Document:

EXHIBIT
4.1

NEUROMETRIX,
INC.

AND

AMERICAN
STOCK TRANSFER & TRUST COMPANY

AS
RIGHTS AGENT

SHAREHOLDER RIGHTS AGREEMENT

DATED
AS OF MARCH 7, 2007

TABLE OF CONTENTS

	
  Section

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Certain Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Appointment of Rights Agent

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Issue of Right Certificates

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Form of Right Certificates

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Countersignature and Registration

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

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

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Exercise of Rights; Exercise Price; Expiration Date
  of Rights

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Cancellation and Destruction of Right Certificates

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Reservation and Availability of Preferred Stock

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Preferred Stock Record Date

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

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

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted Exercise Price or Number of
  Shares

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

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

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Fractional Rights and Fractional Shares

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Rights of Action

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Agreement of Right Holders

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Right Certificate Holder Not Deemed a Shareholder

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Concerning the Rights Agent

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Merger or Consolidation or Change of Name of Rights
  Agent

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Change of Rights Agent

  	
   

  	
  31

  

 

 i
 

 

	
  Section 22.

  	
   

  	
  Issuance of New Right Certificates

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Redemption

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Exchange

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Notice of Certain Events

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 26.

  	
   

  	
  Notices

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 27.

  	
   

  	
  Supplements and Amendments

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 28.

  	
   

  	
  Successors

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 29.

  	
   

  	
  Determinations and Actions by the Board of Directors

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 30.

  	
   

  	
  Benefits of this Agreement

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 31.

  	
   

  	
  Severability

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 32.

  	
   

  	
  Governing Law

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 33.

  	
   

  	
  Counterparts

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 34.

  	
   

  	
  Descriptive Headings

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 35.

  	
   

  	
  Force Majeure

  	
   

  	
  39

  

 

 

Exhibit A —   Certificate
of Designations of Series A Junior Participating Cumulative Preferred Stock

 

Exhibit
B —   Form of Right Certificate

 

 ii

SHAREHOLDER
RIGHTS AGREEMENT

Agreement, dated as of March 7, 2007, between
NeuroMetrix, Inc., a Delaware corporation (the “Company”), and American Stock
Transfer & Trust Company, a New York corporation (the “Rights Agent”).

W I T N E S S E T H

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

WHEREAS, on March 7, 2007, the Board of Directors of
the Company authorized and declared a dividend distribution of one Right (as
such term is hereinafter defined) for each outstanding share of Common Stock, par value $0.0001 per share, of
the Company (the “Common Stock”) outstanding as of March 8, 2007 (the “Record
Date”), and authorized the issuance of one Right for each share of Common Stock
of the Company issued (whether or not 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 ten-thousandth 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”);
and

WHEREAS, the Company desires to appoint the Rights
Agent to act as rights agent hereunder, in accordance with the terms and
conditions hereof.

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

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

(a)                                  “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates (as such term is hereinafter defined) and
Associates (as such term is hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is hereinafter defined)
of the Company, (iii) any employee benefit plan or compensation arrangement of
the Company or any Subsidiary of the Company or (iv) any Person holding shares
of Common Stock of the Company organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement (the Persons described in
clauses (i) through (iv) above are

referred to herein as “Exempt Persons”); provided, however,
that the term “Acquiring Person” shall not include any Grandfathered Person,
unless such Grandfathered Person becomes the Beneficial Owner of a percentage
of the shares of Common Stock of the Company then outstanding equal to or
exceeding such Grandfathered Person’s Grandfathered Percentage.

Notwithstanding the foregoing, no Person shall become
an “Acquiring Person” as the result of an acquisition by the Company of Common
Stock of the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares Beneficially Owned by such Person
to 15%  (or in the case of a
Grandfathered Person, the Grandfathered Percentage applicable to such
Grandfathered Person) or more of the shares of Common Stock of the Company then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% (or in the case of a Grandfathered Person, the
Grandfathered Percentage applicable to such Grandfathered Person) or more of
the shares of Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional shares (other than pursuant to a
stock split, stock dividend or similar transaction) of Common Stock of the
Company and immediately thereafter be the Beneficial Owner of 15% (or in the
case of a Grandfathered Person, the Grandfathered Percentage applicable to such
Grandfathered Person) or more of the shares of Common Stock of the Company then
outstanding, then such Person shall be deemed to be an “Acquiring Person.”

In addition, notwithstanding the foregoing, and
notwithstanding anything to the contrary provided in the Agreement including
without limitation in Sections 1(jj), 3(a) or 27, a Person shall not be an “Acquiring
Person” if the Board of Directors of the Company determines at any time that a
Person who would otherwise be an “Acquiring Person,” has become such without
intending to become an “Acquiring Person,” and such Person divests as promptly
as practicable (or within such period of time as the Board of Directors of the
Company determines is reasonable) a sufficient number of shares of Common Stock
of the Company so that such Person would no longer be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this Section 1(a).

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

(c)                                  “Affiliate”
and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations (the “Rules”) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in
effect on the date of this Agreement; provided, however, that no
Person who is a director or officer of the Company shall be deemed an Affiliate
or an Associate of any other director or officer of the Company solely as a
result of his or her position as director or officer of the Company.

(d)                                 A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“Beneficially Own” and have “Beneficial Ownership” of, any
securities:

(i)                                     which such Person
or any of such Person’s Affiliates or Associates, directly or indirectly,
Beneficially Owns (as determined pursuant to Rule 13d-3 of the Rules under the
Exchange Act, as in effect on the date of this Agreement);

 2
 

(ii)                                  which such Person or
any of such Person’s Affiliates or Associates, directly or indirectly, has:

(A)                              the right to acquire
(whether or not such right is exercisable immediately or only after the passage
of time or upon the satisfaction of any conditions or both) pursuant to any
agreement, arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall
not be deemed the “Beneficial Owner” of, or to “Beneficially Own” or have “Beneficial
Ownership” of, (1) 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; (2) securities issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event; or (3) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event, which Rights
were acquired by such Person or any of such Person’s Affiliates or Associates
prior to the Distribution Date or pursuant to Sections 3(a), 11(i) or 22
hereof; or

(B)                                the right to vote
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” or have “Beneficial
Ownership” of, any security under this clause (B) if the agreement, arrangement
or understanding to vote such security (1) arises solely from a revocable proxy
or consent given in response to a public proxy or consent solicitation made
pursuant to a written proxy or consent solicitation statement filed with the
Securities and Exchange Commission in accordance with the Rules of the Exchange
Act and (2) is not also then reportable by such person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or

(C)                                the right to dispose of
pursuant to any agreement, arrangement or understanding (whether or not in
writing) (other than customary arrangements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities); 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) (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as described in clause (B) of Section 1(d)(ii) hereof)
or disposing of any securities of the Company;

 3
 

provided,
however, that (1) no Person engaged in business as an underwriter
of securities shall be deemed the Beneficial Owner of any securities acquired
through such Person’s participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition, and (2) no Person who is a director or an officer of
the Company shall be deemed, as a result of his or her position as director or
officer of the Company, the Beneficial Owner of any securities of the Company
that are Beneficially Owned by any other director or officer of the Company.

For all purposes of this
Agreement, the phrase “then outstanding,” when used with reference to the
percentage of the then outstanding securities Beneficially Owned by a Person,
shall mean the number of securities then issued and outstanding together with
the number of such securities not then actually issued and outstanding which
such Person would be deemed to Beneficially Own hereunder.

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

(f)                                    “Certificate
of Incorporation” when used in reference to the Company shall mean the
Third Amended and Restated Certificate of Incorporation, as may be amended from
time to time, of the Company.

(g)                                 “Close
of Business” on any given date shall mean 5:00 p.m., Boston, Massachusetts
time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Boston, Massachusetts time, on the next
succeeding Business Day.

(h)                                 “Common
Stock” when used in reference to the Company shall mean the common stock,
par value $0.0001 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 other than the Company organized in corporate form
shall mean (i) the capital stock or other equity interest of such Person with
the greatest voting power, (ii) the equity securities or other equity interest
having power to control or direct the management of such Person or (iii) if
such Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person and which have issued any such
outstanding capital stock, equity securities or equity interest.  “Common Stock” when used with reference to
any Person not organized in corporate form shall mean units of beneficial
interest which (x) 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 (y) 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 or
otherwise replace the general partner or partners.

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

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

 4
 

(k)                                  “Depositary
Agent” shall have the meaning set forth in Section 7(c) hereof.

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

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

(n)                                 “Exempt
Person” shall have the meaning set forth in the definition of “Acquiring
Person.”

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

(p)                                 “Expiration
Date” and “Final Expiration Date” shall have the meanings set forth
in Section 7(a) hereof.

(q)                                 “Fair
Market Value” of any securities or other property shall be as determined in
accordance with Section 11(d) hereof.

(r)                                    “Grandfathered
Percentage” shall mean, with respect to any Grandfathered Person, the
percentage of the outstanding shares of Common Stock of the Company that such
Grandfathered Person, together with all Affiliates and Associates of such
Grandfathered Person, Beneficially Owns as of the Grandfathered Time, plus an
additional 1⁄2%; provided, however, that, in the event any Grandfathered Person
shall sell, transfer, or otherwise dispose of any outstanding shares of Common
Stock of the Company after the Grandfathered Time, the Grandfathered Percentage
shall, subsequent to such sale, transfer or disposition, mean, with respect to
such Grandfathered Person, the lesser of (i) the Grandfathered Percentage as in
effect immediately prior to such sale, transfer or disposition or (ii) the
percentage of outstanding shares of Common Stock of the Company that such
Grandfathered Person Beneficially Owns immediately following such sale,
transfer or disposition, plus an additional 1⁄2%.

(s)                                  “Grandfathered
Person” shall mean any Person who or which, together with all Affiliates
and Associates of such Person, is, as of the Grandfathered Time, the Beneficial
Owner of 15% or more of the shares of Common Stock of the Company then
outstanding.  Notwithstanding anything to
the contrary provided in this Agreement, any Grandfathered Person who after the
Grandfathered Time becomes the Beneficial Owner of less than 15% of the shares
of Common Stock of the Company then outstanding shall cease to be a Grandfathered
Person and shall be subject to all of the provisions of this Agreement in the
same manner as any Person who is not and was not a Grandfathered Person.

(t)                                    “Grandfathered
Time” shall mean 9:00 a.m., Boston, Massachusetts time, on March 8, 2007.

(u)                                 “Group”
shall have the meaning set forth in clause (b) of the definition of “Person.”

(v)                                 “Person”
shall mean (a) an individual, a corporation, a partnership, a limited liability
company, an association, a joint stock company, a trust, a business trust, a

 5
 

government or political subdivision, any
unincorporated organization, or any other association or entity including any
successor (by merger or otherwise) thereof or thereto, and (b) a “group” as
that term is used for purposes of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended.

(w)                               “Preferred
Stock” shall mean shares of Series A Junior Participating Cumulative
Preferred Stock, par value $0.001 per share, of the Company having the rights
and preferences set forth in the form of Certificate of Designations attached
hereto as Exhibit A.

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

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

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

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

(bb)                          “Registered
Common Stock” shall have the meaning set forth in Section 13(b) hereof.

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

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

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

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

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

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

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

(jj)                                  “Stock
Acquisition Date” shall mean the date of the first public announcement
(which for purposes of this definition shall include, without limitation, the
issuance of a press release or the filing of a publicly-available report or
other document with the Securities and Exchange Commission or any other
governmental agency) by the Company, acting pursuant to a resolution adopted by
the Board of Directors of the Company, or by an

 6
 

Acquiring Person, subject in each case to the
last paragraph of Section 1(a), that an Acquiring Person has become such.

(kk)                            “Subsidiary”
shall mean, with reference to any Person, any corporation or other entity of
which securities or other ownership interests 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 of such corporation
or other entity are at the time directly or indirectly Beneficially Owned or
otherwise controlled by such Person either alone or together with one or more
Affiliates of such Person.

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

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

Section 2.  Appointment
of Rights Agent.  The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date (as hereinafter defined in Section 3(a)) also be the holders
of the Common Stock of 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.  In the event the Company appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent and any Co-Rights
Agents shall be as the Company shall determine. 
The Company shall give ten (10) days’ prior written notice to the Rights
Agent of the appointment of one or more Co-Rights Agents and the respective
duties of the Rights Agent and any such Co-Rights Agents.  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.

Section 3.  Issue
of Right Certificates.

(a)                                  From
the date hereof until the earlier of (i) the Close of Business on the tenth
calendar day after the Stock Acquisition Date or (ii) the Close of Business on
the tenth Business Day (or such later calendar day, if any, as the Board of
Directors of the Company may determine in its sole discretion) after the date 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-4(a) of the Exchange
Act, or any successor rule, if, upon consummation thereof, such Person could
become the Beneficial Owner of 15% (or in the case of a Grandfathered Person,
the Grandfathered Percentage applicable to such Grandfathered Person) or more
of the shares of Common Stock of the Company then outstanding (including any
such date which is after the date of this Agreement and prior to the issuance
of the Rights) (the earliest of such dates being herein referred to as the “Distribution
Date”), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for the Common Stock of the
Company registered in the names of the holders of the Common Stock of the
Company (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.  As soon as practicable after the

 7
 

Distribution Date, the Rights Agent will, at
the Company’s expense 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 certificates, in substantially the form of Exhibit B
hereto (the “Right 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(o) hereof, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) at
the time of distribution of the Right Certificates, so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights.  As of and
after the Close of Business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.

(b)                                 With
respect to certificates for the Common Stock of the Company issued prior to the
Close of Business on the Record Date, the Rights will be evidenced by such
certificates for the Common Stock of the Company on or until the Distribution
Date (or the earlier redemption, expiration or termination of the Rights), and
the registered holders of the Common Stock of the Company also shall be the
registered holders of the associated Rights. 
Until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), the transfer of any of the certificates for the
Common Stock of the Company outstanding prior to the date of this Agreement
shall also constitute the transfer of the Rights associated with the Common
Stock of the Company represented by such certificate.

