Document:

Exhibit 4.5

 

AVI BIOPHARMA, INC.

 

WARRANT TO
PURCHASE COMMON STOCK

 

	
  WARRANT NO.

  	
  ORIGINAL ISSUE DATE: DECEMBER
  [    ], 2007

  

 

AVI BioPharma, Inc., a Delaware corporation (the “Company”), hereby
certifies that, for value received,
[                  ]
or its permitted registered assigns (the “Holder”), is entitled to purchase from the
Company up to a total of
[                  ]
shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company (each
such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $2.45 per share (as adjusted from
time to time as provided herein, the “Exercise
Price”), at any time and from time to time on or after June 19,
2008 (the “Original Exercisability
Date”) and through and including December 18, 2012 (the “Expiration Date”),
and subject to the following terms and conditions:

 

This Warrant is being issued pursuant to that certain Subscription
Agreement, dated December 12, 2007, by and between the Company and the
purchaser identified therein (the “Subscription
Agreement”).  The original issuance of the Warrant by the Company
pursuant to the Subscription Agreement has been registered pursuant to a
Registration Statement on Form S-3 (File No. 333-138299) (the “Registration Statement”).

 

1.             Definitions.
In addition to the terms defined elsewhere in this Warrant, capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the Subscription Agreement.

 

2.             List of Warrant
Holders.  The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder
(which shall include the initial Holder or, as the case may be, any registered
assignee to which this Warrant is permissibly assigned hereunder from time to
time).  The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

 

3.             List of
Transfers; Restrictions on Transfer. The Company shall register any such
transfer of all or any portion of this Warrant in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto
duly completed and signed, to the Company at its address specified herein. Upon
any such registration or transfer, a new Warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new Warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect
of the New Warrant that the Holder has in respect of this Warrant.

 

1

 

4.             Exercise and
Duration of Warrant.

 

(a)           All
or any part of this Warrant shall be exercisable by the registered Holder in
any manner permitted by Section 10 of this Warrant at any time and from
time to time on or after the Original Exercisability Date and through and
including the Expiration Date. Subject to Section 11 hereof, at 5:00 p.m.,
New York City time, on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value and this
Warrant shall be terminated and no longer outstanding.

 

(b)           The
Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”), completed and duly signed, and (ii) if such
Holder is not utilizing the cashless exercise provisions set forth in this
Warrant, payment of the Exercise Price for the number of Warrant Shares as to
which this Warrant is being exercised.  The date such items are delivered
to the Company (as determined in accordance with the notice provisions hereof)
is an “Exercise Date.” The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder, but if it is not so delivered then such exercise shall
constitute an agreement by the Holder to deliver the original Warrant to the
Company as soon as practicable thereafter.  Execution and delivery of the
Exercise Notice shall have the same effect as cancellation of the original
Warrant and issuance of a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.

 

5.             Delivery of
Warrant Shares.

 

(a)           Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than three business days after the Exercise Date) issue or cause to be issued
and cause to be delivered to or upon the written order of the Holder and in
such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends. The Holder, or
any Person permissibly so designated by the Holder to receive Warrant Shares,
shall be deemed to have become the holder of record of such Warrant Shares as
of the Exercise Date.  The Company shall, upon the written request of the
Holder, use its best efforts to deliver, or cause to be delivered, Warrant
Shares hereunder electronically through the Depository Trust and Clearing
Corporation or another established clearing corporation performing similar
functions, if available; provided, that, the Company may, but will not be required
to, change its transfer agent if its current transfer agent cannot deliver
Warrant Shares electronically through the Depository Trust and Clearing
Corporation.  If as of the time of exercise the Warrant Shares constitute
restricted or control securities, the Holder, by exercising, agrees not to
resell them except in compliance with all applicable securities laws.

 

(b)           If
by the close of the third business day after delivery of an Exercise Notice and
the payment of the aggregate exercise price in any manner permitted by Section 10
of this Warrant, the Company fails to deliver to the Holder a certificate
representing the required number of Warrant Shares in the manner required
pursuant to Section 5(a), and if after such third business day and prior
to the receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”),
then the Company shall, within three business days after the Holder’s request
and in the Holder’s sole discretion, either (i) pay in cash to the Holder
an amount equal to the Holder’s

 

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total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Warrant Shares and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of Warrant Shares, times (B) the closing bid price on the date of
the event giving rise to the Company’s obligation to deliver such certificate.

 

(c)           To
the extent permitted by law, the Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by the Holder or any other person of any obligation to the
Company or any violation or alleged violation of law by the Holder or any other
person, and irrespective of any other circumstance that might otherwise limit
such obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

 

6.             Charges, Taxes
and Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or the
Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

7.             Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe. If a New
Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition
precedent to the Company’s obligation to issue the New Warrant.

 

8.             Reservation of
Warrant Shares. The Company covenants that it will at all times reserve and
keep available out of the aggregate of its authorized but unissued and
otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares that are then issuable 

 

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and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 9). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and nonassessable.

 

9.             Certain
Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 9.

 

(a)           Stock
Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of
Common Stock, (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of
this paragraph shall become effective immediately after the effective date of
such subdivision or combination.

 

(b)           Pro
Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences
of its indebtedness, (ii) any security (other than a distribution of
Common Stock covered by the preceding paragraph), (iii) rights or warrants
to subscribe for or purchase any security, or (iv) any other asset besides
cash (in each case, “Distributed
Property”), then, upon any exercise of this Warrant that occurs after
the record date fixed for determination of stockholders entitled to receive
such distribution, the Holder shall be entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such exercise (if applicable), the
Distributed Property that such Holder would have been entitled to receive in
respect of such number of Warrant Shares had the Holder been the record holder
of such Warrant Shares immediately prior to such record date.

 

(c)           Fundamental
Transactions. If, at any time while this Warrant is outstanding (i) the
Company effects (A) any merger of the Company with (but not into) another
entity, in which the shareholders of the Company immediately prior to the
transaction own less than a majority of the outstanding stock of the surviving
entity, or (B) any merger or consolidation of the Company into another
entity, (ii) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer approved or authorized by the Company’s Board of
Directors is completed pursuant to which holders of at least a majority of the
outstanding Common Stock tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (each, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it

 

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would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant without regard to any limitations on exercise contained herein
(the “Alternate Consideration”),
and the Holder shall no longer have the right to receive Warrant Shares upon
exercise of this Warrant.  The Company shall not effect any such
Fundamental Transaction unless prior to or simultaneously with the consummation
thereof, any successor to the Company, surviving entity or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume the obligation to deliver to the Holder, such Alternate
Consideration as, in accordance with the foregoing provisions, the Holder may
be entitled to receive, and the other obligations under this Warrant.  The
provisions of this paragraph (c) shall similarly apply to subsequent
transactions of a Fundamental Transaction type.

 

(d)           Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraph (a) of this Section 9, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased
or decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such
adjustment.

 

(e)           Calculations.  All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock.

 

(f)            Notice
of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9,
the Company at its expense will, at the written request of the Holder, promptly
compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment, in good faith, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

 

(g)           Notice
of Corporate Events. If, while this Warrant is outstanding, the Company (i) declares
a dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of
rights or warrants to subscribe for or purchase any capital stock of the
Company or any subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then, except if such notice and the
contents thereof shall be deemed to constitute material non-public information,
the Company shall deliver to the Holder a notice describing the material terms
and conditions of such transaction at least 10 business days prior to the
applicable record or effective date on which a person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will

 

5

 

take
all reasonable steps to give Holder the practical opportunity to exercise this
Warrant prior to such time; provided,
however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice.

 

10.           Payment of
Exercise Price. The Holder may pay the Exercise Price in one of the
following manners:

 

(a)           Cash
Exercise. If an Exercise Notice is delivered at a time when the
Registration Statement is effective, then the Holder shall deliver immediately
available funds; or

 

(b)           Cashless
Exercise. If an Exercise Notice is delivered at a time when the
Registration Statement is not then effective, then the Holder shall notify the
Company in an Exercise Notice of its election to utilize cashless exercise, in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

 

X = Y [(A-B)/A]

 

where:

 

X = the number of Warrant
Shares to be issued to the Holder.

 

Y = the number of Warrant
Shares with respect to which this Warrant is being exercised.

 

A = the closing price on the
business day immediately prior to the Exercise Date.

 

B = the Exercise Price then
in effect.

