
     date of issue of such shares is prior to the record date for the first
     Quarterly Dividend Payment Date, in which case dividends on such shares
     shall begin to accrue 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 Series A Junior
     Participating Preferred Shares entitled to receive a quarterly dividend and
     before such Quarterly Dividend Payment Date, in either of which events such
     dividends shall begin to accrue and be cumulative from such Quarterly
     Dividend Payment Date. Accrued but unpaid dividends shall not bear
     interest. Dividends paid on the Series A Junior Participating Preferred

                                       A-2

<PAGE>

     Shares in an amount less than the total amount of such dividends at the
     time accrued and payable on such shares shall be allocated pro rata on a
     share-by-share basis among all such shares at the time outstanding. The
     Board of Directors may fix a record date for the determination of holders
     of Series A Junior Participating Preferred Shares entitled to receive
     payment of a dividend or distribution declared thereon, which record date
     shall be no more than 30 days prior to the date fixed for the payment
     thereof.

     (c) Voting Rights. The holders of Series A Junior Participating Preferred
Shares shall have the following voting rights:

          (1) Subject to the provision for adjustment hereinafter set forth,
     each Series A Junior Participating Preferred Share shall entitle the holder
     thereof to 200 votes on all matters submitted to a vote of the shareholders
     of the Company. In the event the Company shall at any time (i) declare any
     dividend on Common Shares, (ii) subdivide the outstanding Common Shares,
     (iii) combine the outstanding Common Shares into a smaller number of
     shares, or (iv) issue any shares of its capital stock in a reclassification
     of the outstanding Common Shares, then in each such case the number of
     votes per share to which holders of Series A Junior Participating Preferred
     Shares were entitled immediately prior to such event shall be adjusted by
     multiplying such number by a fraction the numerator of which is the number
     of shares of Common Shares outstanding immediately after such event and the
     denominator of which is the number of shares of Common Shares that were
     outstanding immediately prior to such event.

          (2) Except as otherwise provided herein, in the Memorandum of
     Association or Bye-laws of the Company or under applicable law, the holders
     of Series A Junior Participating Preferred Shares and the holders of Common
     Shares shall vote together as one class on all matters submitted to a vote
     of shareholders of the Company.

          (3) (A) If at any time dividends on any Series A Junior Participating
     Preferred Shares shall be in arrears in an amount equal to six (6)
     quarterly dividends thereon, the occurrence of such contingency shall mark
     the beginning of a period (herein called a "default period") which shall
     extend until such time when all accrued and unpaid dividends for all
     previous quarterly dividend periods and for the current quarterly dividend
     period on all Series A Junior Participating Preferred Shares then
     outstanding shall have been declared and paid or set apart for payment.
     During each default period, the holders of Series A Junior Participating
     Preferred Shares, together with any other series of Preferred Shares then
     entitled to such a vote under the terms of the Memorandum of Association
     and the Bye-laws of the Company, voting as a separate class shall have the
     right to elect two (2) Directors.

          (B) During any default period, such voting rights of the holders of
     Series A Junior Participating Preferred Shares may be exercised

                                       A-3

<PAGE>

          initially at a special general meeting called pursuant to subparagraph
          (c)(3)(C) of this Certificate or at any annual general meeting of
          shareholders, and thereafter at annual general meetings of
          shareholders, provided that such voting right shall not be exercised
          unless the holders of ten percent (10%) in number of Series A Junior
          Participating Preferred Shares outstanding shall be present in person
          or by proxy. The absence of a quorum of the holders of Common Shares
          shall not affect the exercise by the holders of Series A Junior
          Participating Preferred Shares of such voting right. At any meeting at
          which the holders of Series A Junior Participating Preferred Shares
          shall exercise such voting right initially during an existing default
          period, they shall have the right to elect Directors to fill such
          vacancies, if any, in the Board of Directors as may then exist up to
          two (2) Directors or, if such right is exercised at an annual general
          meeting, to elect two (2) Directors. If the number which may be so
          elected at any special general meeting does not amount to the required
          number, the holders of the Series A Junior Participating Preferred
          Shares shall have the right to make such increase in the number of
          Directors as shall be necessary to permit the election by them of the
          required number. After the holders of the Series A Junior
          Participating Preferred Shares shall have exercised their right to
          elect Directors in any default period and during the continuance of
          such period, the number of Directors shall not be increased or
          decreased except by vote of the holders of Series A Junior
          Participating Preferred Shares 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 Shares.