(c)                                  Certificates
for the Common Stock of the Company issued after the Record Date, but prior to
the earlier of the Distribution Date or the Expiration Date, shall be deemed
also to be certificates for Rights, and shall bear a legend, substantially in
the form set forth below:

This certificate
also evidences and entitles the holder hereof to certain Rights as set forth in
a Shareholder Rights Agreement between NeuroMetrix, Inc. and American Stock
Transfer & Trust Company (or any successor thereto), as Rights Agent, dated
as of March 7, 2007 as amended, restated, renewed, supplemented or extended
from time to time (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of NeuroMetrix, Inc. and the stock transfer administration
office of the Rights Agent.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced by this
certificate.  NeuroMetrix, Inc. may
redeem the Rights at a redemption price of $0.01 per Right, subject to
adjustment, under the terms of the Rights Agreement.  NeuroMetrix, Inc. 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,
Rights issued to or held by Acquiring Persons or any Affiliates or Associates
thereof (as defined in the

 8
 

Rights Agreement),
and any subsequent holder of such Rights, 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, if any, 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, the Rights associated with the
Common Stock of the Company represented by such certificates shall be evidenced
by such certificates alone until the earlier of the Distribution Date or the
Expiration Date, 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. 
In the event that the Company purchases or acquires any shares of Common
Stock of the Company after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Stock of the Company shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock of the Company which are no
longer outstanding.  The failure to print
the foregoing legend on any such certificate representing Common Stock of the
Company or any defect therein shall not affect in any manner whatsoever the
application or interpretation of the provisions of Section 7(e) hereof.

Section 4.  Form
of Right Certificates.

(a)                                  The
Right Certificates (and the forms of election to purchase shares and of
assignment and certificate to be printed on the reverse thereof) shall each be
substantially in the form of Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation 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 customary usage. 
The Right Certificates shall be in a machine printable format and in a
form reasonably satisfactory to the Rights Agent.  Subject to the provisions of Section 11
and Section 22 hereof, the Right Certificates, whenever distributed, shall
be dated as of the Record Date, shall show the date of countersignature, and on
their face shall entitle the holders thereof to purchase such number of one
ten-thousandths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (the “Exercise Price”), but the number of such
shares and the Exercise Price shall be subject to adjustment as provided
herein.

(b)                                 Any
Right 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 Associate or Affiliate of an Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights, the shares of
Common Stock of the

 9
 

Company associated with such Rights or the
Company or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6, Section 11 or Section 22
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain the following legend:

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

The Company shall give
notice to the Rights Agent promptly after it becomes aware of the existence and
identity of any Acquiring Person or any Associate or Affiliate thereof.  The Company shall instruct the Rights Agent
in writing of the Rights which should be so legended.  The failure to print the foregoing legend on
any such Right Certificate or any defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of
Section 7(e) hereof.

Section 5.  Countersignature
and Registration.

(a)                                  The
Right Certificates shall be executed on behalf of the Company by its Chairman
of the Board of Directors, or its President or any Vice President and by its
Treasurer or any Assistant Treasurer, or by its Secretary or any Assistant
Secretary, either manually or by facsimile signature, and shall have affixed
thereto the Company’s seal or a facsimile thereof which shall be attested to by
the Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature.  The Right
Certificates shall be manually countersigned by an authorized signatory of the
Rights Agent and shall not be valid for any purpose unless so countersigned,
and such countersignature upon any Right Certificate shall be conclusive
evidence, and the only evidence, that such Right Certificate has been duly
countersigned as required hereunder.  In
case any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by an authorized signatory of the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificates may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this 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 one
of its offices designated as the appropriate place for surrender of Right
Certificates upon exercise or transfer, books for registration and transfer of
the Right Certificates issued

 10
 

hereunder. 
Such books shall show the names and addresses of the respective holders
of the Right Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right Certificates.

Section 6.  Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right 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 Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Certificates, entitling the registered holder to purchase
a like number of one ten-thousandths of a share of Preferred Stock (or
following a Triggering Event, Common Stock of the Company, cash, property, debt
securities, Preferred Stock or any combination thereof, including any such
securities, cash or property following a Section 13 Event) as the Right
Certificate or Certificates surrendered then entitled such holder to purchase
and at the same Exercise Price.  Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Certificates to be transferred,
split up, combined or exchanged, with the form of assignment and certificate
duly executed, at the office or offices of the Rights Agent designated for such
purpose.  Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.  Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Certificates, as the case may be, as so requested.  The Company may require payment by the
registered holder of a Right Certificate, of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.

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

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

(a)                                  Subject
to Section 7(e) hereof, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate on
the reverse side thereof duly

 11
 

executed, to the Rights Agent at the office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Exercise Price for the total number of one ten-thousandths
of a share of Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercised, at or
prior to the earlier of (i) the Close of Business on the tenth anniversary of
the Record Date (the “Final Expiration Date”), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”)
or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof (the “Exchange Date”) (the earliest of (i), (ii) or (iii)
being herein referred to as the “Expiration Date”).  Except as set forth in Section 7(e) hereof
and notwithstanding any other provision of this Agreement, any Person who prior
to the Distribution Date becomes a record holder of shares of Common Stock of
the Company may exercise all of the rights of a registered holder of a Right
Certificate with respect to the Rights associated with such shares of Common
Stock of the Company in accordance with the provisions of this Agreement, as of
the date such Person becomes a record holder of shares of Common Stock of the
Company.

(b)                                 The
Exercise Price for each one ten-thousandth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be Seventy-Five United
States Dollars (U.S. $75.00), shall be subject to adjustment from time to time
as provided in Section 11 and Section 13 hereof and shall be payable in
lawful money of the United States of America in accordance with Section 7(c)
below.

(c)                                  As
promptly as practicable following the Distribution Date, the Company shall
deposit with a corporation, trust, bank or similar institution in good standing
organized under the laws of the United States or any State of the United
States, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by a federal
or state authority (such institution is hereinafter referred to as the “Depositary
Agent”), certificates representing the shares of Preferred Stock that may be
acquired upon exercise of the Rights and the Company shall cause such
Depositary Agent to enter into an agreement pursuant to which the Depositary
Agent shall issue receipts representing interests in the shares of Preferred
Stock so deposited.  Upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase and the certificate on the reverse side thereof duly executed,
accompanied by payment of the Exercise Price for the shares to be purchased and
an amount equal to any applicable transfer tax (as determined by the Rights
Agent) by certified check or bank draft payable to the order of the Company or
by money order, the Rights Agent shall, subject to Section 20(k) and Section
14(b) hereof, thereupon promptly (i) requisition from the Depositary Agent
(or make available, if the Rights Agent is the Depositary Agent) depositary
receipts or certificates for the number of one ten-thousandths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
the Depositary Agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt of each certificate or depositary receipts promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.  In the event that the Company is obligated to
issue other securities (including Common Stock of the Company) of the Company,
pay cash or distribute other property pursuant to Section 11(a) hereof, the
Company 

 12
 

will make all arrangements necessary so that
such other securities, cash or other property are available for distribution by
the Rights Agent, if and when appropriate. 
The payment of the Exercise Price may be made by certified or bank check
payable to the order of the Company, or by money order or wire transfer of
immediately available funds to the account of the Company (provided that notice
of such wire transfer shall be given by the holder of the related Right to the
Rights Agent).

(d)                                 In
case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Right Certificate or to his duly
authorized assigns, 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 or Section 13 Event, any 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 Associate or
Affiliate of an Acquiring Person) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of
any Associate or Affiliate of an Acquiring Person) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, the shares of Common Stock of the Company associated with such Rights
or the Company, or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), shall be
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 shall have no liability to any holder of Right Certificates or other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or any Affiliates or Associates of an Acquiring Person or any
transferee of any of them 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 Rights upon the occurrence of any purported exercise as set forth in
this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

Section 8.  Cancellation
and Destruction of Right Certificates. 
All Right 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 canceled form, or, if surrendered to the Rights Agent, shall be canceled
by it,

 13
 

and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. 
The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof.  The Rights Agent shall
deliver all canceled Right Certificates to the Company.

Section 9.  Reservation
and Availability of Preferred 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 or any
authorized and issued shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding and exercisable Rights.  Upon the occurrence of any events resulting
in an increase in the aggregate number of shares of Preferred Stock issuable
upon exercise of all outstanding Rights in excess of the number then reserved,
the Company shall make appropriate increases in the number of shares so
reserved.

(b)                                 The
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares of Preferred Stock issued or reserved for
issuance to be listed, upon official notice of issuance, upon the principal
national securities exchange, if any, upon which the Common Stock of the
Company is listed or, if the principal market for the Common Stock of the
Company is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System (“NASDAQ”) or any successor thereto or other comparable quotation
system.

(c)                                  The
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section 11(a)(iii) hereof, or as
soon as required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus that at all times
meets the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities or
(B) the Expiration Date.  The
Company will also take such action as may be appropriate under, and which will
ensure compliance with, the securities or “blue sky” laws of the various states
in connection with the exercisability of the Rights.  The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date determined in
accordance with the provisions of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. 
Upon 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 each case with prompt written notice to the Rights Agent.  Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.

 14

(d)                                 The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all shares of Preferred Stock delivered upon the
exercise of the Rights shall, at the time of delivery of the certificates or
depositary receipts for such shares (subject to payment of the Exercise Price),
be duly and validly authorized and issued and fully paid and nonassessable.

(e)                                  The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
certificates for shares of Preferred Stock and/or other property 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 Right Certificates or the issuance or
delivery of other securities or property to a person other than, or in respect
of the issuance or delivery of securities or other property in a name other
than that of, the registered holder of the Right Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for securities
or other property 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 Right 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
Preferred Stock or other securities (including any fraction of a share of
Preferred Stock or such other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Preferred Stock or such other securities represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Stock or such other securities,
as applicable, are closed, such person shall be deemed to have become the
record holder of such shares of Preferred Stock or such other securities on,
and such certificate shall be dated, the next succeeding Business Day on which
the transfer books of the Company are open; and further provided, however,
that if delivery of shares of Preferred Stock or such other securities is
delayed pursuant to Section 9(c), such Person shall be deemed to have become
the record holder of such shares of Preferred Stock or such other securities
only when such shares or such other securities first become deliverable.  Prior to the exercise of the Right evidenced
thereby, the holder of a Right 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 Exercise Price, Number and
Kind of Shares or Number of Rights. 
The Exercise Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.

(a)                                  
(i)                                  In
the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Stock payable in shares of
Preferred

 15
 

Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number
of shares or (D) issue, change or alter any shares of its capital stock in
a reclassification or recapitalization of the Preferred Stock (including any
such reclassification or recapitalization in connection with a consolidation or
merger in which the Company is the continuing or surviving Person), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the Exercise
Price in effect at the time of the record date for such dividend or the
effective time of such subdivision, combination, reclassification or
recapitalization, and the number and kind of shares of capital stock issuable
on such date or at such time, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, reclassification or recapitalization; provided,
however, that in no event shall the consideration to be paid upon the
exercise of a Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of a Right.  If an event occurs which would require an
adjustment under both 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)                                  Subject
to the provisions of Section 24 hereof, in the event any Person, alone or
together with its Affiliates and Associates, shall become an Acquiring Person,
then, promptly following any such occurrence (a “Section 11(a)(ii) Event”),
proper provision shall be made so that each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have a right to receive, upon
exercise thereof at the then current Exercise Price in accordance with the
terms of this Agreement, in lieu of a number of one ten-thousandths of a share
of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Exercise Price by the then number of one ten-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, whether or not such Right was then
exercisable, and dividing that product by (y) 50% of the Fair Market Value
per share of Common Stock of the Company (determined pursuant to Section 11(d))
on the date of the occurrence of a Section 11(a)(ii) Event (such number of
shares being referred to as the “Adjustment Shares”).

(iii)                               In
lieu of issuing any shares of Common Stock of the Company in accordance with
Section 11(a)(ii) hereof, the Company, acting by or pursuant to a resolution of
the Board of Directors of the Company, may, and in the event that the number of
shares of Common Stock of the Company which are authorized by the Company’s
Certificate of Incorporation 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 subparagraph
(ii) of this Section 11(a), the Company, acting by or pursuant to a resolution
of the Board of Directors of the Company, shall:  (A) determine the excess of (X) the Fair
Market Value of the

 16
 

Adjustment Shares issuable upon the exercise
of a Right (the “Current Value”) over (Y) the Exercise Price attributable to
each Right (such excess being referred to as the “Spread”) and (B) with respect
to all or a portion of each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon payment of the
applicable Exercise Price, (1) Common Stock of the Company or equity securities,
if any, of the Company other than Common Stock of the Company (including
without limitation shares, or units of shares, of Preferred Stock that the
Board of Directors of the Company has determined to have the same value as
shares of Common Stock of the Company (such shares of Preferred Stock being
referred to herein as “Common Stock Equivalents”)), (2) cash, (3) a reduction
in the Exercise Price, (4) Preferred Stock Equivalents which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock of the Company, (5) debt securities of the Company, (6) other assets or
securities of the Company or (7) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company after receiving the advice
of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, that if the Company
shall not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the “Section 11(a)(ii) Trigger Date”), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Exercise 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 of Directors of the Company
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 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 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 and 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 and of the Preferred Stock shall be the Fair Market Value (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock of
the Company and the Preferred Stock, respectively, on the Section 11(a)(ii)
Trigger Date, the value of any Common Stock Equivalent shall be deemed to have
the same value as the Common Stock

 17
 

of the Company on such date and the value of
any Preferred Stock Equivalent shall be deemed to have the same value as the
Preferred Stock on such date.