 

11.           Limitations on
Exercise.

 

(a)           Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Holder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by the Holder and its affiliates and any
other persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 4.99% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice by the Holder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this Section and
determined that issuance of the full number of Warrant Shares requested in such
Exercise Notice is permitted under this Section.  The Company’s obligation
to issue shares of Common Stock in excess of the limitation referred to in this
Section shall be suspended (and, except as provided below, shall not
terminate or expire notwithstanding any contrary provisions hereof) until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation; provided, that, if, as of 5:00 

 

6

 

P.M.,
New York City time, on the Expiration Date, the Company has not received
written notice that the shares of Common Stock may be issued in compliance with
such limitation, the Company’s obligation to issue such shares shall
terminate.  This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section 9
of this Warrant.  By written notice to the Company, the Holder may waive
the provisions of this Section but any such waiver will not be effective
until the 61st day after such notice is delivered to the Company, nor will
any such waiver affect any other Holder.

 

(b)           Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Holder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its affiliates and any
other persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 9.99% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that
it has evaluated the limitation set forth in this Section and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section.  The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section shall
be suspended (and, except as provided below, shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as
such shares of Common Stock may be issued in compliance with such limitation; provided, that, if, as of 5:00 P.M.,
New York City time, on the Expiration Date, the Company has not received written
notice that the shares of Common Stock may be issued in compliance with such
limitation, the Company’s obligation to issue such shares shall
terminate.  This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section 9
of this Warrant.  This restriction may not be waived.

 

12.           No Fractional
Shares. No fractional Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares that would otherwise
be issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the closing price of one Warrant Share as reported by the Nasdaq
Global Market or other applicable trading market on the Exercise Date.

 

13.           Notices. Any
and all notices or other communications or deliveries hereunder (including,
without limitation, any Exercise Notice) shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section at or prior to 5:00 p.m.
(New York City time) on a business day, (ii) the next business day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile 

 

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number
specified in this Section on a day that is not a business day or later
than 5:00 p.m. (New York City time) on any business day, (iii) the
business day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to
whom such notice is required to be given. The addresses for such notices or
communications shall be:  if to the Company, to AVI BioPharma, Inc.,
One SW Columbia, Suite 1105, Portland, OR 97258 Attention: K. Michael
Forrest, telefax (503) 227-0751  (or such other address as the
Company shall indicate in writing in accordance with this Section) or (ii) if
to the Holder, to the address or facsimile number appearing on the Warrant
Register (or such other address as the Holder shall indicate in writing in
accordance with this Section).

 

14.           Warrant Agent.
The Company shall serve as warrant agent under this Warrant. Upon 30 days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or
any corporation resulting from any consolidation to which the Company or any
new warrant agent shall be a party or any corporation to which the Company or
any new warrant agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice
of its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.

 

15.           Miscellaneous.

 

(a)           This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns.

 

(b)           All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof that would result in the application of
any other law. Each party irrevocably submits to the jurisdiction of any court
of the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York for the
purpose of any suit, action or other proceeding arising out of this Agreement
or our engagement hereunder.  Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Warrant or the transactions contemplated hereby.

 

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

 

(d)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be 

 

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a
commercially reasonable substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

 

(e)           Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of by being
a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

 

	
   

  	
   

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

10

 

EXERCISE
NOTICE

 

AVI
BIOPHARMA, INC.

 

	
  WARRANT NO.

  	
  DATED
  DECEMBER [      ] , 2007

  

 

Ladies
and Gentlemen:

 

(1)           The undersigned hereby elects to
exercise the above-referenced Warrant with respect to
                               
shares of Common Stock.  Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.

 

(2)           The Holder intends that payment of
the Exercise Price shall be made as (check one):

 

€              Cash
exercise under Section 10(a)

 

€              Cashless
exercise under Section 10(b)

 

(3)           If the Holder has elected a cash
exercise, the holder shall pay the sum of
$                     
to the Company in accordance with the terms of the Warrant.

 

(4)           Pursuant to this Exercise Notice, the
Company shall deliver to the Holder the number of Warrant Shares determined in
accordance with the terms of the Warrant.

 

(5)           By its delivery of this Exercise
Notice, the undersigned represents and warrants to the Company that in giving
effect to the exercise evidenced hereby the Holder will not beneficially own in
excess of the number of shares of Common Stock (as determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934) permitted
to be owned under Section 11 of this Warrant to which this notice relates.

 

	
   

  	
   

  	
  HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print
  name)

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

11

 

WARRANT
ORIGINALLY ISSUED DECEMBER [        ], 2007

 

WARRANT NO.
 [      ]

 

FORM OF
ASSIGNMENT

 

To be completed and signed only upon transfer
of Warrant

 

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                          
the right represented by the within Warrant to purchase
                          
shares of Common Stock to which the within Warrant relates and
appoints                                   
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
  TRANSFEROR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print
  Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print
  Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address
  of Transferee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In
  the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

12Exhibit 4.5

 

RENEWAL RIGHTS
AGREEMENT

 

This Renewal Rights Agreement, dated as of December 11,
2007, is entered into by and between Enterprise Bancorp, Inc., a
Massachusetts corporation (the “Company”),
and Computershare Trust Company, N.A., a national association (the “Rights Agent”).

 

W
I  T  N  E  S  S  E  T  H

 

WHEREAS, the Company and
Enterprise Bank and Trust Company, as rights agent, entered into a Rights
Agreement dated as of January 13, 1998 (the “Existing  Rights
Agreement”), pursuant to which, among other things, the Board of
Directors of the Company authorized and declared a dividend distribution of one
right per share of Common Stock of the Company (as hereinafter defined) to
holders of outstanding shares of Common Stock of the Company on the record date
set forth in the Existing Rights Agreement; and

 

WHEREAS, the Board of
Directors of the Company desires to provide stockholders of the Company with
the opportunity to benefit from the long-term prospects and value of the
Company and to ensure that stockholders of the Company receive fair and equal
treatment in the event of any proposed acquisition or other form of takeover of
the Company; and

 

WHEREAS, the Board of
Directors of the Company has determined that it is in the best interests of the
Company and its stockholders to enter into this Agreement, which shall take
effect contemporaneously with the expiration of the Existing Rights Agreement
on its final expiration date of January 13, 2008 as set forth in the
Existing Rights Agreement; and

 

WHEREAS, on the date of
this Agreement set forth above (the “Rights  Dividend  Declaration
Date”), the Board of Directors of the Company has authorized and
declared a dividend distribution of one Right (as such term is hereinafter
defined) for each outstanding share of Common Stock of the Company outstanding
as of the Close of Business (as such term is hereinafter defined) on January 13,
2008 (the “Record  Date”), and this Agreement provides for the
issuance of one Right for each share of Common Stock of the Company issued
(whether originally issued or sold from the Company’s treasury, except in the
case of treasury shares having associated Rights) between the Record Date and
the earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase
one one-hundredth of a share of Series A Junior Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth on Exhibit A hereto, 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:

 

 

“Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 10% or more of the shares of
Common Stock of the Company then outstanding, but shall not include an Exempt
Person.

 

“Act” shall mean the Securities Act of 1933, as amended.

 

“Adjustment Shares”
shall have the meaning set forth in Section 11(a)(ii) hereof.

 

“Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.

 

“Agreement” means
this Renewal Rights Agreement as originally executed or as it may from time to
time be supplemented or amended pursuant to the applicable provisions hereof.

 

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 or
on behalf of such Person or any of such Person’s Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, or (B) 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 are Original Rights or
securities issued 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 understanding to vote such security if such agreement,
arrangement or understanding:  (A) arises
solely from a revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act;
and (B) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or

 

(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 

 

2

 

revocable proxy as
described in clause (A) of the proviso to subparagraph (ii) of this
definition) or disposing of any voting securities of the Company; provided,
however, that nothing in this subparagraph (iii) 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 days after the date of such acquisition.

 

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

 

“Business Day”
shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the states in which either the Rights Agent or any transfer
agent of the Company is located are authorized or obligated by law or executive
order to close.

 

“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.

 

“Common Stock”
when used with reference to the Company shall mean the shares of common stock,
par value $.01 per share, of the Company or any other shares of capital stock
of the Company into which such stock shall be reclassified or changed.  “Common Stock” when used with reference to
any Person which shall be organized in corporate form, other than the Company,
shall mean the capital stock or other equity security with the greatest voting
power or the equity securities or other equity interest having power to control
or direct the management of such Person or, if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person and which has or have issued any such outstanding
capital stock, equity securities or equity interest.  “Common Stock” when used with reference to
any Person which shall not be organized in corporate form shall mean units of
beneficial interest which (i) shall represent the right to participate
generally in the profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from an ownership interest
in such Person) and (ii) shall be entitled to exercise the greatest voting
power of such Person or, in the case of a limited partnership, shall have the
power to remove the general partner or partners.