               (C) Unless the holders of Series A Junior Participating Preferred
          Shares shall, during an existing default period, have previously
          exercised their right to elect Directors, the Board of Directors may
          order, or any person owning in the aggregate not less than ten percent
          (10%) of the total number of Series A Junior Participating Preferred
          Shares outstanding, irrespective of series may request, the calling of
          a special general meeting of the holders of Series A Junior
          Participating Preferred Shares, which meeting shall thereupon be
          called by the Chairman of the Board, the President, a Vice President
          or the Secretary of the Company. Notice of such meeting and of any
          annual general meeting at which holders of Series A Junior
          Participating Preferred Shares are entitled to vote pursuant to this
          subparagraph (c)(3)(C) shall be given to each holder of record of
          Series A Junior Participating Preferred Shares by mailing a copy of
          such notice to him at his last address as the same appears on the
          books of the Company. Such meeting shall be called for a time not
          earlier than 10 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 ten percent (10%) of the total number of Series A Junior
          Participating Preferred Shares outstanding. Notwithstanding the
          provisions of this subparagraph (c)(3)(C), no such special general
          meeting shall be called during the period within 60 days immediately
          preceding the date fixed for the next annual general meeting of the
          shareholders.

                                       A-4

<PAGE>

               (D) In any default period the holders of Common Shares, and other
          classes of stock of the Company, if applicable, shall continue to be
          entitled to elect the whole number of Directors in accordance with the
          Bye-laws of the Company until the holders of Series A Junior
          Participating Preferred Shares shall have exercised their right to
          elect two (2) Directors after the exercise of which right (x) the
          Directors so elected by the holders of Series A Junior Participating
          Preferred Shares shall continue in office until their successors shall
          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 subparagraph (c)(3)(C) of this Certificate) 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 shall have become vacant. References in this
          paragraph (3) to Directors elected by the holders of a particular
          class of stock shall include Directors elected by such Directors to
          fill vacancies as provided in clause (y) of the foregoing sentence.

               (E) Immediately upon the expiration of a default period, (x) the
          right of the holders of Series A Junior Participating Preferred Shares
          to elect Directors shall cease, (y) the term of any Directors elected
          by the holders of Series A Junior Participating Preferred Shares shall
          terminate, and (z) the number of Directors shall be such number as may
          be provided for elsewhere in the Memorandum of Association or the
          Bye-laws irrespective of any increase made pursuant to the provisions
          of subparagraph (c)(3)(B) of this Certificate (such number being
          subject, however, to change thereafter in any manner provided by law
          or in the Memorandum of Association or the Bye-laws of the Company).
          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.

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

     (d) Certain Restrictions.

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

          (A) declare or pay dividends on, make any other distributions

                                      A-5

<PAGE>

     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
     Shares;

          (B) 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 Shares, except dividends paid ratably on the Series
     A Junior Participating Preferred Shares 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;

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

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

     (2) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under Section (d)(1) of this Certificate, purchase or
otherwise acquire such shares at such time and in such manner.

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

     (f) Liquidation, Dissolution or Winding Up.

     (1) Upon any voluntary liquidation, dissolution or winding up

                                      A-6

<PAGE>

of the Company, no distribution shall 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 Shares unless, prior
thereto, the holders of Series A Junior Participating Preferred Shares shall
have received US$200.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of Series A Junior Participating
Preferred Shares unless, prior thereto, the holders of Common Shares shall have
received an amount per share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference by (ii) 200 (as
appropriately adjusted as set forth in paragraph 3 below to reflect such events
as stock splits, stock dividends and recapitalizations with respect to the
Common Shares) (such number in clause (ii), 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 Series A Junior Participating
Preferred Shares and Common Shares, respectively, holders of Series A Junior
Participating Preferred Shares and holders of Common Shares shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Series A Junior
Participating Preferred Shares and Common Shares, on a per share basis,
respectively.

     (2) 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 Shares, if any, which
rank on a parity with the Series A Junior Participating Preferred Shares, then
such remaining assets shall 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 shall be distributed
ratably to the holders of Common Shares.