(b)                                 If
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period
expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same or
more favorable rights, privileges and preferences as the shares of Preferred
Stock (“Preferred Stock Equivalents”)) or securities convertible into Preferred
Stock or Preferred Stock Equivalents at a price per share of Preferred Stock or
per share of Preferred Stock Equivalents (or having a conversion price per
share, if a security convertible into Preferred Stock or Preferred Stock
Equivalents) less than the Fair Market Value (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record date, the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Preferred Stock Equivalents to be offered (and the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value 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 Preferred
Stock Equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of a Right be less than the aggregate par value of the shares of stock
of the Company issuable upon exercise of a Right.  In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be the Fair Market Value thereof determined
in accordance with Section 11(d) hereof. 
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 adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Exercise Price shall be adjusted
to be the Exercise Price which would then be in effect if such record date had
not been fixed.

(c)                                  If
the Company shall fix a record date for the making of 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 any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(b)), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one ten-thousandth of a share of Preferred Stock on such record date, less
the Fair Market Value (as determined pursuant to Section 11(d) hereof) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such convertible securities, subscription rights or warrants
applicable to one ten-thousandth of a share of Preferred Stock and the
denominator of which shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per one ten-thousandth of a share of

 18
 

Preferred
Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of stock of the Company issuable upon
exercise of a Right.  Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would be in effect if such record date
had not been fixed.

(d)                                 For
the purpose of this Agreement, the “Fair Market Value” of any share of
Preferred Stock, Common Stock or any other stock or any Right or other security
or any other property shall be determined as provided in this Section 11(d).

(i)                                     In
the case of a publicly-traded stock or other security, the Fair Market Value on
any date shall be deemed to be the average of the daily closing prices per
share of such stock or per unit of such other security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the Fair Market
Value per share of any share of stock is determined during a period following
the announcement by the issuer of such stock of (x) a dividend or
distribution on such stock payable in shares of such stock or securities
convertible into shares of such stock or (y) any subdivision, combination
or reclassification of such stock, and prior to the expiration of the 30
Trading Day period after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Fair Market Value 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 securities 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 such security is listed or admitted to trading;
or, if not listed or admitted to trading on any national securities exchange,
the last quoted price (or, if not so quoted, the average of the last quoted
high bid and low asked prices) in the over-the-counter market, as reported by
NASDAQ or such other system then in use; or, if on any such date no bids for
such security are quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in such security selected by the Board of Directors of the Company.  If on any such date no market maker is making
a market in such security, the Fair Market Value of such security on such date
shall be determined reasonably and with utmost good faith to the holders of the
Rights by the Board of Directors of the Company, provided, however,
that if at the time of such determination there is an Acquiring Person, the
Fair Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights.  The term “Trading
Day” shall mean a day on which the principal national securities exchange on
which such security is listed or admitted to

 19
 

trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day.

(ii)                                  If
a security is not publicly held or not so listed or traded, “Fair Market Value”
shall mean the fair value per share of stock or per other unit of such security,
determined reasonably and in good faith to the holders of the Rights by the
Board of Directors of the Company; provided, however, that if at
the time of such determination there is an Acquiring Person, the Fair Market
Value of such security on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, which determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights; provided, however, that for the purposes of making any
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple (as both of such terms are defined in the
Certificate of Designations attached as Exhibit A hereto) applicable to
the Preferred Stock and shall not exceed 105% of the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock.

(iii)                               In
the case of property other than securities, the Fair Market Value thereof shall
be determined reasonably and in good faith to the holders of Rights by the
Board of Directors of the Company; provided, however, that if at
the time of such determination there is an Acquiring Person, the Fair Market
Value of such property on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, which 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.

(e)                                  Anything
herein to the contrary notwithstanding, no adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-millionth
of a share of Common Stock of the Company or hundred-millionth of a share of
Preferred Stock, as the case may be, or to such other figure as the Board of
Directors of the Company may deem appropriate. 
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 any provision of Section 11(a) or Section 13(a) hereof, the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Section 11(a), (b), (c), (d), (e), (g) through (k) and (m), inclusive,

 20
 

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.

(g)                                 All
Rights originally issued by the Company subsequent to any adjustment made to
the Exercise Price hereunder shall evidence the right to purchase, at the
adjusted Exercise Price, the number of one ten-thousandths of a share of
Preferred Stock (or other securities or amount of cash or combination thereof)
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 Exercise Price as a result of the calculations made
in Section 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 Exercise Price, that number of one ten-thousandths of a share of
Preferred Stock (calculated to the nearest hundred-millionth) as the Board of
Directors of the Company determines is appropriate to preserve the economic
value of the Rights, including, by way of example, that number obtained by (i)
multiplying (x) the number of one ten-thousandths of a share of Preferred Stock
for which a Right may be exercisable immediately prior to this adjustment by
(y) the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.

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

 21
 

(j)                                     Irrespective
of any adjustment or change in the Exercise Price or the number of one
ten-thousandths of a share of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per share and the number of shares which were
expressed in the initial Right Certificates issued hereunder without prejudice
to any adjustment or change.

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

(l)                                     In
any case in which this Section 11 shall require that an adjustment in the
Exercise 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 issuing to
the holder of any Right exercised after such record date the number of one
ten-thousandths of a share of Preferred Stock or other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one ten-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(m)                               Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that in its good faith judgment the Board of Directors of the Company shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any shares of Preferred Stock at
less than the Fair Market Value, 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, stock dividends or issuance of rights, options
or warrants referred to hereinabove 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 and so long as the Rights have not been redeemed pursuant to
Section 23 hereof or exchanged pursuant to Section 24 hereof, (i) consolidate
with (other than a Subsidiary of the Company in a transaction that complies
with the proviso at the end of this sentence), (ii) merge with or into, 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 50% or more 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 the proviso at the end of this sentence) if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to,

 22
 

simultaneously
with or immediately after such consolidation, merger or sale the shareholders
of a Person who constitutes, or would constitute, the “Principal Party” for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates; provided,
however, that, subject to the following sentence, this Section 11(n)
shall not affect the ability of any Subsidiary of the Company to consolidate
with, or merge with or into, or sell or transfer assets or earning power to,
any other Subsidiary of the Company.  The
Company further covenants and agrees that after the Distribution Date it will
not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.

(o)                                 Notwithstanding
anything in this Agreement to the contrary, in the event the Company shall at
any time after the date of this Agreement and prior to the Distribution Date
(i) declare or pay any dividend on the outstanding Common Stock of the Company
payable in shares of Common Stock of the Company or (ii) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock of the
Company (by reclassification or otherwise than by payment of dividends in
shares of Common Stock of the Company) into a greater or lesser number of
shares of Common Stock of the Company, then in any such case (A) the
number of one ten-thousandths of a share of Preferred Stock purchasable after
such event upon proper exercise of each Right shall be determined by
multiplying the number of one ten-thousandths of a share of Preferred Stock so
purchasable immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock of the Company outstanding
immediately prior to such event and the denominator of which is the number of
shares of Common Stock of the Company outstanding immediately after such event,
and (B) 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(o) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.

(p)                                 The
exercise of Rights under Section 11(a)(ii) shall only result in the loss of
rights under Section 11(a)(ii) to the extent so exercised and neither such
exercise nor any exchange of Rights pursuant to Section 24 shall otherwise
affect the rights of holders of Right Certificates under this Rights Agreement,
including rights to purchase securities of the Principal Party following a
Section 13 Event which has occurred or may thereafter occur, as set forth in
Section 13 hereof.  Upon exercise of a
Right Certificate under Section 11(a)(ii), the Rights Agent shall return such
Right Certificate duly marked to indicate that such exercise has occurred.

Section 12.  Certificate of Adjusted Exercise Price or
Number of Shares.  Whenever an
adjustment is made as provided in Section 11 or 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 Right 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 26 hereof.  The Rights Agent shall be fully protected in

 23
 

relying on any such certificate and on any adjustment
contained therein and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.

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

(a)                                  In
the event that, following the Stock Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction which is not
prohibited by Section 11(n) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which is not
prohibited by the proviso at the end of the first sentence of Section 11(n)
hereof) shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the shares of Common Stock
of the Company shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company shall
sell, mortgage or otherwise transfer (or one or more of its Subsidiaries shall
sell, mortgage or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions, each of which is not prohibited by the
proviso at the end of the first sentence of Section 11(n) hereof), then, and in
each such case, proper provision shall be made so that:  (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall have the right to receive, upon the
exercise thereof at the then current Exercise Price in accordance with the
terms of this Agreement, such number of validly authorized and issued, fully
paid and nonassessable shares of freely tradable Common Stock of the Principal
Party (as hereinafter defined in Section 13(b)), free and clear of rights
of call or first refusal, liens, encumbrances, transfer restrictions or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Exercise Price by the number of one ten-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof),
and dividing that product by (2) 50% of the Fair Market Value (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such consolidation, merger, sale
or transfer; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale, mortgage or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such Principal Party; and (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 to permit
exercise of all outstanding Rights in accordance with this Section 13(a) and
the making of payments in cash and/or other securities in accordance with
Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights.

(b)                                 “Principal
Party” shall mean

 24
 

(i)                                     in
the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of Common
Stock that has the highest aggregate Fair Market Value (determined pursuant to
Section 11(d)), and if no securities are so issued, the Person that is the
other party to the merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the highest aggregate Fair
Market Value (determined pursuant to Section 11(d)); 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
transferred pursuant to such transaction or transactions or if the Person receiving
the largest portion of the assets or earning power cannot be determined,
whichever Person the Common Stock of which has the highest aggregate Fair
Market Value (determined pursuant to Section 11(d));

provided, however, that in
any such case described in clauses (i) or (ii) of Section 13(b) hereof, (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 (“Registered Common Stock”) or such Person
is not a corporation, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person who has Registered Common Stock outstanding, “Principal
Party” shall refer to such other Person; (2) if the Common Stock of such Person
is not Registered Common Stock or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person but is not a direct
or indirect Subsidiary of another Person which has Registered Common Stock
outstanding, “Principal Party” shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is
not Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and one or
more of such other Persons has Registered Common Stock outstanding, “Principal
Party” shall refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate Fair Market Value
(determined pursuant to Section 11(d)); and (4) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons has Registered Common Stock outstanding, “Principal
Party” shall refer to whichever ultimate parent entity is the corporation
having the greatest shareholders’ equity or, if no such ultimate parent entity
is a corporation, “Principal Party” shall refer to whichever ultimate parent
entity is the entity having the greatest net assets.

(c)                                  The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto (x) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock, which have not been issued or reserved
for issuance, to permit the exercise in full of the Rights in accordance with
this Section 13, and (y) the Company and each Principal Party and each
other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
Section 13(a) and (b) and

 25
 

further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets mentioned in Section 13(a), the Principal
Party at its own expense will:

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

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

(iii)                               list
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on a national securities exchange or to meet the
eligibility requirements for quotation on NASDAQ; and

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

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

The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other transfers.

Section 14.  Fractional Rights and Fractional Shares.

(a)                                  The
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(o) hereof, or to distribute Right
Certificates which evidence fractional Rights. 
If the Company elects not to issue such fractional Rights, the Company
shall pay, in lieu of such fractional Rights, to the registered holders of the

 26
 

Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.

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

(c)                                  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, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company); and any registered holder of any
Right 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 Right Certificate (or, prior to the Distribution Date, of the Common
Stock of the Company), may, in such registered holder’s own behalf and for such
registered holder’s own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Right evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement.  Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and 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.  Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys’
fees, incurred by them in any action to enforce the provisions of this
Agreement.

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

(a)                                  prior
to the Distribution Date, each Right will be transferable only simultaneously
and together with the transfer of shares of Common Stock of the Company;

 27
 

(b)                                 after
the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the office or offices of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer;

(c)                                  subject
to Sections 6(a) and 7(f), the Company and the Rights Agent may deem and treat
the person in whose name a Right Certificate (or, prior to the Distribution
Date, the associated certificate representing Common Stock of the Company) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated certificate representing Common Stock of the
Company made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and, subject to the last sentence of Section 7(e), neither
the Company nor the Rights Agent shall 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 the
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligations;
provided, however, that 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.  Right Certificate Holder Not Deemed a
Shareholder.  No holder, as such, of
any Right Certificate shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the shares 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
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right 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 such compensation as shall be agreed
to in writing between the Company and the Rights Agent 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
arising therefrom, directly or indirectly. 
The provisions 

 28
 

of this
Section 18(a) shall survive the expiration of the Rights and the termination of
this Agreement.

(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 Right Certificate or
certificate representing Common Stock of the Company, Preferred Stock, or other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it in good faith
and without negligence to be genuine and to be signed and executed by the
proper Person or Persons.

(c)                                  The
Rights Agent shall not be liable for consequential damages under any provision
of this Agreement or for any consequential damages arising out of any act or
failure to act hereunder.

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

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

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

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

 29

(a)                                  The
Rights Agent may consult with legal counsel selected by it (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 “Fair
Market Value”) 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 shall be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman of the Board of Directors, a
Vice Chairman of the Board of Directors, the President, a Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company and delivered to the Rights Agent. 
Any 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 Right Certificates (except
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.

(e)                                  The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Section 7(e) hereof) or any adjustment
required under the provisions of Sections 11, 13 or 23(c) 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 Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of the Fair Market Value
of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; 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 of the Company or Preferred Stock to be issued pursuant to this Agreement
or any Right Certificate or as to whether or not any shares of Common Stock of
the Company 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

 30
 

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 and certificates delivered
pursuant to any provision hereof from any person believed by the Rights Agent
to be the Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, the President, a Vice President, the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the Company, and is
authorized 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.  Any application by the Rights
Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Agreement and the date on or after which such
action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

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

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

(k)                                  If,
with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has either not been completed
or indicates an affirmative response to clause (1) or clause (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.