 

“Common Stock
Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

“Company” shall
mean the Person named as the “Company” in the first paragraph of this Agreement
until a successor corporation shall have become such, or until a Principal
Party shall assume, and thereafter be liable for, all obligations and duties of
the Company hereunder pursuant to the applicable provisions of this Agreement,
and thereafter “Company” shall mean such successor corporation or Principal
Party.

 

“Current Market Price”
shall have the meaning set forth in Section 11(d) hereof.

 

“Current Value”
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

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

 

3

 

“Equivalent Preferred Stock”
shall have the meaning set forth in Section 11(b) hereof.

 

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

 

“Exchange Ratio”
shall have the meaning set forth in Section 29(a) hereof.

 

“Exempt Person”
shall mean (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit or employee stock plan of the Company or of any Subsidiary of
the Company, (iv) any Person or entity organized, appointed, established
or holding Common Stock of the Company by, for or pursuant to the terms of any
such plan, (v) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of shares of Common Stock of the Company
outstanding due to the repurchase of shares of Common Stock of the Company by
the Company, unless and until any such Person shall purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock of the Company
constituting 1% or more of the then outstanding shares of Common Stock of the
Company, or (vi) any Person who or which shall have executed a written
agreement with the Company (which shall have been approved by a majority of the
Outside Directors) prior to the date on which such Person became the Beneficial
Owner of 10% or more of the shares of Common Stock then outstanding, which
agreement imposes one or more limitations (the “Thresholds”) on the
amount of such Person’s Beneficial Ownership of shares of Common Stock, if and
so long as the Thresholds continue to be binding on such Person and such Person
is in substantial compliance (as determined by a majority of the Outside
Directors) with the terms of such written agreement.

 

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

 

“Final Expiration Date”
shall mean the Close of Business on January 13, 2018.

 

“Original Rights”
shall mean Rights acquired by a 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.

 

“Outside Directors”
shall mean members of the Board who are not officers of the Company or any of
its Subsidiaries and who are not Acquiring Persons or representatives,
nominees, Affiliates or Associates of Acquiring Persons.

 

“Person” shall
mean any individual, firm, corporation, partnership, trust or other entity and
includes, without limitation, an unincorporated group of persons who, by formal
or informal agreement, have embarked on a common purpose or act.

 

“Preferred Stock”
shall mean the Series A Junior Participating Preferred Stock, par value
$.01 per share, of the Company, having the rights, powers and preferences as
set forth on Exhibit A hereto.

 

“Principal Party”
shall have the meaning set forth in Section 13(b) hereof.

 

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

 

4

 

“Record Date”
shall have the meaning set forth in the last WHEREAS clause at the beginning of
this Agreement.

 

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

 

“Rights” shall
have the meaning set forth in the last WHEREAS clause at the beginning of this
Agreement.

 

“Rights Agent”
shall mean the Person named as the “Rights Agent” in the first paragraph of
this Agreement until a successor Rights Agent shall have become such pursuant
to the applicable provisions hereof, and thereafter, “Rights Agent” shall mean
such successor Rights Agent.  If at any
time there is more than one Person appointed by the Company as Rights Agent
pursuant to the applicable provisions of this Agreement, “Rights Agent” shall
mean and include each such Person.

 

“Rights Certificates”
shall have the meaning set forth in Section 3(a) hereof.

 

“Rights Dividend
Declaration Date” shall have the meaning set forth in the last WHEREAS
clause at the beginning of this Agreement.

 

“Section 11(a)(ii) Event”
shall have the meaning set forth in Section 11(a)(ii) hereof.

 

“Section 11(a)(ii) Trigger
Date” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

“Section 13 Event”
shall have the meaning set forth in Section 13(a) hereof.

 

“Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

“Stock Acquisition
Date” shall mean the first date of public announcement by the Company that
an Acquiring Person has become such.

 

“Subsidiary” shall
mean, with reference to any Person, any corporation or other entity of which
securities or other ownership interest having ordinary voting power sufficient,
in the absence of contingencies, to elect a majority of the board of directors
or other persons performing similar functions are at the time directly or
indirectly beneficially owned, or otherwise controlled, by such Person and any
Affiliate of such Person.

 

“Substitution Period”
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

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

 

“Thresholds” shall
have the meaning set forth in the definition of “Exempt Person” contained in
this Section 1 above.

 

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

 

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

 

5

 

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

 

Section 3.  Issue of Rights Certificates.

 

(a)           Until
the earlier of (i) the Close of Business on the tenth Business Day (or
such specified later date as may be determined by the Board before the
occurrence of the Distribution Date) after the Stock Acquisition Date (or, if
the tenth Business Day after the Stock Acquisition Date occurs before the
Record Date, the Close of Business on the tenth Business Day following the
Record Date) or (ii) the Close of Business on the tenth Business Day (or
such specified or unspecified later date as may be determined by the Board
before the occurrence of the Distribution Date) after the date that a tender or
exchange offer by any Person (other than an Exempt Person) 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 an Acquiring Person (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 paragraphs (b) and (c) of
this Section 3) by the certificates for the Common Stock of the Company
registered in the names of the holders of the Common Stock of the Company
either with the Summary of Rights to Purchase Preferred Stock, in substantially
the form attached hereto as Exhibit B
(the “Summary  of  Rights”), attached or bearing the legend
set forth in Section 3(c) hereof (which certificates for Common Stock
of the Company 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 shares of Common Stock of the
Company (including a transfer to the Company). 
As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates in substantially the form attached
hereto as Exhibit C (the “Rights  Certificates”)
evidencing one Right for each share of Common Stock of the Company so held,
subject to adjustment as provided herein. 
In the event that an adjustment in the number of Rights per share of
Common Stock of the Company has been made pursuant to Section 11(i) hereof,
at the time of distribution of the Rights Certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

 

(b)           As
promptly as practicable following the Record Date, the Company will send or
cause to be sent a copy of the Summary of Rights by first-class, postage
prepaid mail, to each record holder of the Common Stock of the Company as of
the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.  With
respect to certificates for the Common Stock of the Company outstanding as of
the Record Date, as set 

 

6

 

forth in Section 3(a) above,
until the earlier of the Distribution Date or the Expiration Date, the Rights
will be evidenced by such certificates for the Common Stock of the Company with
or without a copy of the Summary of Rights attached, and the registered holders
of the Common Stock of the Company shall also be the registered holders of the
associated Rights.  Until the earlier of
the Distribution Date or the Expiration Date, the transfer of any certificates
representing shares of Common Stock of the Company in respect of which Rights
have been issued shall also constitute the transfer of the Rights associated
with such shares of Common Stock of the Company.

 

(c)           Rights
shall be issued in respect of all shares of Common Stock of the Company which
are issued (whether originally issued or from the Company’s treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date, and to the extent provided in Section 22 hereof, in respect of
shares of Common Stock of the Company issued after the Distribution Date and
prior to the Expiration Date. 
Certificates representing such shares of Common Stock of the Company
shall also be deemed to be certificates for Rights, and shall, as promptly as
practicable following the Record Date, bear a legend, substantially in the form
of the following:

 

This certificate also
evidences and entitles the holder hereof to certain Rights as set forth in the
Renewal Rights Agreement between Enterprise Bancorp, Inc. (the “Company”)
and Computershare Trust Company, N.A. (the “Rights Agent”) dated as of December 11,
2007 (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal offices of
the Company.  Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Company will mail to
the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written request
therefor.  Under certain circumstances
set forth in the Rights Agreement, Rights beneficially owned (as such term is
defined in the Rights Agreement) 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.  The Rights shall not be exercisable, and
shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.

 

With respect to such certificates containing the
foregoing legend, until the earlier of the Distribution Date or the Expiration
Date, the Rights associated with the Common Stock of the Company represented by
such certificates shall be evidenced by such certificates alone, and registered
holders of Common Stock of the Company shall also be the registered holders of
the 

 

7

 

associated Rights, and
the transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock of the Company represented by such
certificates.

 

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 in substantially the form set
forth in Exhibit C 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 one-hundredths of a share of
Preferred Stock as shall be set forth therein at the exercise price set forth
therein (such exercise price per one one-hundredth of a share, as adjusted from
time to time hereunder, 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) a legend, substantially in the form of the following:

 

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.

 

Section 5.  Countersignature and Registration.

 

(a)           The
Rights Certificates shall be executed under seal (or with the same force and
effect as a document executed under seal) on behalf of the Company by its
Chairman of the 

 

8

 

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

 

(b)           Following
the Distribution Date, 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 Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Rights 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 Rights 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 or exchange of any such surrendered Rights Certificate or Rights
Certificates 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 or Rights Certificates 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) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights Certificates.