     (3) In the event the Company shall at any time (i) declare any dividend on
Common Shares payable in Common Shares, (ii) subdivide the outstanding Common
Shares, (iii) combine the outstanding Common Shares into a smaller number of
shares or (iv) issue any shares of its capital stock in a reclassification of
the outstanding Common Shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of Common
Shares outstanding immediately after such event and the denominator of which is
number of Common Shares that were outstanding immediately prior to such event.

     (g) Consolidation, Merger, etc. In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the Common

                                      A-7

<PAGE>

Shares are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case the Series A Junior Participating
Preferred Shares shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 200 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 Common Share is changed or exchanged. In the event the Company shall at any
time (i) declare any dividend on Common Shares payable in shares of Common
Shares, (ii) subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the outstanding Common
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 Shares shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Shares
outstanding immediately after such event and the denominator of which is the
number of shares of Common Shares that were outstanding immediately prior to
such event.

     (h) No Redemption. The shares of Series A Junior Participating Preferred
Shares shall not be redeemable.

     (i) Ranking. The Series A Junior Participating Preferred Shares shall rank
junior to all other series of the Company's Preferred Shares as to the payment
of dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.

     (j) Amendment. The Bye-laws of the Company shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of a majority or more
of the outstanding Series A Junior Participating Preferred Shares.

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

                                      A-8

<PAGE>

     IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true this [__]th day of [_____], 2002.

By:____________________
Name:   Bruce H. Beatt, Esq.
Title:  Vice President,
        General Counsel and
        Secretary

                                      A-9

<PAGE>

                                                                       Exhibit B

                           Form of Rights Certificate

                                                              Certificate No. R-
                                                                 ________ Rights

         NOT EXERCISABLE AFTER MARCH 10, 2006 OR EARLIER IF REDEEMED BY THE
         COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
         COMPANY, AT US$.01 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/

                               Rights Certificate

                             THE STANLEY WORKS, LTD.

     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 [month day], 2002 (the "Rights Agreement"), between The
Stanley Works, Ltd., a Bermuda corporation (the "Company"), and [           ]
(the "Rights Agent"), to purchase from the Company at any time prior to 5:00
P.M. (New York City time) on March 10, 2006 at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one
two-hundredths of a fully paid, non-assessable share of Series A Junior
Participating Preferred Shares (the "Preferred Shares") of the Company, at a
purchase price of US$220.00 per one two-hundredths 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

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

                                       B-1

<PAGE>

thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of [month day], 2002, based on the Preferred
Shares 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 Shares will be issued.

     Upon the occurrence of a Section 11(a)(ii) 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 such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such 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 shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.

     As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Shares or other securities, which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, 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 one two-hundredths of a Preferred Share as
the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of US$.01 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement) and (ii) the Final
Expiration Date.

                                       B-2

<PAGE>

     No fractional shares of Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one two-hundredths of a Preferred Share to the extent permitted by
Bermuda law, 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 shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Preferred Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
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 shall have been
exercised as provided in the Rights Agreement.

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

                                       B-3

<PAGE>

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

Dated as of __________________

ATTEST:                                      THE STANLEY WORKS, LTD.

_________________                            By_________________
Secretary                                      Name:
                                               Title:

Countersigned:

[                ]

By ______________________
   Authorized Signature

                                       B-4

<PAGE>

                  [Form of Reverse Side of Rights Certificate)

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate.)

  FOR VALUE RECEIVED _____________________________________________ hereby sells,

 assigns and transfers unto _______________________

    ________________________________________________________________________
                  (Please print name and address of transferee)

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

Dated: __________, _____            ________________________________
                                            Signature

Signature Guaranteed:

                                       B-5

<PAGE>

                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such 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:  _________, ____             ________________________________________
                                                    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-6

<PAGE>

                          FORM OF ELECTION TO PURCHASE

                  (To be executed if holder desires to exercise
                 Rights represented by the Rights Certificate.)

To:  THE STANLEY WORKS, LTD.:

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

Please insert social security
or other identifying number

_____________________________________________________________________________
                         (Please print name and address)

_____________________________________________________________________________

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

Please insert social security
or other identifying number

____________________________________________________________________________
                         (Please print name and address)

____________________________________________________________________________

Dated:____________, ____

  _______________________________________
                  Signature

Signature Guaranteed:

                                       B-7

<PAGE>

                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

     (2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or 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-8

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