Section 21.  Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days’ notice

 31
 

in writing mailed to the Company by first class mail, provided,
however, that in the event the transfer agency relationship in effect
between the Company and the Rights Agent with respect to the Common Stock of
the Company terminates, the Rights Agent will be deemed to have resigned
automatically on the effective date of such termination.  The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause), effective immediately or on
a specified date, by written notice given to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock of the Company and Preferred Stock, and by giving notice to the holders
of the Right Certificates by any means reasonably determined by the Company to
inform such holders of such removal (including without limitation, by including
such information in one or more of the Company’s reports to shareholders or
reports or filings with the Securities and Exchange Commission).  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States, the State of Delaware or the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Delaware or the State of New
York), in good standing, which is authorized under such laws to exercise stock
transfer or corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $10,000,000 or (b) an
Affiliate of a Person described in clause (a) of this sentence.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock of the
Company and the Preferred Stock, and give notice to the holders of the Right
Certificates by any means reasonably determined by the Company to inform such
holders of such appointment (including without limitation, by including such
information in one or more of the Company’s reports to shareholders or reports
or filings with the Securities and Exchange Commission).  Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

Section 22.  Issuance of New Right Certificates.  Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as may be approved
by the Board of Directors of the Company to reflect any adjustment or change in
the Exercise Price per share and the number or kind or class of shares of stock
or other securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Agreement.  In addition, in

 32
 

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 hereafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right 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 Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.

Section 23.  Redemption.

(a)                                  The
Board of Directors of the Company may, at its option, redeem all but not less
than all of the then outstanding Rights at a redemption price of $0.01 per
Right, appropriately adjusted to reflect any stock dividend declared or paid,
any subdivision or combination of the outstanding shares of Common Stock of the
Company or any similar event occurring after the date of this Agreement (such
redemption price, as adjusted from time to time, being hereinafter referred to
as the “Redemption Price”).  The Rights
may be redeemed only until the earlier to occur of (i) the time at which any
Person becomes an Acquiring Person or (ii) the Final Expiration Date.

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the
redemption of the Rights in accordance with Section 23 hereof, 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 of
Directors of the Company ordering the redemption of the Rights in accordance
with Section 23 hereof, 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 the Rights Agent and to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Stock of the Company.  Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.  The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books
of the Rights Agent.  Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.  Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or Section 24 hereof or in
connection with the purchase of shares of Common Stock of the Company prior to
the Distribution Date.

(c)                                  The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock of the Company (based on the Fair Market Value of the Common Stock of the

 33
 

Company as of
the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors of the Company.

Section 24.  Exchange.

(a)                                  (i)                                     The
Board of Directors of the Company may, at its option, at any time on or after
the occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for 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 “Section 24(a)(i) Exchange Ratio”).  Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Stock of the Company.

(ii)                                  Notwithstanding
the foregoing, the Board of Directors of the Company may, at its option, at any
time on or after the occurrence of a Section 11(a)(ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
7(e) hereof) for shares of Common Stock of the Company at an exchange ratio
specified in the following sentence, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement.  Subject to the
adjustment described in the foregoing sentence, each Right may be exchanged for
that number of shares of Common Stock of the Company obtained by dividing the
Spread (as defined in Section 11(a)(iii)) by the then Fair Market Value per one
ten-thousandth of a share of Preferred Stock on the earlier of (x) the date on
which any person becomes an Acquiring Person or (y) the date on which 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-4(a) of the Exchange
Act or any successor rule, if upon consummation thereof such Person could
become an Acquiring Person (such exchange ratio being referred to herein as the
“Section 24(a)(ii) Exchange Ratio”). 
Notwithstanding the foregoing, the Board of Directors of the Company
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Stock of
the Company.

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights pursuant to
Section 11(a)(ii) 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 Section 24(a)(i) Exchange Ratio or the Section 24(a)(ii) Exchange Ratio, as
applicable; provided, however, that the holder of a Right
exchanged pursuant to this Section 24 shall continue to have the right to
purchase securities or other property of the Principal Party following a
Section 13 Event that has occurred or may thereafter

 34
 

occur.  The Company shall promptly give notice of any
such exchange in accordance with Section 26 hereof and shall promptly mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. 
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 effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.

(c)                                  In
any exchange pursuant to this Section 24, the Company, at its option, may
substitute Preferred Stock (or Preferred Stock Equivalent, as such term is defined
in Section 11(b) hereof) for Common Stock of the Company exchangeable for
Rights, at the initial rate of one ten-thousandth of a share of Preferred Stock
(or Preferred Stock Equivalent) for each share of Common Stock of the Company,
as appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, 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 or Preferred Stock (or Preferred Stock Equivalents) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take
all such action as may be necessary to authorize additional shares of Common
Stock of the Company or Preferred Stock (or Preferred Stock Equivalent) for
issuance upon exchange of the Rights.

(e)                                  The
Company shall not be required to issue fractions of Common Stock of the Company
or to distribute certificates which evidence fractional shares of Common Stock
of the Company.  If the Company elects
not to issue such fractional shares of Common Stock of the Company, the Company
shall pay, in lieu of such fractional shares of Common Stock of the Company, to
the registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock of the Company would otherwise be issuable,
an amount in cash equal to the same fraction of the Fair Market Value of a
whole share of Common Stock of the Company. 
For the purposes of this paragraph (e), the Fair 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 (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.

Section 25.  Notice of Certain Events.

(a)                                  In
case the Company shall propose, at any time after the Distribution Date, (i) to
pay any dividend payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock
(other than a regular periodic 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

 35
 

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,
or to effect any sale, mortgage or other transfer (or to permit one or more of
its Subsidiaries to effect any sale, mortgage or other transfer), in one
transaction or a series of related transactions, of 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person (other than a Subsidiary of the Company in one or more
transactions each of which is not prohibited by the proviso at the end of the
first sentence of Section 11(n) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Stock of the Company payable in Common Stock of the
Company or to effect a subdivision, combination or consolidation of the Common
Stock of the Company (by reclassification or otherwise than by payment of
dividends in Common Stock of the Company) then in each such case, the Company
shall give to each holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Common Stock of the Company and/or 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 Common Stock of the
Company and/or Preferred Stock, whichever shall be the earlier; provided,
however, no such notice shall be required pursuant to this Section 25 as
a result of any Subsidiary of the Company effecting a consolidation or merger
with or into, or effecting a sale or other transfer of assets or earnings power
to, any other Subsidiary of the Company in a manner not inconsistent with the
provisions of this Agreement.

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

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

NeuroMetrix, Inc.

62 Fourth Avenue

Waltham, MA 02451

Facsimile No. (781)
890-1556

Attention: Chief
Financial Officer

 36
 

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 Right Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, by facsimile transmission or by nationally-recognized overnight
courier addressed (until another address is filed in writing with the Company)
as follows:

American Stock Transfer
& Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile No. (718)
921-8334

Attention:  Corporate Trust Department

Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of any Right
Certificate (or, prior to the Distribution Date, to the holder of any
certificate 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 27.  Supplements and Amendments.  Prior to the occurrence of a Section
11(a)(ii) Event, the Company and the Rights Agent shall, if the Board of
Directors of the Company so directs, supplement or amend any provision of this
Agreement as the Board of Directors of 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 occurrence of a Section 11(a)(ii) Event, the Company
and the Rights Agent shall, if the Board of Directors of the Company so
directs, supplement or amend this Agreement without the approval of any holder
of Right 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 hereof in any manner
which the Board of Directors of the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or any Affiliate or Associate of
an Acquiring Person); provided, however, that from and after the
occurrence of a Section 11(a)(ii) Event this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person). 
Without limiting
the foregoing, the Company may at any time prior to the occurrence of a Section
11(a)(ii) Event amend this Agreement to lower the threshold set forth in
Section 1(a) to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding Common Stock of the Company then known by
the Company to be Beneficially Owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Stock of the Company
for or pursuant to the terms of any such plan) and (ii) 10%.  Upon the delivery of such certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment,
and any failure of the Rights Agent to so execute such supplement or

 37
 

amendment shall not affect the validity of the actions
taken by the Board of Directors of the Company pursuant to this Section
27.  Prior to the occurrence of a Section
11(a)(ii) Event, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock of the
Company.  Notwithstanding any other
provision hereof, the Rights Agent’s consent must be obtained regarding any
amendment or supplement pursuant to this Section 27 which alters the
Rights Agent’s rights or duties.

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

Section 29.  Determinations and Actions by the Board of
Directors.  The Board of Directors of
the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations and computations 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 of Directors 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 any member of
the Board of Directors to any liability to the holders of the Rights or to any
other person.

Section 30.  Benefits of this Agreement.  Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, 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 Right 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 of Directors of the Company determines in its good faith judgment that
severing the invalid language from the Agreement would adversely affect the
purpose or effect of the Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the Close of
Business on the tenth day following the date of such determination by the Board
of Directors.

Section 32.  Governing Law.  This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware

 38
 

and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State.  The courts of the State of Delaware and of
the United States of America located in the State of Delaware (the “Delaware
Courts”) shall have exclusive jurisdiction over any litigation arising out of
or relating to this Agreement and the transactions contemplated hereby, and any
Person commencing or otherwise involved in any such litigation shall waive any
objection to the laying of venue of such litigation in the Delaware Courts and
shall not plead or claim in any Delaware Court that such litigation brought
therein has been brought in an inconvenient forum.

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.

Section 35.  Force Majeure.  Notwithstanding anything to the contrary
contained herein, neither the Company nor the Rights Agent shall be liable for
any delay or failure in performance resulting directly from any act or event
beyond its reasonable control and without the fault or gross negligence of the
delayed or non-performing party that causes a sudden, substantial or widespread
disruption in business activities, including, without limitation, fire, flood,
natural disaster or act of God, strike or other industrial disturbance, war
(declared or undeclared), embargo, blockade, legal restriction, riot,
insurrection, act of terrorism, disruption in transportation, communications,
electric power or other utilities, or other vital infrastructure or any means
of disrupting or damaging internet or other computer networks or facilities
(each, a “Force Majeure Condition”); provided, that such delayed
or non-performing party shall use reasonable commercial efforts to resume
performance as soon as practicable.  If
any Force Majeure Condition occurs, the party delayed or unable to perform
shall give immediate written notice to the other party, stating the nature of
the Force Majeure Condition and any action being taken to avoid or minimize its
effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 39

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

 

	
  ATTEST:

  	
   

  	
   

  	
  NEUROMETRIX, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ W. Bradford Smith

  	
   

  	
   

  	
  By: 

  	
  /s/ Shai N. Gozani

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  W. Bradford Smith

  	
   

  	
   

  	
   

  	
  Name: 

  	
  Shai N. Gozani, M.D., Ph.D.

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer and President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
  AMERICAN STOCK TRANSFER & TRUST

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  COMPANY, as Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Susan Sibler

  	
   

  	
   

  	
  By: 

  	
  /s/ Herbert J. Lemmer

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Susan Sibler

  	
   

  	
   

  	
   

  	
  Name: 

  	
  Herbert J. Lemmer

  	
   

  
	
   

  	
  Title

  	
  Assistant Secretary

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
														

 

Exhibit
A

CERTIFICATE OF DESIGNATIONS

of

SERIES A JUNIOR PARTICIPATING CUMULATIVE

PREFERRED STOCK

of

NEUROMETRIX, INC.

Section 1.                                            Designation
and Amount.  The shares of such
series shall be designated as “Series A Junior Participating Cumulative
Preferred Stock” (the “Series A Preferred Stock”), and the number of shares
initially constituting such series shall be 25,000; provided, however,
that if more than a total of 25,000 shares of Series A Preferred Stock shall be
issuable upon the exercise of Rights (the “Rights”) issued pursuant to the
Shareholder Rights Agreement dated as of March 7, 2007, between the Corporation
and American Stock Transfer & Trust Company, as Rights Agent (the “Rights
Agreement”), the Board of Directors of the Corporation, pursuant to Section
151(g) of the General Corporation Law of the State of Delaware, may direct by
resolution or resolutions that a certificate be properly executed,
acknowledged, filed and recorded, in accordance with the provisions of Section
103 thereof, providing for the total number of shares of Series A Preferred
Stock authorized to be issued to be increased (to the extent that the
Certificate of Incorporation then permits) to the largest number of whole
shares (rounded up to the nearest whole number) issuable upon exercise of such
Rights.

Section 2.                                            Dividends
and Distributions.

(A)                              (i)                                     Subject
to the rights of the holders of any shares of any series of preferred stock (or
any similar stock) ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A Preferred Stock,
in preference to the holders of shares of common stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provisions for adjustment hereinafter set forth,
10,000 times the aggregate per share amount of all cash dividends, and 10,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
common stock or a subdivision of the outstanding shares of common stock (by
reclassification or otherwise), declared on the common stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock.  The multiple of cash and non-cash dividends
declared on the common stock to which holders of the Series A Preferred Stock
are entitled, which shall be 10,000 initially but which shall be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the “Dividend
Multiple.”  In the event the Corporation
shall at any time after March 7, 2007 (the “Rights Declaration Date”) (i)
declare or pay any dividend on common stock 

payable in shares of
common stock, or (ii) effect a subdivision or combination or consolidation
of the outstanding shares of common stock (by reclassification or otherwise
than by payment of a dividend in shares of common stock) into a greater or lesser
number of shares of common stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive
shall be the Dividend Multiple applicable immediately prior to such event
multiplied by a fraction, the numerator of which is the number of shares of
common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.

(ii)                                  Notwithstanding
anything else contained in this paragraph (A), the Corporation shall, out of
funds legally available for that purpose, declare a dividend or distribution on
the Series A Preferred Stock as provided in this paragraph (A) immediately
after it declares a dividend or distribution on the common stock (other than a
dividend payable in shares of common stock); provided that, in the event no
dividend or distribution shall have been declared on the common stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.

(B)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series A Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix in accordance with applicable law a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than such number of days prior to the date fixed for the payment thereof as may
be allowed by applicable law.