 

9

 

(b)           Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to each of them of the loss, theft, destruction or mutilation of a valid Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to each of 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 one-hundredths of a
share of Preferred Stock (or such number or amount of 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 Final Expiration Date,
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof or exchanged as provided in Section 29 hereof or (iii) the
time at which the Rights expire pursuant to Section 13(d) hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the “Expiration
Date”).

 

(b)           The
Purchase Price for each one one-hundredth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be $52.00 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 Section 7(c) below.

 

(c)           Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate on the reverse side of the Rights
Certificate duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price, as such amount may be reduced pursuant to Section 11(a)(iii) hereof,
per one one-hundredth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Sections 7(f) and 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the 

 

10

 

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 check, cashier’s check or bank draft payable to
the order of the Company.  In the event
that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the Rights Agent,
if and when appropriate.  The Company
reserves the right to require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.

 

(d)           In
case the registered holder of any Rights Certificate 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 which the
Board  in its sole discretion determines is
or was involved in or caused or facilitated, directly or indirectly, such Section 11(a)(ii) Event,
(ii) a transferee of any such Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after such Acquiring Person becomes such
or (iii) a transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
such Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from such 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 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 ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but the Company and the Rights Agent shall have no liability to
any holder of Rights Certificates or other Person as a result of the Company’s
failure to make any determinations with respect to an Acquiring Person or any
of their 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 of any Rights Certificate 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 assignment or election to
purchase set forth on the reverse side of the 

 

11

 

Rights Certificate
surrendered for such assignment or 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 shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement (including Section 11(a)(iii) hereof),
will be sufficient to permit the exercise in full of all outstanding Rights.

 

(b)           So
long as, and to the extent that, the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its reasonable 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 all reasonable efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, a
registration statement under the Act on an appropriate form with respect to the
securities purchasable upon exercise of the Rights, (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 or (B) the Expiration Date.  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, acting by
resolution of the Board, 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 

 

12

 

to become effective.  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.  In addition, if the Company shall determine
that a registration statement is required in other circumstances following the
Distribution Date, the Company may similarly 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 shall not have been obtained, the exercise thereof shall not
otherwise be 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 one-hundredths of a share of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued, fully paid and nonassessable.

 

(e)           The
Company further covenants and agrees that, except as set forth in Section 6(a) hereof,
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 one-hundredths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. 
The Company shall not, however, be required to pay any 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 one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise, nor shall the Company be required to issue or deliver any
certificates for a number of one one-hundredths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until 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.

 

Section 10. 
Preferred Stock Record Date. 
Each person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) 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 Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.  Prior to the exercise of the Rights 

 

13

 

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, or fractions thereof, purchasable upon the exercise
of 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
Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding Preferred Stock, (C) combine or consolidate the outstanding
Preferred Stock into a smaller number of shares or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, split, combination, consolidation or
reclassification, and the number and kind of shares of Preferred Stock 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 shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock (or other capital
stock, as the case may be) transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, split, combination, consolidation 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
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii) hereof.

 

(ii)           In the
event (a “Section 11(a)(ii) Event”) any Person (other than an
Exempt Person) alone or together with its Affiliates and Associates (other than
an Exempt Person) shall, at any time after the Rights Dividend Declaration
Date, become an Acquiring Person, unless the event causing such Person to
become an Acquiring Person is (x) a Section 13 Event or (y) an
acquisition of shares of Common Stock of the Company pursuant to a tender offer
or an exchange offer for all outstanding shares of Common Stock of the Company
at a price and on terms that are accepted by the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock held by Persons other
than such Acquiring Person or any Affiliates or Associates of such Acquiring
Person, then promptly after the date of occurrence of a Section 11(a)(ii) 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
one-hundredths of a share of Preferred Stock, such number of shares 

 

14

 

of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as the “Purchase
Price” for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price per share of Common Stock of the Company on the date of such
first occurrence (such number of shares being referred to as the “Adjustment Shares”).

 

(iii)          In
lieu of issuing shares of Common Stock of the Company in accordance with Section 11(a)(ii) hereof,
the Company, acting by resolution of the Board, may, and in the event that the
number of shares of Common Stock of the Company which are authorized by the
Company’s articles of organization (as the same may be amended and restated
from time to time) but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing Section 11(a)(ii),
the Company, acting by resolution of the Board, shall (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the “Current  Value”) over (2) the
Purchase Price attributable to each Right (such excess being referred to as the
“Spread”), and (B) with respect to each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for the Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) equity securities of the Company other than Common
Stock of the Company (including, without limitation, shares, or units of
shares, of preferred stock which the Board has deemed to have the same value as
shares of Common Stock (such shares of preferred stock being referred to as “Common
Stock  Equivalents”)), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing which, when added to any
shares of Common Stock issued upon such exercise, have an aggregate value equal
to the Current Value, 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, 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) hereof,
as such date may be amended pursuant to Section 26 hereof, expires (the
later of (x) and (y) being referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock of the Company (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread.  If the Board shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock of the Company 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 period, as it may be extended being referred to
herein as the “Substitution  Period”).  To the extent that the Company determines
that some action need be taken pursuant to the first and/or 

 

15

 

second sentences
of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
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 the Common Stock of the Company shall be the Current Market Price
per share of the Common Stock of the Company on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Stock of the Company 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 Stock entitling them to subscribe for or purchase (for a
period expiring within 45 calendar days after such record date) shares of
Preferred Stock (or shares having the same rights, privileges and preferences
as the shares of Preferred Stock (“Equivalent  Preferred  Stock”))
or securities convertible into Preferred Stock or Equivalent Preferred Stock at
a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
and/or Equivalent Preferred Stock which the aggregate subscription or purchase
price of the total number of shares of Preferred Stock and/or Equivalent
Preferred Stock so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible).  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 conclusive
for all purposes.  Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

 

(c)           In case the Company
shall fix a record date for a distribution to all holders of Preferred Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular periodic cash dividend
out of the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including 

 

16

 

any dividend payable in
stock other than Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such Current Market Price per share of Preferred Stock.  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.

 

(d)           (i)            For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common Stock
for the thirty (30) consecutive Trading Days immediately prior to such date,
and for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common Stock
for the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of
the Common Stock is determined during a period following the announcement by
the Company of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights) or (B) any subdivision, combination,
consolidation, reverse stock split or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination,
consolidation, reverse stock split or reclassification, then, 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 shares of Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading, or if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price, or if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by any
industry recognized automated quotation system then in use, or if on any such
date the shares of Common Stock are not quoted by any such automated quotation
system, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board.  If the Common Stock is not
publicly held or not so listed, 

 

17

 

traded or quoted,
and a market maker is not making a market, Current Market Price per share of
Common Stock 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.

 

(ii)           For the purpose of any
computation hereunder, the Current Market Price per share of Preferred Stock
shall be determined in the same manner as set forth above for the Common Stock
in subparagraph (i) of this Section 11(d) (other than the last
sentence thereof).  If the Current Market
Price per share of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in subparagraph (i) of this Section 11(d), the
Current Market Price per share of Preferred Stock shall be conclusively deemed
to be an amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock.  If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, Current Market Price per share
of the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.  For all purposes of this Agreement, the
Current Market Price of one one-hundredth of a share of Preferred Stock shall
be equal to the Current Market Price of one share of Preferred Stock divided by
100.  The term “Trading  Day”
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business, or if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day.

 

(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 thousandth of a share of
Common Stock or other share or one-millionth of a share of Preferred Stock, as
the case may be.  Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (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 Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and the Purchase
Price thereof (or the number of rights) shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares; provided, however, that the
Company shall not be liable for its inability to reserve and keep available for

 

18

 

issuance upon exercise of
the Rights pursuant to Section 11(a)(ii) a number of shares of Common
Stock of the Company greater than the number then authorized by the Company’s
articles of organization (as the same may be amended and restated from time to
time) but not outstanding or reserved for any other purpose.

 

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

 

(h)           Unless
the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one one-hundredths of a share of
Preferred Stock (calculated to the nearest one one-millionth of a share)
obtained by (i) multiplying (x) the number of one one-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
one-hundredths of a share of Preferred Stock purchasable upon the exercise of a
Right.  Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price.  The Company shall make a public
announcement 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.

 

19

 

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

 

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

 

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

 

(m)          Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such adjustments in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that in its good faith judgment the Board shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the Current
Market Price, (iii) issuance wholly for cash of shares of Preferred Stock
or securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made
by the Company to holders of its Preferred Stock 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 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, sale or transfer there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially 

 

20

 

diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation, merger, sale
or transfer, the stockholders 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, Section 26, Section 29 or Section 31
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 Rights Dividend Declaration Date and prior
to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock of the Company payable in shares of Common Stock of the
Company, (ii) subdivide the outstanding shares of Common Stock of the
Company in a manner not covered in (i) above or (iii) combine the
outstanding shares of Common Stock of the Company into a smaller number of
shares, (x) the number of one one-hundredths of a share of Preferred Stock
then purchasable upon exercise of a Right shall be proportionately adjusted so
that the number of one one-hundredths of a share of Preferred Stock purchasable
thereafter upon proper exercise of each Right shall equal the result obtained
by multiplying the number of one one-hundredths of a share of Preferred Stock
so purchasable immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock of the Company
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock of the
Company outstanding immediately following the occurrence of such event and (y) action
shall be taken such that each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each share of Common Stock of the Company outstanding
immediately prior to such event had issued with respect to it.  The adjustments provided for in this Section 11(p) shall
be made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.  If an event occurs which would require an
adjustment under Section 11(a)(ii) and this Section 11(p), the
adjustments provided for in this Section 11(p) shall be in addition
and prior to any adjustment required pursuant to Section 11(a)(ii).

 

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 Stock and the
Common Stock of the Company, a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock of the Company) in accordance with Section 25 hereof.  Notwithstanding the foregoing sentence, the
failure of the Company to prepare such certificate or statement or make such
filings or mailings shall not affect the validity of, or the force or effect
of, the requirement for such adjustment. 
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.

 

21

 

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

 

(a)           In the event (a “Section 13
Event”) that, on or after the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate or otherwise combine with, or
merge with or into, any other Person or Persons (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, combination or merger, (y) any Person or Persons (other
than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof)
shall consolidate or combine with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation,
combination or merger and, in connection with such consolidation, combination
or merger, all or part of the outstanding shares of Common Stock of the Company
shall be changed into or exchanged for stock or other securities of any other
Person or Persons or cash or any other property or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole and calculated on
the basis of the Company’s most recent regularly prepared financial statements)
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);
provided, however, that this clause (z) of Section 13(a) shall
not apply to the pro  rata distribution by the Company of assets
(including securities) of the Company or any of its Subsidiaries to all holders
of the Company’s Common Stock; 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, on or after the later of (A) the date of the first occurrence of
any such Section 13 Event or (B) the date of the expiration of the
period within which the Rights may be redeemed pursuant to Section 23
hereof (as the same may be amended or reinstated as provided in Section 26
or Section 31 hereof, respectively), have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party, 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 one-hundredths of a share
of Preferred Stock for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-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 (2) dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per share of the
Common Stock 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 shares of its Common Stock) in 

 

22

 

connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
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)           For purposes of this Agreement, “Principal
Party” shall mean the following:

 

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

 

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

 

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

 

(c)           The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not 

 

23

 

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 confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be
performed in accordance with their terms and that such Section 13 Event
shall not result in a default by the Principal Party under this Agreement as
the same shall have been assumed by the Principal Party pursuant to Sections 13(a) and
(b) hereof and further providing that, as soon as practicable after the
date of such Section 13 Event, 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 to similarly comply with applicable state
securities laws;

 

(ii)           use
its best efforts to list or obtain quotation of (or continue the listing or
quotation of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or automated quotation service;

 

(iii)          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 (or any successor form) under
the Exchange Act; and

 

(iv)          use
its best efforts to obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.

 

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 subparagraph (x) or (y) of Section 13(a) if
(i) such transaction is consummated with a Person or Persons (or a wholly
owned subsidiary of any such Person or Persons) who acquired shares of Common
Stock of the Company pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock of the Company which complies with the
exception provided for in Section 11(a)(ii) hereof, (ii) the
price per share of Common Stock of the Company offered in such transaction is
not less than the price per share of Common Stock paid to all holders of shares
of Common Stock of the Company 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 shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.

 

24

 

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(i) 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 any industry recognized automated
quotation system then in use or, if on any such date the Rights are not quoted
by any such automated quotation system, 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 shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock). In lieu of fractional shares
of Preferred Stock that are not integral multiples of one one-hundredth of a
share of Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of Preferred Stock
or, if unavailable, the appropriate alternative price (in each case as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.

 

(c)           Following the occurrence of a
Triggering Event, the Company shall not be required to issue fractions of
shares of Common Stock of the Company upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock of the
Company. In lieu of fractional shares of Common Stock of the Company, 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) share of Common Stock
of the Company. For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing price of one share of
Common Stock 

 

25

 

or, if unavailable, the appropriate alternative price
(in each case 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, except the
rights of action vested in the Rights Agent pursuant to Section 18 hereof,
are vested in the respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of the Common
Stock of the Company); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock of the Company), without
the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock of the
Company), 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 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
Stock of the Company;

 

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

 

(c)           subject to Section 6(a) and
Section 7(f) hereof, the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, 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

 

26

 

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 one-hundredths of a share of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a 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 24 hereof),
or to receive dividends or other distributions on shares of any series or class
of the capital stock of the Company, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised 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 expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises. In no
event shall the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the Rights Agent
has been advised of the likelihood of such loss or damage.

 

(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 Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably 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 

 

27

 

corporation succeeding to the corporate trust or stock
transfer 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. If 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 if 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)           If 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 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 the 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 Chief
Executive Officer, the President, any Executive Vice President, the Treasurer
or any Assistant Treasurer 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 gross negligence, bad faith or willful misconduct.

 

(d)           The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates, nor shall it be required 

 

28

 

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 thereon); 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 or Section 13 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 shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.

 

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

 

(g)           The Rights Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the Chief Executive Officer,
the President, any Executive Vice President, 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 stockholder,
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 

 

29

 

repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.

 

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

 

(l)            Notwithstanding any other provision
contained in this Agreement to the contrary, the Rights Agent shall not be
liable for any delays or failures in the performance of its duties hereunder
resulting from acts or circumstances beyond its reasonable control, including
without limitation any of the following: 
acts of God; terrorist acts; unanticipated and uncontrollable shortages
of supplies, breakdowns or malfunctions; interruptions or malfunctions of
computer facilities; loss of data due to power failures or mechanical
difficulties with information storage or retrieval systems; labor difficulties;
war; or civil unrest.

 

Section 21. Change
of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30 days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. In the event that any transfer agency
relationship in effect between the Company and the Rights Agent is terminated
for any reason, then the Rights Agent will be deemed to have resigned
automatically and be discharged from its duties under this Agreement as of the
effective date of such termination, and the Company shall be responsible for
any required notices to be sent to any other transfer agent and to the holders
of the Rights Certificates. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and Preferred Stock, by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. If no successor Rights Agent shall have been
appointed within 30 days from effectiveness of such removal or resignation, and
no registered holder of any Rights Certificates has applied pursuant to this
Agreement for the appointment of a new Rights Agent, the Company or any
Subsidiary of the Company that it may designate in writing shall be
automatically designated as successor Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of any state of the United States so long as such corporation is authorized to
do business as a banking institution in such state, is in good standing, is
authorized under such laws to exercise corporate trust powers, is subject to
supervision or examination by federal or state authority and has at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an 

 

30

 

Affiliate of a corporation described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder and shall execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock and shall 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 Certificates 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 shares of Common Stock of the Company following the Distribution Date
and prior to the redemption or expiration of the Rights, the Company (a) shall,
with respect to shares of Common Stock of the Company so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.

 

Section 23.
Redemption 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
Business Day (or such specified later date as may be determined by the Board
before the occurrence of the Distribution Date) following the Stock Acquisition
Date (or, if the tenth Business Day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the tenth Business Day
following the Record Date) or (ii) the Final Expiration Date, direct the
Company to, and if so directed, the Company shall, redeem all but not less than
all of the then outstanding Rights at a redemption price of $.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, shares of Common
Stock of the Company (based 

 

31

 

on the Current Market Price of the Common Stock 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 Stock. 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.
Notice of Certain Events.

 

(a)           In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any dividend payable in
stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof),
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
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 shares of Preferred Stock,
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 

 

32

 

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 Stock shall be deemed
thereafter to refer to Common Stock of the Company and/or, if appropriate,
other securities.

 

Section 25. 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:

 

Enterprise
Bancorp, Inc.

222
Merrimack Street

Lowell,
Massachusetts  01852

Attention:  Chief Financial Officer

 

Subject to the provisions
of Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Rights Certificate to or
on the Rights Agent 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:

 

Computershare
Trust Company, N.A.