Section 3.  Voting
Rights.  In addition to any other
voting rights required by law, the holders of shares of Series A Preferred
Stock shall have the following voting rights:

(A)                              Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 10,000 votes on all matters
submitted to a vote of the stockholders of the Corporation.  The number of votes which a holder of a share
of Series A Preferred Stock is entitled to cast, which shall initially be
10,000 but which may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the “Vote Multiple.” 
In the event the Corporation shall at any time after the Rights
Declaration Date 

 2
 

(i) declare or pay
any dividend on common stock payable in shares of common stock, or (ii) effect
a subdivision or combination or consolidation of the outstanding shares of
common stock (by reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares of common
stock, then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series A Preferred Stock shall be entitled shall be the Vote Multiple
immediately prior to such event multiplied by a fraction, the numerator of
which is the number of shares of common stock outstanding immediately after
such event and the denominator of which is the number of shares of common stock
that were outstanding immediately prior to such event.

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

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

Section 4.  Certain Restrictions.

(A)                              Whenever
dividends or distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation 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 stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;

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

(iii)                               except
as permitted in subsection 4(A)(iv) below, redeem, purchase or otherwise
acquire for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv)                              purchase
or otherwise acquire for consideration any shares of Series A Preferred Stock,
or any shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by publication
(as determined by the Board of 

 3
 

Directors) to all holders
of such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective series or
classes.

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

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

Section 6. 
Liquidation, Dissolution or Winding Up.  Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made (x) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $10,000.00 per share
or (2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 10,000 times the aggregate amount to be
distributed per share to holders of common stock, or (y) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.  In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on
common stock payable in shares of common stock, or (ii) effect a subdivision or
combination or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in shares of common
stock) into a greater or lesser number of shares of common stock, then in each
such case the aggregate amount per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (x)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately prior to
such event.

Neither the consolidation of nor merging of the
Corporation with or into any other corporation or corporations, nor the sale or
other transfer of all or substantially all of the assets of the Corporation,
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6.

 4
 

Section 7. 
Consolidation, Merger, etc. 
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of common stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series A Preferred Stock 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 10,000 times
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
common stock is changed or exchanged, plus accrued and unpaid dividends, if
any, payable with respect to the Series A Preferred Stock.  In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on
common stock payable in shares of common stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of common
stock (by reclassification or otherwise than by payment of a dividend in shares
of common stock) into a greater or lesser number of shares of common stock,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of common stock outstanding immediately after such event
and the denominator of which is the number of shares of common stock that were
outstanding immediately prior to such event.

Section 8. 
Redemption.  The shares of
Series A Preferred Stock shall not be redeemable; provided, however,
that the foregoing shall not limit the ability of the Corporation to purchase
or otherwise deal in such shares to the extent otherwise permitted hereby and
by law.

Section 9.  Ranking.  Unless otherwise expressly provided in the
Certificate of Incorporation or a Certificate of Designations relating to any
other series of preferred stock of the Corporation, the Series A Preferred
Stock shall rank junior to every other series of the Corporation’s preferred
stock previously or hereafter authorized, as to the payment of dividends and
the distribution of assets on liquidation, dissolution or winding up and shall
rank senior to the common stock.

Section 10.  Amendment.  The Certificate of Incorporation and this
Certificate of Designations shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.

Section 11.  Fractional
Shares.  Series A Preferred Stock may
be issued in whole shares or in any fraction of a share that is one
ten-thousandth (1/10,000th) of a share or any integral multiple of such
fraction, which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series
A Preferred Stock.  In lieu of fractional
shares, the Corporation may elect to make a cash payment as provided in the
Rights Agreement for fractions of a share other than one ten-thousandth
(1/10,000th) of a share or any integral multiple thereof.

 5
 

Exhibit
B

FORM OF RIGHT
CERTIFICATE

Certificate No. R-          Rights

NOT EXERCISABLE AFTER
MARCH 8, 2017 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF NEUROMETRIX, INC., AT $0.01 PER RIGHT, ON THE TERMS SET FORTH IN THE
SHAREHOLDER RIGHTS AGREEMENT BETWEEN NEUROMETRIX, INC. AND AMERICAN STOCK
TRANSFER & TRUST COMPANY, AS RIGHTS AGENT, DATED AS OF MARCH 7, 2007 (THE “RIGHTS
AGREEMENT”).  UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE 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.

Right Certificate

NEUROMETRIX, INC.

This certifies that                       ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Shareholder Rights Agreement dated as of March
7, 2007 (the “Rights Agreement”) between NeuroMetrix, Inc. (the “Company”) and
American Stock Transfer & Trust Company, as Rights Agent (the “Rights Agent”),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to the close of business on
March 8, 2017 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one ten-thousandth of a fully paid,
non-assessable share of the Series A Junior Participating Cumulative Preferred
Stock (the “Preferred Stock”) of the Company, at a purchase price of $           
per one ten-thousandth of a share (the “Exercise Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and
the related Certificate duly executed. 
The number of Rights evidenced by this Right Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and
the Exercise Price per share set forth above, are the number and Exercise Price
as of              ,
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 Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person or Associate or Affiliate thereof, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a Person who, after such
transfer, became an Acquiring Person or an Affiliate or Associate of an 

 6
 

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

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

This Right 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 Right 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 principal office of the Company and the designated office of the Rights
Agent and are also available upon written request to the Company or the Rights
Agent.

This Right Certificate,
with or without other Right Certificates, upon surrender at the office or
offices of the Rights Agent designated for such purpose, may be exchanged for
another Right Certificate or 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 Right Certificate or
Certificates surrendered shall have entitled such holder to purchase.  If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Certificates for the number of whole Rights not exercised.  If this Right Certificate shall be exercised in
whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the
holder shall be entitled to receive this Right Certificate duly marked to
indicate that such exercise has occurred as set forth in the Rights Agreement.

Under certain circumstances,
subject to the provisions of the Rights Agreement, the Board of Directors of
the Company at its option may exchange all or any part of the Rights evidenced
by this Certificate for shares of the Company’s Common Stock or Preferred Stock
at an exchange ratio (subject to adjustment) specified in the Rights Agreement.

Subject to the provisions
of the Rights Agreement, the Rights evidenced by this Certificate may be
redeemed by the Board of Directors of the Company at its option at a redemption
price of $0.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors).

The Company is not
obligated to issue fractional shares of stock upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one ten-thousandth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts).  If the Company elects not to issue such
fractional shares, in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.

No holder of this Right
Certificate, as such, shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock, Common Stock or
any other 

 7
 

securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
the Rights Agreement.

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

WITNESS the facsimile
signature of the proper officers of the Company as a document under corporate
seal.

	
  Attested:

  	
   

  	
  NEUROMETRIX,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  [Secretary or
  Assistant Secretary]

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title: 

  	
  [Chairman, Vice Chairman,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  President or Vice President]

  	
   

  	
   

  

 

	
  Countersigned:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN STOCK
  TRANSFER

  	
   

  	
   

  	
   

  	
   

  
	
  & TRUST
  COMPANY

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  

 

 8

[Form
of Reverse Side of Right Certificate]

FORM
OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate.)

FOR VALUE RECEIVED                                
hereby sells, assigns and transfers unto                                     
(Please print name and address of transferee)                            
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint                        
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.

	
  Dated: 

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed: 

  	
   

  	
   

  	
   

  	
   

  
											

 

CERTIFICATE

The undersigned hereby certifies
by checking the appropriate boxes that:

(1)           the Rights evidenced by this Right
Certificate            are           
are not being 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, the undersigned           
did            did not
directly or indirectly acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of any such Person.

	
  Dated: 

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

NOTICE

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

 

FORM
OF ELECTION TO PURCHASE

(To
be executed if holder desires to

exercise the Right Certificate.)

To NEUROMETRIX, INC.:

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

Please insert social
security or other identifying taxpayer number: 

 

 

(Please print name and address)

If such number of Rights
shall not be all the Rights evidenced by this Right Certificate or if the
Rights are being exercised pursuant to Section 11(a)(ii) of the Rights
Agreement, a new Right Certificate for the balance of such Rights shall be
registered in the name of and delivered to:

Please insert social
security or other identifying taxpayer number: 

 

 

(Please print name and
address)

	
  Dated: 

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed: 

  	
   

  	
   

  	
   

  	
   

  
											

 

CERTIFICATE

The undersigned hereby
certifies by checking the appropriate boxes that:

(1)           the Rights evidenced by this Right
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 Person (as such terms are
defined in the Rights Agreement); and

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

	
  Dated: 

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

NOTICE

The signature to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.Exhibit 10.23

ACCESS AND SECURITY AGREEMENT

This ACCESS AND SECURITY
AGREEMENT (this “Agreement”) is made on November 17, 2006 by and between
Haynes International, Inc., a Delaware corporation (“Haynes”), and
Titanium Metals Corporation, a Delaware corporation (“TIMET”).

WHEREAS, Haynes has
excess capacity at its 4-High “Steckel” rolling mill located at its plant in
Kokomo, Indiana and desires to monetize such excess capacity;

WHEREAS, in furtherance
of its continuing operations and business objectives, TIMET requires the
services capable of being provided by Haynes and the use of the aforementioned
4-High “Steckel” rolling mill, and requires such services in such capacities,
for such duration and on such demand as, for all practical purposes, can only
be provided by Haynes and the use of the aforementioned 4-High “Steckel”
rolling mill;

WHEREAS, in furtherance
of its desire to utilize its excess capacity of the 4-High Mill, Haynes wishes
to make to TIMET the capacity commitments described herein and to agree to
supply TIMET with Titanium Conversion Services, as defined in and pursuant to
the terms and conditions of that certain Conversion Services Agreement of even
date herewith by and between TIMET and Haynes, the form of which is attached
hereto as Exhibit A (the “Conversion Agreement”);

WHEREAS, in order for
Haynes to make the commitment and agreements set forth in the Conversion
Agreement, Haynes must reserve and not fully utilize the capacity of the 4-High
Mill, and Haynes is willing and able to do so only if such excess capacity is
monetized such that Haynes does not suffer economic harm by reserving such
excess capacity for TIMET;

WHEREAS, TIMET has agreed
to monetize such excess capacity by paying the Fee (as defined below) to Haynes
in exchange for Haynes’ execution of the Conversion Agreement and performance
thereunder;

WHEREAS, Haynes
acknowledges that any delay in the performance of the Titanium Conversion
Services or any default by Haynes under the Transaction Documents (as defined
below) may cause TIMET irreparable harm and, therefore, Haynes has agreed to
provide to TIMET the rights and protections set forth in the Transaction
Documents; and

WHEREAS, TIMET
acknowledges that Haynes cannot reserve the excess capacity of the 4-High Mill
for the benefit of TIMET without TIMET’s monetization of such excess capacity
without causing Haynes irreparable harm, and that any failure of such
monetization, whether by reason of TIMET’s default under the Transaction
Documents or otherwise, may cause Haynes irreparable harm.

NOW, THEREFORE, in
consideration of the foregoing, the agreements, covenants, representations and
warranties of the parties set forth herein and in the other Transaction
Documents, and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, Haynes and TIMET agree as follows:

1.                                       Defined
Terms.  The following terms have the
indicated meanings, unless the context otherwise requires:

(a)                                  “Acceleration
Event” shall mean the exercise by TIMET of its rights under Section 5.3(a)
of the Conversion Agreement.

(b)                                 “Access
Period” has the meaning set forth in Section 4(a).

(c)                                  “Additional
Contracts” means all Contracts that relate or pertain both to (i) the Mill,
the Equipment, the Intellectual Property or the performance of the Titanium
Conversion Services and (ii) other assets or operations of Haynes.

(d)                                 “Agreement”
has the meaning set forth in the introduction hereto.

(e)                                  “Bankruptcy
Proceeding” means any case, action, proceeding, petition or filing,
voluntary or involuntary, under the Federal Bankruptcy Code or any similar
state or federal law now or hereafter in effect pertaining to bankruptcy,
reorganization, insolvency, composition, restructuring, dissolution,
liquidation, receivership, custodianship, or adjustment of debts.

(f)                                    
“Change in Control” has the meaning set forth in the Conversion
Agreement.

(g)                                 “Claims”
has the meaning set forth in Section 4(b)(ii).

(h)                                 “Code”
means the Uniform Commercial Code as in effect in the State of Indiana as of
the date of this Agreement.

(i)                                     “Collateral”
has the meaning set forth in Section 3(a).

(j)                                     “Conversion
Agreement” has the meaning set forth in the recitals hereto.

(k)                                  “Contract
Rights” means all rights of Haynes (including to payment) arising under
each Contract that relate or pertain only to the Mill, the Equipment, the
Intellectual Property for Titanium Conversion Services or the performance of
the Titanium Conversion Services.

(l)                                     “Contracts”
means all service agreements (including utility services and supply agreements),
permits and licenses, operating agreements, maintenance, training, operational
and procedural manuals, leases and contract rights, choses in action or causes
of action or claims in each case as to all of the foregoing with respect to the
Equipment, the Mill, the Intellectual Property or the performance of Titanium
Conversion Services, documents which evidence rights to Equipment, Intellectual
Property or any portion of the Mill, guaranty or warranty claims with respect
to Equipment, Intellectual Property or the Mill, and the Proceeds of all of the
foregoing, other than the Transaction Documents.

(m)                               “Debt
Obligations” means, collectively, (i) any outstanding principal
balance under the Option Note and any accrued and unpaid interest thereon, if
any; (ii) the entire

 2
 

unearned portion of the Fee; (iii) the
amount of any Liquidated Damages (as defined in the Conversion Agreement); (iv)
the amount of any Termination Fee (as defined in the Conversion Agreement); (v)
the amount of any Non-Compete Amendment Fee (as defined in the Conversion
Agreement); and (vi) any amounts owed by Haynes under Section 5.1 of
the Conversion Agreement.