250
Royall Street

Canton,
Massachusetts  02021

Attention:  Client Administration

 

Notices or demands
authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or, if prior to the Distribution
Date, to the holder of certificates representing shares of Common Stock of the
Company) 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 26.
Supplements and Amendments. Prior to the Distribution Date, the Company
and the Rights Agent shall, if the Board so directs, supplement or amend any
provision of this Agreement as the Company may deem necessary or desirable
without the approval of any holders of certificates representing shares of
Common Stock of the Company. From and after the Distribution Date, the Company
and the Rights Agent shall, if the Board so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of any such Person); 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 or to modify the ability (or inability) of the Board to redeem the
Rights, in either 

 

33

 

case at such time as the Rights are not then redeemable or (B) any
other time periods unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of any such
Person). 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 26, the Rights Agent shall execute such
supplement or amendment; provided, however, that the Company must provide the
Rights Agent with at least twenty-four (24) hours prior notice of any proposed
supplement or amendment to this Agreement to enable the Rights Agent to review
and provide comments on such proposed supplement or amendment, and any
reasonably comments or requested changes to any proposed supplement or
amendment that the Rights Agent reasonably determines to be necessary to
protect its reasonable interests under this Agreement shall be incorporated
into such proposed supplement or amendment prior to its approval by the Board. Notwithstanding
anything contained in this Agreement to the contrary, the Rights Agent’s
consent must be obtained regarding any amendment or supplement pursuant to this
Section 26 that would alter the rights or duties of the Rights Agent. Prior
to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock of the
Company.

 

Section 27.
Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.

 

Section 28.
Determinations and Actions by the Board, etc. For all purposes of this
Agreement, any calculation of the number of shares of Common Stock of the Company
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of the Company
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 (a) interpret the provisions of
this Agreement and (b) 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, the Outside Directors or the Company 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  or the Outside Directors to any
liability to the holders of the Rights.

 

Section 29.
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 provision of Section 

 

34

 

7(e) hereof) for shares of Common Stock of the Company at an
exchange ratio of one share of Common Stock of the Company 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 an Exempt Person) becomes the Beneficial
Owner of 50% or more of the shares of Common Stock of the Company then
outstanding.

 

(b)           Immediately upon the action of the
Board ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 29 and without any further action and without notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock of the Company 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 or, prior to the Distribution Date, on the registry books
of the Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided 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 shares of Common Stock of the Company 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 affected 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 any exchange pursuant to this Section 29,
the Company, at its option, may substitute Preferred Stock (or Equivalent
Preferred Stock, as such term is defined in Section 11(b) hereof) for
shares of Common Stock of the Company exchangeable for Rights, at the initial
rate of one one-hundredth of a share of Preferred Stock (or Equivalent
Preferred Stock) for each share of Common Stock of the Company, as
appropriately adjusted to reflect adjustment in the voting rights of the
Preferred Stock pursuant to Exhibit A hereto, so that the fraction of a
share of Preferred Stock delivered in lieu of each share of Common Stock of the
Company shall have the same voting rights as one share of Common Stock of the
Company.

 

(d)           In the event that there shall not be
sufficient shares of Common Stock of the Company issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 29, the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock of the Company
for issuance upon exchange of the Rights.

 

(e)           The Company shall not be required to
issue fractions of shares of Common Stock of the Company or to distribute
certificates which evidence fractional shares of Common Stock of the Company. In
lieu of such fractional shares of Common Stock of the Company, there shall be
paid to the registered holders of the Rights Certificates with regard to which
such fractional shares of Common Stock of the Company would otherwise be 

 

35

 

issuable an amount in cash equal to the same fraction of the current
market value of a whole share of Common Stock of the Company. For the purposes
of this Section 29(e), the current market value of a whole share of Common
Stock of the Company shall be the closing price of a share of Common Stock of
the Company or, if unavailable, the appropriate alternative price (in each case
as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date on which the Board takes action ordering an
exchange pursuant to this Section 29.

 

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

 

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 Business 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 the
Commonwealth of Massachusetts and shall for all purposes be governed by and
construed in accordance with the laws of Massachusetts applicable to contracts
made and to be performed entirely within Massachusetts, including Massachusetts
principles of conflicts of law. The rights and duties of the Rights Agent
hereunder shall be governed by the laws of the Commonwealth of Massachusetts,
including its principles of conflicts of law.

 

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 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.

 

[Remainder of Page Intentionally Blank]

 

36

 

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

 

 

	
  Attest:

  	
   

  	
  ENTERPRISE
  BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Michael A. Spinelli

  	
   

  	
   

  	
  By: 

  	
  /s/ James A. Marcotte

  	
   

  
	
   

  	
  Michael A. Spinelli

  	
   

  	
   

  	
  James A.
  Marcotte

  
	
   

  	
  Secretary

  	
   

  	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  COMPUTERSHARE TRUST
  COMPANY, N.A.

  
	
   

  	
   

  	
   

  	
  as Rights Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James Walsh

  	
   

  	
   

  	
  By: 

  	
  /s/ Dennis Moccia

  	
   

  
	
   

  	
  James Walsh

  	
   

  	
   

  	
  Dennis Moccia

  
	
   

  	
  Relationship
  Manager

  	
   

  	
   

  	
  Managing
  Director

  
																

 

37

 

EXHIBIT A

 

ENTERPRISE
BANCORP, INC.

 

TERMS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

 

The following is a statement of the terms (including
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms or conditions of
redemption) of the Series A Junior Participating Preferred Stock, par
value $.01 per share, of Enterprise Bancorp, Inc. (the “Company”):

 

1.  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 200,000.

 

2.  Dividends and Distributions.

 

(a)           Subject to the prior and superior
rights of the holders of any shares of any series of shares of preferred stock
(generally, “Preferred  Shares”) ranking prior and superior to the
Series A Junior Participating Preferred Shares with respect to dividends
(if any), the holders of Series A Junior Participating Preferred Shares
shall be entitled to receive, when, as and if declared by the Board of
Directors of the Company (the “Board”) out of funds legally available
for the purpose, dividends payable in cash at such times as dividends, other
than dividends payable in Common Shares (as defined herein), are paid by the Company
to holders of shares of the common stock, par value $0.01 per share, of the
Company (the “Common Shares”), commencing
on the first date on which such a dividend is paid by the Company to the
holders of the Common Shares following the first issuance of a Series A
Junior Participating Preferred Share or fraction thereof.  Each such dividend payable on the Series A
Junior Participating Preferred Shares shall be in an amount per share (rounded
to the nearest cent) equal to, subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, plus 100 times the aggregate per share amount (payable in kind) of
all noncash dividends or other distributions, other than a dividend payable in
Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared by the Board and then payable on the
Common Shares.  In the event the Company
shall at any time after December 11, 2007 (the “Rights  Declaration
Date”) (i) declare any dividend on 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, then in each
such case the amount to which holders of Series A Junior Participating
Preferred Shares were entitled immediately prior to such event pursuant to the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number 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.

 

 

(b)           The Board shall declare a dividend or
distribution on the Series A Junior Participating Preferred Shares as
provided in paragraph (a) above immediately after it declares a dividend
or distribution on the Common Shares (other than a dividend payable in Common
Shares).

 

(c)           Dividends shall begin to accrue and
be cumulative on outstanding Series A Junior Participating Preferred Shares
from the date of issue of such shares. 
Accrued but unpaid dividends shall not bear interest.  Dividends paid on the Series A Junior
Participating Preferred Shares in an amoujnt 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 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 not more than 70 days prior to the
date fixed for the payment thereof.

 

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

 

(a)           Subject to the provision for
adjustment hereinafter set forth, each Series A Junior Participating
Preferred Share shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Company.  In the event that the Board shall at any time
after the Rights Declaration Date (i) declare any dividend on 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, 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 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.

 

(b)           Except as otherwise provided herein
or by 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.

 

(c)           (i)  If at any time dividends on
any Series A Junior Participating Preferred Shares shall be in arrears,
the occurrence of such contingency shall mark the beginning of a period (a “Default
Period”) which shall extend until such time when all accrued and unpaid
dividends for all previous dividend periods and for the current 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, all holders of
Preferred Shares (including holders of the Series A Junior Participating
Preferred Shares) with dividends in arrears, voting as a class, irrespective of
series, shall have the right to elect two (2) Directors.

 

2

 

(ii) 
During any Default Period, such voting right of the holders of Series A
Junior Participating Preferred Shares may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(c) or
at an annual meeting of shareholders, and thereafter at annual meetings of shareholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Shares, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of ten
percent (10%) in number of 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 Preferred Shares of such voting right.  At any meeting at which the holders of
Preferred Shares shall exercise such voting right initially during an existing
Default Period, they shall have the right, voting as a class, to elect
Directors to fill up to two (2) vacancies, if any, in the Board or, if
such right is exercised at an annual meeting, to elect two (2) Directors.  The holders of 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 at any special meeting of two (2) Directors.  After the holders of 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 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, if any.