(n)                                 “Default”
means any of the following events:

(i)                                     If TIMET fails at
any time to have a legal, valid, binding and enforceable first priority lien on
the Collateral or any portion thereof that is caused by reason of an act or
omission of Haynes (provided, however that a Permitted Encumbrance will not
cause or be deemed to cause a default hereunder);

(ii)                                  Violation of any of
the terms, obligations, covenants or conditions set forth in Sections 11(b) or
(c); or

(iii)                               The failure of Haynes to
pay when due any principal of or other amount due on the Debt Obligations,
which failure continues for five (5) days after the date such payment becomes
due;

(o)                                 “Equipment”
means all of the equipment located at the Mill of any kind, nature and
description, whether affixed to real property or not, as well as all additions
to, substitutions for, replacements of or accessions to any of the foregoing
items and all attachments, components, parts (including spare parts), and
accessories whether installed thereon or affixed thereto in each case to the
extent used in or related to the performance of the Titanium Conversion
Services, including but not limited to the equipment listed on Exhibit B
attached hereto, but excluding any equipment that may be temporarily located at
the Mill such as forklifts, golf carts, hand tools and other portable equipment
that is used in connection with the Mill and other assets of Haynes.

(p)                                 “Fee”
has the meaning set forth in Section 2(c).

(q)                                 “Haynes”
has the meaning set forth in the introduction hereto.

(r)                                    “Haynes
Bankruptcy Event” means any of the following events:  (i) Haynes consents to the filing of, or
commences or consents to the commencement of, any Bankruptcy Proceeding;
(ii) any Bankruptcy Proceeding shall have been filed against Haynes and
the same is not withdrawn, dismissed, canceled or terminated within ninety (90)
days of such filing; (iii) Haynes is adjudicated bankrupt or insolvent or
a petition for reorganization of it is granted; (iv) a receiver,
liquidator or trustee of it or of any of Haynes’ properties shall be appointed;
(v) Haynes shall make an assignment for the benefit of its creditors or
shall admit in writing the inability to pay its debts generally as they become
due; or (vi) Haynes otherwise institutes or causes to be instituted any
proceeding for its termination or dissolution.

(s)                                  “Intellectual
Property” means all now existing or hereafter acquired patents, trademarks,
copyrights, inventions, licenses, discoveries, processes, know-how, techniques,
trade secrets, designs, specifications and the like (regardless of whether such
items are now patented or registered, or registerable, or patentable in the
future), and all technical,

 3
 

engineering, or other information and
knowledge, production data and drawings, in each case to the extent used in,
necessary for or related to the operation of the Mill and the Equipment or the
performance of Titanium Conversion Services, including without limitation, all
items, rights and property defined as Intellectual Property under 11 U.S.C.
Section 101, as amended from time to time.

(t)                                    “Intellectual
Property for Titanium Conversion Services” means all Intellectual Property
that relates or pertains only to the Mill, the Equipment or the performance of
the Titanium Conversion Services.

(u)                                 “License”
has the meaning set forth in Section 5.

(v)                                 “Mill”
means the 4-High “Steckel” rolling mill located in Building R-55 on the Real
Estate, and all licenses, easements and appurtenances relating thereto,
wherever located on the Real Estate, and any easements necessary for access
thereto or necessary to deliver, store or ship materials thereto, and any
fixtures or equipment located at the Real Estate which are primarily related
to, and/or integral or primarily used in connection with the operation of the
Mill, consisting of all pumps, pipes, plumbing, cleaning, call and sprinkler
systems, fire extinguishing apparatuses and equipment, heating, ventilating,
plumbing, incinerating, electrical, air conditioning and air cooling equipment
and systems, pollution control equipment, security systems disposals, water,
gas, electrical, storm and sanitary sewer facilities, utility lines and equipment,
all water tanks, water supply, water power sites, fuel stations, fuel tanks,
fuel supply, and all other structures, together with  all accessions, appurtenances, additions,
replacements, betterments and substitutions for any of the foregoing.

(w)                               “Obligations”
means the Debt Obligations together with Haynes’ obligations under the
Transaction Documents.

(x)                                   “Operating
Assets” means the Mill, the Contract Rights, the Equipment, the
Intellectual Property for Titanium Conversion Services, the Real Estate and all
Proceeds thereof.

(y)                                 “Option”
has the meaning set forth in the Conversion Agreement.

(z)                                   “Option
Note” has the meaning set forth in the Conversion Agreement.

(aa)                            “Permitted
Encumbrances” means:

(i)                                     Liens in favor of
TIMET;

(ii)                                  Encumbrances consisting
of minor easements, zoning restrictions, or other restrictions on the use of
real property that do not (individually or in the aggregate) materially affect
the value of the Operating Assets or materially impair the ability of Haynes to
use the Operating Assets, and none of which is violated in any material respect
by existing or proposed structures or land use;

 4
 

(iii)                               Liens for taxes,
assessments, or other governmental charges which are not delinquent or which
are being contested in good faith and for which adequate reserves have been
established; and

(iv)                              Liens of mechanics,
materialmen, warehousemen, carriers, or other similar statutory liens securing
obligations that are not yet due and are incurred in the ordinary course of
business; and liens resulting from good faith deposits to secure payments of
workers’ compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
or contracts (other than for payment of indebtedness), or leases of any
Operating Assets made in the ordinary course of business.

(bb)                          “Person”
means any individual, corporation, limited or general partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government authority or other entity.

(cc)                            “Proceeds”
shall have the meaning provided it under Section 9-102(a)(65) of the Code and,
in any event, shall include, but not be limited to: (i) any and all proceeds of
any insurance, indemnity, warranty, or guaranty payable to Haynes from time to
time with respect to any of the Collateral; (ii) any and all payments (in any
form whatsoever) made or due and payable to Haynes from time to time in
connection with any requisition, confiscation, condemnation, seizure, or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau, or agency (or any Person acting under color of governmental
authority): and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

(dd)                          “Real
Estate” means the real property on which Building R-55 at Haynes’
operations on the south side of Defenbaugh Street in Kokomo, Indiana is located
including leasehold interests, together with the building and all other
improvements located thereon, the legal description for which is set forth on Exhibit C
hereto, and all licenses, easements and appurtenances relating thereto,
wherever located on such real property, and any fixtures or equipment located
at the Real Estate which are primarily related to, and/or integral or primarily
used in connection with the operation of the Real Estate, consisting of all
pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire
extinguishing apparatuses and equipment, heating, ventilating, plumbing,
incinerating, electrical, air conditioning and air cooling equipment and
systems, pollution control equipment, security systems disposals, water, gas,
electrical, storm and sanitary sewer facilities, utility lines and equipment,
all water tanks, water supply, water power sites, fuel stations, fuel tanks,
fuel supply, and all other structures, together with all accessions,
appurtenances, additions, replacements, betterments and substitutions for any
of the foregoing, and any easements necessary for access thereto or to deliver,
store or ship materials thereto.

(ee)                            “Right
of Access” has the meaning set forth in Section 4(a).

(ff)                                “Secured
Facility Event” means that a Secured Lender has declared Haynes to be in
default of Haynes’ obligations to such Secured Lender, the Secured Lender has
accelerated all such obligations to such Secured Lender, and Haynes has (i)
failed to cure such

 5
 

default such that such obligations are no
longer accelerated, or (ii) provide adequate assurance reasonably acceptable to
TIMET of Haynes’ continuing ability to perform under the terms of the
Transaction Documents.

(gg)                          “Secured
Lender” means Wachovia Capital Finance Corporation (Central), an Illinois
corporation, as agent, for itself and the parties from time to time to the loan
agreement as lenders, collectively, together with their respective successors
and assigns, herein, or any lender or lenders from time to time hereafter
holding instruments representing Haynes’ indebtedness, the obligations under
which are secured by a pledge of substantially all of Haynes’ assets, other
than the indebtedness created by the Conversion Agreement.

(hh)                          “Titanium
Conversion Services” has the meaning set forth in the Conversion Agreement.

(ii)                                  “TIMET”
has the meaning set forth in the introduction hereto.

(jj)                                  “TIMET
Bankruptcy Event” means any of the following events:  (i) TIMET consents to the filing of, or
commences or consents to the commencement of, any Bankruptcy Proceeding;
(ii) any Bankruptcy Proceeding shall have been filed against TIMET and the
same is not withdrawn, dismissed, canceled or terminated within ninety (90)
days of such filing; (iii) TIMET is adjudicated bankrupt or insolvent or a
petition for reorganization of it is granted; (iv) a receiver, liquidator
or trustee of it or of any of TIMET’s properties shall be appointed;
(v) TIMET shall make an assignment for the benefit of its creditors or
shall admit in writing the inability to pay its debts generally as they become
due; or (vi) TIMET otherwise institutes or causes to be instituted any
proceeding for its termination or dissolution.

(kk)                            “Transaction
Documents” means, collectively, the Conversion Agreement, the Option Note,
this Agreement and any other document or instrument delivered in connection
herewith or therewith.

2.                                       Capacity
Commitments, Termination of Standstill Agreement, Fee and Option Note.

(a)                                  Capacity
Commitments.  Haynes agrees:  (i) to reserve for the benefit of and
dedicate to TIMET or its designee(s) adequate capacity at the Mill and the
other Operating Assets necessary to provide the Titanium Conversion Services in
accordance with and subject to all terms of the Conversion Agreement, including
the Maximum Monthly Volume and the Maximum Annual Volume (as each such term is defined
in the Conversion Agreement); and (ii) not to engage in any activity or
transaction that is prohibited by Section 11.1 of the Conversion Agreement (as
such term may be amended by the Non-Compete Amendment (as defined in the
Conversion Agreement)).

(b)                                 Termination
of Standstill Agreement.  Effective
as of the date hereof, the provisions of the carryover paragraph on pages 3 and
4 of the Confidentiality Agreement, dated November 21, 2005, between TIMET and
Houlihan Lokey Howard & Zukin Capital, Inc. are hereby terminated and of no
further force or effect.

 6
 

(c)                                  Fee.  As consideration for (i) the capacity
reservations and commitments described in Section 2(a) above and in the
Conversion Agreement, (ii) the termination of the standstill provisions as
described in Section 2(b) above and (iii) the Option to order additional
Conversion Services granted to TIMET pursuant to Section 2.1(b) of the
Conversion Agreement, concurrently herewith, TIMET agrees to pay to Haynes an
advance fee of $50,000,000 (the “Fee”) in immediately payable U.S. funds
in accordance with the wiring instructions provided by Haynes.  The Fee shall be deemed earned by Haynes
during the term of the Conversion Agreement in equal amounts on the first twenty
(20) anniversaries of the date hereof. 
Upon being deemed earned as set forth in the preceding sentence, the
earned portion of the Fee shall be nonrefundable to TIMET.  In the event that a Haynes Successor (as
defined in the Conversion Agreement) exercises the option with respect to the
Non-Compete Amendment (as defined in the Conversion Agreement), the unearned
portion of the Fee shall be reduced by the Non-Compete Amendment Fee (as
defined in the Conversion Agreement), and the amortization of the remaining
unearned portion of the Fee shall be adjusted based upon the remaining
anniversaries of this Agreement. 
Notwithstanding the foregoing, the Fee shall not be deemed earned by
Haynes (i) from and after the time that TIMET has exercised any of its rights
under Section 8(b) or (ii) during (but not before or after) an Access Period if
for any reason TIMET does not have in all material respects all of its rights
set forth in Section 4.  Haynes
shall be required to repay the unearned portion of the Fee only in accordance
with the requirements of the Transaction Documents.

(d)                                 Option
Note.  Upon the exercise of the
Option under the Conversion Agreement, under the terms and conditions set forth
in the Conversion Agreement, Haynes will execute the Option Note in the form
attached to the Conversion Agreement as Exhibit B.

3.                                       Grant
of Lien and Security Interests.

(a)                                  First
Priority Lien Interest.  As security
for the Obligations, Haynes hereby grants to TIMET a continuing first priority
security interest in the Operating Assets, whether now owned or hereafter
acquired by Haynes, or in which Haynes now has or at any time in the future may
acquire any right, title or interest (the “Collateral”).  On or prior to the date hereof, (i) any
applicable loan documents have been amended to reflect the first priority of
the lien created hereunder and are otherwise in the form approved by TIMET, and
(ii) any liens superior to the first priority lien created hereunder have been
released in forms reasonably acceptable to TIMET, and such documents will be
delivered to TIMET within three (3) business day from the date hereof.

(b)                                 Financing
Statements.  Haynes hereby authorizes
TIMET to file one or more financing statements, and amendments thereto,
relating to the Collateral.

(c)                                  Non-disturbance.  On or prior to the date hereof, Haynes and
any mortgagee or other party holding an interest in the Real Estate shall
execute a non-disturbance agreement or similar agreement in favor of TIMET in
form reasonably acceptable to TIMET, and such documents will be delivered to
TIMET within three (3) business day from the date hereof.

 7
 

4.                                       Right
of Access.

(a)                                  General.  Upon the occurrence of a Haynes Bankruptcy
Event or a Secured Facility Event, TIMET or its agreed-upon designee(s) shall
have a right, but not the obligation, to use and occupy the Operating Assets to
perform any or all of the Titanium Conversion Services (the “Right of Access”),
subject to the Maximum Monthly Volume and the Maximum Annual Volume, for a
period commencing upon the Haynes Bankruptcy Event or Secured Facility Event,
as the case may be, and ending at the earlier of (i) the expiration of the term
of the Conversion Agreement or (ii) the termination of the Right of Access
pursuant to Section 4(d), subject to reinstatement as set forth therein
(the “Access Period”).  TIMET may
invoke the Right of Access by delivering written notice to Haynes indicating
TIMET’s intention to invoke the Right of Access.  TIMET shall have no right to sell, transfer,
or dispose of the Operating Assets as part of the Right of Access.

(b)                                 TIMET’s
Obligations. If TIMET invokes the Right of Access for itself or its
designee(s), TIMET and its designee shall:

(i)                                     Use reasonable
care in the custody and preservation of the Operating Assets;

(ii)                                  Indemnify, defend and
hold Haynes and its officers, directors, employees and agents harmless from any
and all costs, expenses (including reasonable attorneys’ fees), losses,
damages, liabilities or claims (collectively, “Claims”) with respect to
injury to or death of persons occurring on the Real Estate to the extent
arising out of the willful misconduct or gross negligence of TIMET or its
officers, directors, employees or agents to the extent such Claims arise or
accrue during an Access Period; and

(iii)                               Subject to TIMET’s or
its designee’s right to use and occupy the Operating Assets during an Access
Period, afford Haynes any access requested by Haynes to the Operating Assets
provided that such access does not in any material way interfere with the
performance of the Titanium Conversion Services.