 

(iii) 
Unless the holders of Preferred Shares shall, during an existing Default Period,
have previously exercised their right to elect Directors, the Board may order,
or any shareholder or shareholders owning in the aggregate not less than ten
percent (10%) of the total number of Preferred Shares outstanding, irrespective
of series, may request, the calling of a special meeting of the holders of
Preferred Shares, which meeting shall thereupon be called by the Board, the
Chairman or the Chief Executive Officer of the Company.  The Secretary of the Company shall give
notice of such meeting and of any annual meeting at which holders of Preferred
Shares are entitled to vote pursuant to this paragraph (c)(iii) to each
holder of record of 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 fifteen (15) days and not later than sixty (60) days after such
order or request.  If such meeting is not
called within sixty (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 Preferred
Shares outstanding.  Notwithstanding the
provisions of this paragraph (c)(iii), no such special meeting shall be called
during the period within sixty (60) days immediately preceding the date fixed
for the next annual meeting of the shareholders.

 

(iv) 
In any Default Period, the holders of Common Shares shall continue to be
entitled to elect the whole number of Directors of the Company until the
holders of Preferred Shares shall have exercised their rights to elect two (2) Directors
voting as a class, after the exercise of which right, (X) the Directors so

 

3

 

elected by the holders of
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 shall (except as provided in paragraph (c)(ii) of
this Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of capital stock of the Company
(i.e., the Common Shares or the Preferred Shares) which elected the Directors
whose office shall have become vacant. 
References in this paragraph (c) to Directors elected by the
holders of a particular class of the capital stock of the Company shall include
Directors elected by such Directors to fill vacancies as provided in clause (Y) of
the foregoing sentence.

 

(v) 
Immediately upon the expiration of a Default Period, (X) the right of the
holders of Preferred Shares as a class to elect Directors shall cease, (Y) the
term of any Directors elected by the holders of Preferred Shares as a class
shall terminate, and (Z) the number of Directors shall be such number as
may be provided for in the Articles of Organization, as may then be amended or
restated and in effect, or the By-Laws of the Company, irrespective of any
increase made pursuant to the provisions of paragraph (c)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law, or in the Articles of Organization, as may be amended or
restated from time to time, or the By-Laws of the Company).  Any vacancies in the Board effected by the
provisions of clauses (Y) and (Z) in the preceding sentence may be
filled by a majority of the remaining Directors.

 

(d)           Except as set forth herein, holders
of Series A Junior Participating Preferred 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.

 

4.  Certain Restrictions.

 

(a)           Whenever dividends or other
distributions payable on the Series A Junior Participating Preferred
Shares as provided in Section 2 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:

 

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

 

(ii) 
declare or pay dividends on or make any other distributions on any shares of
capital stock of the Company 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 shares of capital
stock of 

 

4

 

the Company on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares of capital stock are then entitled;

 

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

 

(iv) 
purchase or otherwise acquire for consideration any Series A Junior
Participating Preferred Shares, or any shares of capital stock of the Company
ranking on a parity with the Series A Junior Participating Preferred
Shares, except pursuant to Section 8 hereof or in accordance with a
purchase offer made in writing or by publication (as determined by the Board)
to all holders of such shares upon such terms as the Board, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective series or
classes of shares of capital stock of the Company.

 

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

 

5.  Reacquired
Shares.  Any Series A Junior
Participating Preferred Shares, purchased or otherwise acquired by the Company
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof.  All such shares
shall upon their cancellation become authorized but unissued 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, subject to the conditions and
restrictions on issuance set forth herein.

 

6.  Liquidation, Dissolution or Winding Up.

 

(a)           Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Company, no distribution shall be
made to the holders of shares of capital stock of the Company 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 Five Thousand Two Hundred
and 00/100 Dollars ($5,200.00) 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 “Liquidation  Preference”).  Following the payment of the full amount of
the Liquidation Preference, no additional distributions shall be made to the
holders of Series A Junior Participating Preferred Shares, unless, prior
thereto, the 

 

5

 

holders of Common
Shares shall have received an amount per share (the “Common  Adjustment”)
equal to the quotient obtained by dividing (i) the Liquidation Preference
by (ii) 100 (as appropriately adjusted as set forth in subparagraph (c) below
to reflect such events as stock splits, stock dividends and recapitalization
with respect to the Common Shares) (such number in clause (ii) immediately
above being referred to as the “Adjustment  Number”).  Subject to the rights of any other series of
Preferred Shares then outstanding, if any, following the payment of the full
amount of the Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Junior Participating Preferred Shares
and Common Shares, respectively, holders of Series A Junior Participating
Preferred Shares and holders of shares 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 one (1) with respect to such Series A
Junior Participating Preferred Shares and Common Shares, on a per share basis,
respectively.

 

(b)           In the event, however, that there are
not sufficient assets available to permit payment in full of the 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 Preferred Shares (including the Series A Junior
Participating Preferred 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 after satisfaction of the liquidation preferences of all
series of Preferred Shares, if any, then such remaining assets shall be
distributed ratably to the holders of Common Shares.

 

(c)           In the event the Company shall at any
time after the Rights Declaration Date (i) declare any dividend on 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, 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 the
number of shares of Common Shares that were outstanding immediately prior to
such event.

 

7.  Consolidation,
Merger, etc.  In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the Common Shares are exchanged for or changed into other stock or
securities, cash 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 100 times the aggregate amount of
shares, securities, cash 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
after the Rights Declaration Date (i) declare any dividend on 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, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change 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 

 

6

 

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.

 

8.  Redemption.  The Series A Junior Participating
Preferred Shares shall not be redeemable.

 

9.  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.

 

10.  Amendment.  At such time as Series A Junior
Participating Preferred Shares are outstanding, the Articles of Organization of
the Company shall not be amended, nor shall any Articles of Amendment thereto,
including without limitation any amendment establishing a series or class of stock
pursuant to Section 6.02 of Chapter 156D of the Massachusetts General
Laws, be filed with the Massachusetts Secretary of State or otherwise 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 voting separately as a class.

 

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

 

7

 

EXHIBIT B

 

SUMMARY OF RIGHTS
TO PURCHASE

SHARES OF SERIES A
JUNIOR

PARTICIPATING
PREFERRED STOCK

 

On December 11, 2007, the Board of Directors of
Enterprise Bancorp, Inc. (the “Company”)
declared a dividend distribution of one right for each of the Company’s
outstanding shares of common stock, par value $.01 per share (the “Common Stock”), to holders of record of the
Common Stock at the close of business on January 13, 2008.  Each Right entitles the registered holder to
purchase from the Company one one-hundreth of a share of preferred stock, par
value $.01 per share, of the Company (the “Preferred
Stock”) or in certain circumstances, to receive cash, property, shares of
Common Stock or other securities of the Company, at a purchase price of $52.00
per one one-hundreth of a share of Preferred Stock (the “Purchase  Price”), subject to
adjustment (the “Rights”).  The description and terms of the Rights are
set forth in a Renewal Rights Agreement (the “Rights
Agreement”) between the Company and Computershare Trust Company, N.A., as
Rights Agent.

 

Initially, the Rights will be attached to all
certificates representing the shares of the Common Stock and no separate Rights
Certificates will be distributed.  The
Rights will separate from the shares of Common Stock and a Distribution Date will occur upon the earlier of (i) 10
business days (or such later date as the Company’s Board of Directors may
determine before a Distribution Date occurs) following a public announcement by
the Company that a person or group of affiliated or associated persons, with
certain exceptions (an “Acquiring Person”),
has acquired, or has obtained the right to acquire, beneficial ownership of 10%
or more of the outstanding shares of Common Stock (the date of such
announcement being the “Stock Acquisition Date”)
or (ii) 10 business days (or such later date as the Company’s Board of
Directors may determine before a Distribution Date occurs) following the
commencement of a tender offer or exchange offer that would result in a person
becoming an Acquiring Person.

 

Until the Distribution Date, (i) the Rights will
be evidenced by the certificates for shares of Common Stock and will be
transferred with and only with such Common Stock certificates, (ii) Common
Stock certificates will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificates.

 

The Rights are not exercisable until the Distribution
Date and will expire at the close of business on January 13, 2018, unless
earlier redeemed, exchanged or otherwise rescinded by the Company as described
below.