(c)                                  If
TIMET invokes its Right of Access for itself or its designee(s):

(i)                                     Haynes shall use
commercially-reasonable efforts to continue to employ those of its employees
that TIMET determines are necessary or appropriate to perform the Titanium
Conversion Services;

(ii)                                  If TIMET is required
to retain personnel to perform Titanium Conversion Services or incurs any other
costs or expenses to perform Haynes’ obligations under the Conversion
Agreement, all such personnel and other costs and expenses shall be credited
against the payments due to Haynes under the Conversion Agreement; provided,
however, that such credits in a single week may not exceed the weekly average
cost to Haynes in the prior fiscal year for similar personnel and cost and
expenses, and any such excess shall be the sole responsibility of TIMET.

 8
 

(iii)                               Haynes shall indemnify,
defend and hold TIMET, its designee(s) and their respective officers,
directors, employees and agents harmless from any and all Claims to the extent
such Claims (1) arise or accrue prior to the commencement of an Access Period
or (2) arise or accrue during an Access Period and are not covered by Section
4(b)(ii).

(d)                                 Right
to Terminate.  TIMET shall have the
absolute right to terminate the Right of Access upon twenty (20) days’ written notice
to Haynes.  Haynes shall have the right
to cure a Haynes Bankruptcy Event or Secured Facility Event the occurrence of
which gave rise to the Right of Access. 
Upon the completion of such cure and Haynes’ providing notice thereof to
TIMET along with evidence that such Haynes Bankruptcy Event or Secured Facility
Event, as the case may be, has been cured in form reasonably satisfactory to
TIMET, the Right of Access shall be deemed terminated.  Notwithstanding the foregoing, TIMET shall
have the absolute right to reinvoke the Right of Access at any time after the
occurrence of a subsequent Haynes Bankruptcy Event or Secured Facility Event
giving rise to the Right of Access by delivering written notice to Haynes
indicating TIMET’s intention to reinvoke the Right of Access.

(e)                                  Irreparable
Harm; Limitation of Notice.  HAYNES
ACKNOWLEDGE THAT TIMET MAY SUFFER IRREPARABLE HARM IF TIMET INVOKES THE RIGHT
OF ACCESS AND HAYNES FAILS TO COOPERATE WITH TIMET IN ALLOWING TIMET TO
EXERCISE THE RIGHT OF ACCESS UNDER THIS AGREEMENT OR IF TIMET IS OTHERWISE
PREVENTED FROM EXERCISING SUCH RIGHT. 
ACCORDINGLY, PROVIDED THAT HAYNES RECEIVES AT LEAST FORTY-EIGHT (48)
HOURS’ ACTUAL NOTICE OF ANY REQUEST FOR HEARINGS IN CONNECTION WITH PROCEEDINGS
INSTITUTED BY TIMET, HAYNES WAIVES, TO THE FULLEST EXTENT POSSIBLE UNDER
APPLICABLE LAW, THE RIGHT TO NOTICE IN EXCESS OF FORTY-EIGHT (48) HOURS IN
CONNECTION WITH ANY JUDICIAL PROCEEDINGS INSTITUTED BY TIMET TO ENFORCE THE
RIGHT OF ACCESS.

5.                                       License.  Haynes hereby grants TIMET a non-exclusive
worldwide, irrevocable, fully paid, and in the event TIMET exercises its rights
under Section 8(b) hereof, fully transferable, right and license to use any
Intellectual Property necessary or helpful for the performance of the Titanium
Conversion Services for use by TIMET or a sublicensee (the “License”).  TIMET’s right to use the License shall
include the right to grant one or more third parties sublicenses for the
performance of the Titanium Conversion Services, provided, however, that any
sublicensee must satisfy the terms of this Agreement, including
Section 15, and sublicensing will have no effect on TIMET’s obligations
under this Agreement.

(a)                                  Right
to Use License.  Although the License
is being granted to TIMET as of the date set forth above, TIMET agrees that,
except as set forth under Section 5(e) below, neither it nor its sublicensees
will utilize the License unless TIMET invokes the Right to Access and then
TIMET and its sublicensee will only use the License (i) during an Access Period
and (ii) in connection with the performance of the Titanium Conversion
Services using the Operating Assets.

(b)                                 No
Royalty.  For all purposes, Haynes
has been fully paid for the License and other rights granted to TIMET under
this Agreement (except as otherwise provided in this

 9
 

Agreement) and no royalties, fees, payments,
charges or other consideration shall be due from TIMET on account of the
License or this Agreement or TIMET’s (or sublicensee’s) use of the License or
other rights granted pursuant to this Agreement.  The above is not intended to relieve TIMET in
any way of payment obligations under the Conversion Agreement.

(c)                                  Protection
of Ownership.  TIMET and its
sublicensees, if any, shall treat and preserve the Intellectual Property in
accordance with the same practices employed by TIMET to safeguard its own
intellectual property against unauthorized use and disclosure and, except as
set forth under Section 5(e) below, will only use such information, data and
trade secrets during an Access Period in connection with producing the Titanium
Conversion Services.  The foregoing
obligations of TIMET shall not be applicable to information that is now or
becomes hereafter available to the public through no action, conduct, admission
or fault of TIMET.  Except as set forth
under Section 5(e) below, without waiving any rights under the Conversion
Agreement, which rights, if any, are expressly reserved, no such sub-licensees
shall have any rights respecting the continued use of intellectual property
upon termination of an Access Period. 
The provisions of this Section 5(c) shall survive termination of
this Agreement.

(d)                                 Sale
of Intellectual Property.  Nothing
contained herein shall prevent Haynes from marketing and selling the
Intellectual Property subject to all rights of TIMET granted under this
Section 5.

(e)                                  Transferability.  In the event that TIMET exercises its rights
under Section 8(b) hereof, TIMET shall be permitted to transfer the
License in connection with any sale, transfer or other disposition of the Operating
Assets.  Each transferee of the License
shall obtain all of TIMET’s rights to the License hereunder.  Each transferee shall be required to use the
License in connection with its use of the Operating Assets, and any further
transfer or assignment of the License may occur only in connection with a
further sale, transfer or other disposition of the Operating Assets.

6.                                       Protection
of Performance.  TIMET shall have the
unlimited right to, among other things, enter into discussions, negotiations,
and agreements regarding the performance of the Titanium Conversion Services by
any potential alternative supplier(s), including without limitation, any
current or former agents, consultants, directors, employees, or officers of
Haynes so long as such parties are not subject to restrictions under a
noncompetition agreement.

7.                                       Rights
of TIMET; Limitations on TIMET’s Obligations.  Unless TIMET exercises the Right of Access,
in which case TIMET shall have the obligations as are expressly provided in
this Agreement, except as provided by applicable law, TIMET shall not have any
obligation or liability by reason of or arising out of this Agreement.  In no event shall TIMET be required or
obligated in any manner to perform or fulfill any of the obligations of Haynes
under any of the Transaction Documents.

8.                                       TIMET’s
Remedies.

(a)                                  Right
of Access.  Upon a Haynes Bankruptcy
Event or a Secured Facility Event, TIMET may exercise the Right of Access only
on the terms and conditions set forth of

 10
 

Section 4.  Further, in connection with TIMET’s rights
and remedies under this Agreement and the other Transaction Documents:

(i)                                     Haynes waives any
right it may have to require TIMET to foreclose its security interests and
liens and/or reduce the Debt Obligations to a monetary sum;

(ii)                                  If TIMET exercises
the Right of Access, TIMET’s use and occupancy of the Operating Assets will not
be deemed to be acceptance of such assets in satisfaction of the Debt
Obligations; and

(iii)                               Except as otherwise
provided herein, all of TIMET’s rights and remedies under this Agreement are
cumulative and not exclusive of any rights and remedies under any other
agreement or under applicable law; provided, however, that if TIMET exercises
its rights under Section 8(b) hereof, it shall no longer be permitted to
exercise the, or must terminate any current, Right of Access.

(b)                                 Right
to Repayment of the Debt Obligations and Foreclose on the Collateral.

(i)                                     In addition to the
remedies set forth in Section 8(a), upon a Default or an Acceleration
Event, TIMET, at TIMET’s option, may declare due and payable the Debt
Obligations, without notice, demand or presentment, all of which are hereby
waived, and upon such declaration, the same shall become and shall be
immediately due and payable, and TIMET shall have the right to foreclose on the
Collateral or otherwise enforce all liens or security interests securing
payment of the Debt Obligations, or any part thereof, and offset against the
Debt Obligations any sum or sums owed by TIMET to Haynes and exercise any
powers and any and all other remedies permitted by Indiana law or provided in
this Agreement or in any other Transaction Documents.  Failure of TIMET to exercise the options set
forth in this Section 8(b) shall not constitute a waiver of the right to
exercise the same upon the occurrence of a subsequent Default or Acceleration
Event.  Haynes acknowledges that the
power of sale granted by this Agreement may be exercised by TIMET without prior
judicial hearing.

(ii)                                  Upon a Default or an
Acceleration Event, and provided that any access under a Right of Access is not
continuing, TIMET is authorized prior or subsequent to the institution of any
foreclosure proceedings by private power of sale or otherwise to enter upon the
Real Estate, or any part thereof, to take possession of the Operating Assets
and of all books, records and accounts relating exclusively to the Operating
Assets, to have access at any reasonable time upon TIMET’s request to review or
make copies or facsimiles of any books, records and accounts that relate in
part to the Operating Assets and in part to any other assets of Haynes, and to
exercise without interference from Haynes any and all rights which Haynes has
with respect to the management, possession, operation, protection or
preservation of the Operating Assets, including the right to operate the same
for the account of Haynes and to deduct from the proceeds thereof all costs,
expenses and liabilities of every character incurred by TIMET in collecting
such proceeds and in managing, operating, maintaining, protecting or

 11
 

preserving the Operating Assets and to apply the remainder of such
proceeds on the Debt Obligations secured hereby in such manner as TIMET may
elect.  All such costs, expenses and
liabilities incurred by TIMET in collecting such proceeds and in managing,
operating, maintaining, protecting or preserving the Operating Assets, if not
paid out of proceeds as hereinabove provided, shall constitute a demand
obligation owing by Haynes and shall bear interest from the date that is ten
(10) days after TIMET notifies Haynes in writing of expenditure until the date
paid at the maximum lawful interest rate under applicable law, all of which
shall constitute a portion of the Debt Obligations.  If necessary to obtain the possession
provided for above, TIMET may invoke any and all legal remedies to dispossess
Haynes, including specifically one or more actions for forcible entry and
detainer, trespass to try title and restitution.  IN CONNECTION WITH ANY ACTION TAKEN BY TIMET
PURSUANT TO THIS SECTION 8(b)(ii), TIMET SHALL NOT BE LIABLE FOR ANY LOSS
SUSTAINED BY HAYNES RESULTING FROM ANY FAILURE TO OPERATE THE OPERATING ASSETS,
OR ANY PART THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF TIMET IN MANAGING THE
OPERATING ASSETS (REGARDLESS OF WHETHER SUCH LOSS IS CAUSED BY THE NEGLIGENCE
OF TIMET OR ANY STRICT LIABILITY) UNLESS SUCH LOSS IS CAUSED BY THE GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD, BAD FAITH OR ILLEGAL ACTION OF TIMET,
NOR SHALL TIMET BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY
UNDER ANY AGREEMENT RELATING TO THE OPERATING ASSETS OR ANY PART THEREOF OR
UNDER OR BY REASON OF THIS AGREEMENT OR THE EXERCISE OF RIGHTS OR REMEDIES
HEREUNDER.  HAYNES SHALL AND DOES HEREBY
AGREE TO INDEMNIFY AND DEFEND TIMET FOR, AND TO HOLD TIMET HARMLESS FROM, ANY
AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY TIMET UNDER
ANY SUCH AGREEMENT OR UNDER OR BY REASON OF THIS AGREEMENT OR THE EXERCISE OF
RIGHTS OR REMEDIES HEREUNDER AND FROM ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER
WHICH MAY BE ASSERTED AGAINST TIMET BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS OR
AGREEMENTS CONTAINED IN ANY SUCH AGREEMENT, REGARDLESS OF WHETHER SUCH
LIABILITY, LOSS, DAMAGE, CLAIMS OR DEMANDS ARE THE RESULT OF THE NEGLIGENCE OF
TIMET OR ANY STRICT LIABILITY, UNLESS SUCH LOSS IS CAUSED BY THE GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD, BAD FAITH OR ILLEGAL ACTION OF
TIMET.  Should TIMET incur any such
liability, the amount thereof, including costs, expenses and reasonable
attorney’s fees, shall be secured hereby and Haynes shall reimburse TIMET
within ten (10) days after written demand therefor.  Nothing in this Section 8(b)(ii) shall impose
any duty, obligation or responsibility upon TIMET for the control, care,
management or repair of the Operating Assets, nor for the carrying out of any
of the terms and conditions of any such agreement; nor shall it operate to make
TIMET responsible or liable for any waste committed on the Operating Assets by
any parties or for any dangerous or defective condition of the Operating
Assets, OR FOR ANY NEGLIGENCE IN THE MANAGEMENT, UPKEEP, REPAIR OR CONTROL OF
THE

 12
 

OPERATING ASSETS RESULTING IN LOSS OR INJURY OR DEATH TO ANY LICENSEE,
EMPLOYEE OR STRANGER OR ANY STRICT LIABILITY. 
Haynes hereby assents to, ratifies and confirms any and all actions of
TIMET with respect to the Operating Assets taken under this Section 8(b)(ii),
other than any actions constituting TIMET’s gross negligence, willful misconduct,
fraud, bad faith or illegal action.  For
purposes of this paragraph, the term “TIMET” shall include the directors,
officers, employees, attorneys and agents of TIMET and any persons or entities
owned or controlled by, owning or controlling, or under common control or
affiliated with TIMET.