 

As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of shares of the Common
Stock as of the close of business on the Distribution Date and, from and after
the Distribution Date, the separate Rights Certificates alone will represent the
Rights.

 

 

In the event (a “Flip-In
Event”) a person becomes an Acquiring Person (except pursuant to a tender
or exchange offer for all outstanding shares of Common Stock at a price and on
terms that are accepted by the holders of more than fifty percent (50%) of the
outstanding shares of Common Stock held by persons other than such Acquiring
Person or any affiliates or associates of such Acquiring Person (an “accepted offer”)), each holder of a Right will
thereafter have the right to receive, upon exercise of such Right, shares of
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a Current Market Price (as defined in the Rights
Agreement) equal to two times the exercise price of the Right.  Notwithstanding the foregoing, following the
occurrence of any Flip-In Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person (or by certain related parties) will be null and void in
the circumstances set forth in the Rights Agreement.  However, Rights will not be exercisable
following the occurrence of any Flip-In Event until such time as the Rights are
no longer redeemable by the Company as set forth below.

 

For example, at an exercise price of $52.00 per Right,
each Right not owned by an Acquiring Person (or by certain related parties)
following a Flip-In Event would entitle its holder to purchase $104.00 worth of
shares of Common Stock (or other consideration, as noted above) for $52.00.  Assuming that the shares of Common Stock had
a Current Market Price of $20.80 at such time, the holder of each valid Right
would be entitled to purchase five (5) shares of Common Stock for $52.00.

 

In the event (a “Flip-Over
Event”) that, at any time on or after the Stock Acquisition Date, (i) the
Company shall take part in a merger or other business combination transaction
(other than certain mergers that follow an accepted offer) and the Company
shall not be the surviving entity or (ii) the Company shall take part in a
merger or other business combination transaction in which the shares of Common
Stock are changed or exchanged (other than certain mergers that follow an
accepted offer) or (iii) 50% or more of the Company’s assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided, as set forth above) shall thereafter have the
right to receive, upon exercise, a number of shares of common stock of the
acquiring company having a Current Market Price equal to two times the exercise
price of the Right.  Flip-In Events and
Flip-Over Events are collectively referred to as “Triggering Events”.

 

The Purchase Price payable and the number of shares of
Preferred Stock (or the amount of cash, property or other securities) issuable
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a share dividend on, or a
subdivision, combination or reclassification of, the shares of Preferred Stock,
(ii) if holders of the shares of Preferred Stock are granted certain
rights or warrants to subscribe for shares of Preferred Stock or convertible
securities at less than the Current Market Price of the Preferred Stock or (iii) upon
the distribution to holders of shares of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).

 

With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at least 1% of
the Purchase Price.  The Company is not

 

2

 

required to issue
fractional shares of the Preferred Stock upon the exercise of any Right or Rights.  In lieu thereof, a cash payment may be made,
as provided in the Rights Agreement.

 

At any time until 10 business days following the Stock
Acquisition Date (or such later date as may be determined by the Company’s
Board of Directors, so long as such determination is made prior to the
expiration of such 10-business day period), the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right, payable, at the option
of the Company, in cash, shares of Common Stock or other consideration as the
Board of Directors may determine. 
Immediately upon the effectiveness of the action of the Company’s Board
of Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the $.01 per Right
redemption price.

 

Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.  While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income upon the occurrence of either a
Flip-In Event or a Flip-Over Event as described above.

 

The terms of the Rights, including without limitation
the date on which the Rights expire, may be amended by the Board of Directors
of the Company at any time prior to the Distribution Date.  Thereafter, the provisions of the Rights
Agreement may be amended by the Board of Directors only in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person and certain other related parties) or to shorten or lengthen
any time period under the Rights Agreement; provided, however, that no
amendment to lengthen the time period governing redemption shall be made at
such time as the Rights are not redeemable.

 

A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K
dated December 12, 2007.  A copy of
the Rights Agreement is available free of charge from the Company or the Rights
Agent.  This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.

 

3

 

EXHIBIT C

 

[Form of
Rights Certificate]

 

	
  Certificate No. R-

  	
   

  	
               
  Rights

  

 

NOT EXERCISABLE AFTER JANUARY 13, 2018 OR EARLIER IF
REDEEMED OR OTHERWISE RESCINDED BY THE COMPANY. 
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THAT CERTAIN RENEWAL RIGHTS AGREEMENT
DATED AS OF DECEMBER 11, 2007 (THE “RIGHTS AGREEMENT”).  UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON.  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

 

ENTERPRISE
BANCORP, INC.

 

This certifies that
                            ,
or his or her 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 Renewal Rights Agreement, dated as
of December 11, 2007 (the “Rights
Agreement”), by and between Enterprise Bancorp, Inc., a Massachusetts
corporation (the “Company”), and
Computershare Trust Company, N.A., a national association (the “Rights Agent”), to purchase from the Company
at any time prior to 5:00 P.M. (New York City time) on January 13,
2018 at the office or offices of the Rights Agent designated for such purpose,
or at the office or offices of its successors as Rights Agent, one one-hundreth
of a fully paid, nonassessable, share of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company (the “Preferred Stock”), or under the circumstances
described in the Rights Agreement, to receive cash, property, shares of Common
Stock, par value $0.01 per share (the “Common Stock”), or other securities of
the Company, at a purchase price of $52.00 (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 of Preferred Stock or
amount of cash, property,

 

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

 

 

Common Stock or other
securities, as the case may be, deliverable upon proper exercise thereof) set
forth above, and the Purchase Price set forth above, are the number of Rights
and the Purchase Price as of January 13, 2008, respectively, based on the
Preferred Stock as constituted at such date.

 

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 Associate or Affiliate of an Acquiring Person (as such terms are defined
in the Rights Agreement), which is determined to have been involved in, caused
or facilitated such Section 11(a)(ii) Event, (ii) a transferee
of any such Acquiring Person, Associate or Affiliate who becomes a transferee
after such Acquiring Person, Associate or Affiliate becomes such or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such, 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 Stock (or the amount of
cash, property, Common Stock or other securities) deliverable upon such
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
those events specified in Section 11(a)(ii) and Section 13 of
the Rights Agreement.

 

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 offices 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 shares of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase.  If this Rights Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.

 

Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Company at a
redemption price of $.01 per Right at any time prior to the earlier of the
close of business on (i) the tenth business day (or such later day as may
be determined by the Company’s Board of Directors) following the first date of
public announcement by the Company that an Acquiring Person has become such (or
if the date of such

 

2

 

announcement shall have
occurred prior to January 13, 2008, the close of business on the tenth
business day following January 13, 2008) and (ii) the close of
business on January 13, 2018.

 

The Company is not required to issue fractional shares
of Preferred Stock upon the exercise of any Right or Rights evidenced
hereby.  In lieu thereof, a cash payment
may be made, as provided in the Rights Agreement.

 

No holder of this Rights Certificate, as such, shall
be entitled to vote or receive dividends or be deemed for any purpose to be the
holder of shares of Preferred Stock, Common Stock or of any other securities of
the Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a 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 other distributions on shares of any series or class of
capital stock of the Company, 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.

 

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

 

Dated as of
                                                        .

 

 

	
  ATTEST:

  	
  ENTERPRISE BANCORP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
  [Name]

  	
   

  	
  [Name]

  
	
  [Title]

  	
   

  	
  [Title]

  
	
   

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
  COMPUTERSHARE TRUST
  COMPANY, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signature

  	
   

  	
   

  
								

 

3

 

[Form of
Reverse Side of Rights Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by
the registered holder if such

holder desires to
transfer the Rights Certificate.)

 

FOR VALUE RECEIVED,
                                                                                                                                                  
hereby sells, assigns and transfers unto                                                                                                                                                         

	
   

  
	
  (Please print
  name and address of transferee)

  

                                                                                                                                                                                
this Rights Certificate, together with all rights, 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:

 

4

 

Certificate

 

The undersigned hereby
certifies by checking the appropriate boxes that:

 

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

 

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

 

 

	
  Dated:

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Guaranteed:

 

 

NOTICE

 

The signature to the
foregoing Form of 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.

 

5

 

FORM OF
ELECTION TO PURCHASE

 

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

 

To:  ENTERPRISE BANCORP, INC.

 

The
undersigned hereby irrevocably elects to exercise
                    
Rights represented by this Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or Common Stock or such other
securities, cash or other property of the Company or of any other person that
may be issuable or otherwise deliverable 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:

 

6

 

Certificate

 

The undersigned hereby
certifies by checking the appropriate boxes that:

 

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

 

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

 

	
  Dated:

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Guaranteed:

 

 

NOTICE

 

The
signature to the foregoing Form of 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.

 

7

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