(iii)                               In addition to all other
remedies herein provided for, Haynes agrees that upon a Default or an
Acceleration Event, and provided that any access under a Right of Access is not
continuing, TIMET shall as a matter of right be entitled to the appointment of
a receiver or receivers for all or any part of the Operating Assets, whether
such receivership be incident to a proposed sale of such assets or otherwise,
and without regard to the value of the Operating Assets or the solvency of any
person or persons liable for the payment of the Debt Obligations secured
hereby, and Haynes does hereby consent to the appointment of such receiver or
receivers, waives any and all defenses to such appointment and agrees not to oppose
any application therefor by TIMET, but nothing herein is to be construed to
deprive TIMET of any other right, remedy or privilege it may now have under the
law to have a receiver appointed.  Any
money advanced by TIMET in connection with any such receivership shall be a
demand obligation owing by Haynes to TIMET and shall bear interest from the
date that is ten (10) days after written notice from TIMET after such
advancement by TIMET until the date paid at the maximum lawful interest rate
under applicable law, and all of which shall be a part of the Debt Obligations
and shall be secured by this Agreement and by any other instrument securing the
Debt Obligations.

(iv)                              TIMET shall have the
right to become the purchaser at any sale held by TIMET or any trustee or
substitute or successor or by any receiver or public officer, and in such event
TIMET shall have the right to credit upon the amount of the bid made therefor,
to the extent necessary to satisfy such bid, the Debt Obligations owing to
TIMET.

(v)                                 Upon a Default or an
Acceleration Event, TIMET may exercise its rights of enforcement with respect
to the Collateral under the Code, as amended, and in conjunction with, in
addition to or in substitution for those rights and remedies:

(1)                                  TIMET may enter upon
the Real Property to take possession of, assemble and collect the Collateral or
to render it unusable; and

(2)                                  written notice mailed
to Haynes as provided herein ten (10) days prior to the date of public sale of
the Collateral or prior to the date after which private sale of the Collateral
will be made shall constitute reasonable notice; and

 13

(3)                                  any
sale made pursuant to the provisions of this paragraph shall be deemed to have
been a public sale conducted in a commercially reasonable manner if held
contemporaneously with the sale of the Collateral under power of sale as
provided herein upon giving the same notice with respect to the sale of the
Collateral hereunder as is required for such sale of the Collateral under power
of sale; and

(4)                                  in
the event of a foreclosure sale, whether made by the TIMET or its designee,
successor or substitute under the terms hereof, or under judgment of a court,
the Collateral may, at the option of TIMET, be sold as a whole; and

(5)                                  it
shall not be necessary that TIMET take possession of the Collateral or any part
thereof prior to the time that any sale pursuant to the provisions of this
paragraph is conducted and it shall not be necessary that the Collateral or any
part thereof be present at the location of such sale; and

(6)                                  prior
to application of proceeds of disposition of the Collateral to the Debt
Obligations, such proceeds shall be applied to the reasonable expenses of
retaking, holding, preparing for sale or lease, selling, leasing and the like
and the reasonable attorney’s fees and legal expenses incurred by TIMET; and

(7)                                  any
and all statements of fact or other recitals made in any bill of sale or
assignment or other instrument evidencing any foreclosure sale hereunder as to
nonpayment of the indebtedness or as to the occurrence of any default, or as to
TIMET having declared all of such indebtedness to be due and payable, or as to
notice of time, place and terms of sale and of the properties to be sold having
been duly given, or as to any other act or thing having been duly done by
TIMET, shall be taken as prima facie evidence of the truth of the facts so stated
and recited; and

(8)                                  TIMET
may appoint or delegate any one or more persons as agent to perform any act or
acts necessary or incident to any sale held by TIMET, including the sending of
notices and the conduct of the sale, but in the name and on behalf of TIMET.

(vi)                              All
remedies herein expressly provided for are cumulative of any and all other
remedies existing at law or in equity and are cumulative of any and all other
remedies provided for in any other instrument securing the payment of the Debt
Obligations, or any part thereof, or otherwise benefiting TIMET, and TIMET
shall, in addition to the remedies herein provided, be entitled to avail itself
of all such other remedies as may now or hereafter exist at law or in equity
for the enforcement of the covenants herein and the foreclosure of the liens
and security interests evidenced hereby, and the resort to any remedy provided
for hereunder or under any such other instrument

 14
 

or provided
for by law shall not prevent the concurrent or subsequent employment of any
other appropriate remedy or remedies.

(vii)                           To
the fullest extent permitted by law, TIMET may resort to any security given by
this Agreement or to any other security now existing or hereafter given to
secure the payment of the Debt Obligations, in whole or in part, and in such
portions and in such order as may seem best to TIMET in its sole and
uncontrolled discretion, and any such action shall not in anywise be considered
as a waiver of any of the rights, benefits, liens or security interests evidenced
by this Agreement.

(viii)                        To
the full extent Haynes may do so, Haynes agrees that it will not at any time
insist upon, plead, claim or take the benefit or advantage of any law now or
hereafter in force pertaining to the rights and remedies of sureties or
redemption, and Haynes, for itself and its representatives, successors and
assigns, and for any and all persons ever claiming any interest in the
Operating Assets, to the extent permitted by law, hereby waives and releases
all rights of redemption, valuation, appraisement, stay of execution, notice of
intention to mature or declare due the whole of the secured indebtedness,
notice of election to mature or declare due the whole of the secured
indebtedness, notices as provided for under the Code, and all rights to a
marshaling of the assets of Haynes, including the Operating Assets, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and security interests hereby created. 
Haynes shall not have or assert any right under any statute or rule of
law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
TIMET under the terms of this Agreement to a sale of the Operating Assets for
the collection of the secured indebtedness without any prior or different
resort for collection, or the right of TIMET under the terms of this Agreement
to the payment of such Obligations out of the proceeds of sale of the Operating
Assets in preference to every other claimant whatever.  If any law referred to in this paragraph and
now in force, of which Haynes or their representatives, successors and assigns
and such other persons claiming any interest in the Operating Assets might take
advantage despite this paragraph, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to preclude the application of
this paragraph.  Without limiting the
foregoing, Haynes and any surety or guarantor of the indebtedness secured
hereby waives, to the maximum extent not prohibited under applicable law, the
following: (1) any requirement that TIMET first take any action whatsoever
against Haynes or any other party, or file any claim in the event of Haynes’
bankruptcy, in order to enforce the obligations of Haynes under this Agreement
or any other Transaction Document, (2) failure to protect, preserve or resort
to any Collateral, (3) failure of TIMET to notify Haynes of any assignment
of the Transaction Documents or any part thereof, (4) all rights if Haynes or
any other person is found not liable for the Debt Obligations secured hereby or
any part thereof for any reason, and regardless of any joinder of Haynes or any
other person in any action to obtain payment or performance of any or all of
the indebtedness secured hereby, and (5) all rights and defenses in
connection with any full or partial release of the liability of Haynes.  Haynes authorizes TIMET, without notice to or
consent of Haynes, and without affecting Haynes’ liability hereunder, from time
to time to change the terms under any document (other those to which Haynes is
a party), including, without

 15
 

limitation,
exchanging, enforcing, waiving or releasing any security with regard to the
Debt Obligations, releasing any other guarantor or exercising or refraining
from exercising any right or remedy of TIMET.

(ix)                                Upon
a Default or an Acceleration Event, Haynes shall be liable for reimbursing
TIMET for all expenses incurred by TIMET as a result of such Default or
Acceleration Event, including, but not limited to, all travel costs,
third-party appraisal fees, report preparation and testing fees, consultants’
fees and reasonable legal fees and expenses.

(x)                                   Haynes
agrees that any disclaimer of warranties in a foreclosure sale of any or all of
the Collateral will not render the sale commercially unreasonable.

9.                                       Injunctive
Relief.  GIVEN THAT TIMET MAY INCUR
SIGNIFICANT DAMAGES IF HAYNES FAILS TO TIMELY SATISFY ITS OBLIGATIONS TO TIMET
AND TIMET’S OPERATIONS MAY BE NEGATIVELY IMPACTED, AND BECAUSE TIMET DOES NOT
HAVE AN ADEQUATE REMEDY AT LAW AND WOULD BE IRREPARABLY HARMED BY SUCH EVENTS
AND BECAUSE THE OPERATING ASSETS ARE UNIQUE, AND BECAUSE HAYNES IS OBTAINING
INTELLECTUAL PROPERTY/KNOW-HOW FROM TIMET THAT WOULD COMPETITIVELY HARM TIMET,
HAYNES AGREES THAT TIMET SHALL BE ENTITLED TO INJUNCTIVE RELIEF (BOTH
PROHIBITIVE AND MANDATORY) IN CONNECTION WITH ANY DEFAULT BY HAYNES UNDER THIS
AGREEMENT OR THE TRANSACTION DOCUMENTS TO AFFORD TIMET ITS RIGHT OF ACCESS
UNDER THIS AGREEMENT, IN ADDITION TO ALL OTHER RIGHTS AND REMEDIES IN LAW OR AT
EQUITY.

10.                                 Representations
and Warranties.  Haynes represents
and warrants to TIMET that:

(a)                                  Title; No Other
Security Interests.  Except for the
security interest granted under this Agreement to TIMET and the Permitted
Encumbrances, Haynes owns the Collateral free and clear of any and all security
interests or claims.

(b)                                 Address; Etc.  Haynes’ chief executive office is set forth
in Section 22 and the location of the Collateral is described in Exhibit C
and neither location shall not be changed without prior written notice to TIMET
(but any such change or the failure of the Collateral to be located at such
address shall not exclude any of the Collateral from being subject to the
security interest granted therein). 
Haynes must immediately advise TIMET in writing of any change in its
name, trade name, address, state of organization, or form of organization.  Haynes’ exact name, entity type and organizational
number issued by the Secretary of State of Delaware are set forth on the first
page hereof.

(c)                                  Trade Names.  Any and all trade names under which Haynes
transacts any part of its business, and all former names of Haynes used since
1986, are those that have been previously disclosed to TIMET in writing.

(d)                                 Accuracy of
Information.  All information,
certificates, or statements given to TIMET under this Agreement are true and
complete in all material respects.

 16
 

11.                                 Covenants.  Haynes covenants and agrees with TIMET that
from and after the date of this Agreement until the Debt Obligations are paid
in full:

(a)                                  Further
Documentation. At any time and from time to time, upon the written request
of TIMET, and at Haynes’ sole expense, Haynes will promptly and duly execute
and deliver to TIMET any and all such further instruments and documents and
take such further action as TIMET may reasonably request for the purpose of
obtaining the full benefits of this Agreement and of the rights and powers
herein granted.

(b)                                 Sales or
Dispositions of Assets.  Haynes will
not sell or otherwise dispose of or encumber the Collateral, except for
Permitted Encumbrances, without the written consent of TIMET; provided,
however, that the foregoing shall not be deemed to restrict a Change in
Control.

(c)                                  Limitations on
Liens.  Haynes shall not permit or
grant any liens (voluntary or involuntary) on any portion of the Collateral,
except Permitted Encumbrances.

(d)                                 Maintenance of
Insurance.  Haynes will at all times
comply with the provisions of Section 7.1 of the Conversion Agreement.

(e)                                  Right of
Inspection; Cooperation.  In addition
to any rights TIMET may have under the Conversion Agreement, TIMET and its
representatives shall, at TIMET’s expense, upon reasonable request and at
reasonable times, have the right to enter into and upon any premises where any
of the Collateral is located for the purpose of inspecting the same, observing
the use thereof or otherwise protecting TIMET’s interests therein.

(f)                                    Notice of
Default.  Haynes will provide
immediate notice to TIMET, by way of facsimile transmission and overnight
express mail service, of its or its attorneys’ or agents’ receipt of any notice
of default under Haynes’ agreements with any secured creditors including but
not limited to taxing authorities. 
Haynes hereby grants to TIMET the option, but not the obligation, to
exercise whatever rights to cure defaults that Haynes has under such agreements
or by law.

(g)                                 Haynes Bankruptcy
Event.  If a Haynes Bankruptcy Event
occurs, Haynes will support any request by TIMET to lift any stay imposed by
any court (bankruptcy or otherwise) that might block or impede TIMET’s exercise
of the Right of Access.

(h)                                 Additional
Contracts.  Upon a Default, Haynes
Bankruptcy Event, Secured Facility Event or Acceleration Event, Haynes
covenants and agrees (i) to provide or otherwise make available to TIMET, its
affiliates, designee(s), successors and permitted assigns all rights,
privileges and benefits arising under any Additional Contract; (ii) to provide
notice of renewal, termination, breach or threatened breach of any Additional
Contract; and (iii) to provide notice of any lapse, revocation or threat of
revocation of any permit or license that constitutes an Additional Contract.  Haynes hereby grants TIMET the option, but
not the obligation, upon a Default, Haynes Bankruptcy Event, Secured Facility
Event or Acceleration Event, (x) to exercise whatever rights to cure any breach
that Haynes has under any Additional Contract or by law and (y) to approach
directly any party to an Additional Contract for the purpose of arranging to
obtain directly from such party all rights, privileges and benefits arising
under such Additional

 17
 

Contract that relate or pertain to the Mill, the Equipment, the Real
Estate or the performance of the Titanium Conversion Services.

12.                                 Haynes’
Remedies.  Upon (a) TIMET’s consent
to the filing of, or TIMET’s commencement or consent to the commencement of, or
a court’s entry of an order for relief in any TIMET Bankruptcy Event under
Chapter 7 of Title 11, United States Code; (b) a TIMET Bankruptcy Event in
which the Conversion Agreement is rejected by order of a court or by operation
of law; or (c) the termination of the Conversion Agreement by TIMET for any
reason other than an Event of Default (as defined in the Conversion Agreement)
or TIMET’s exercise of its rights under Section 8(b) of this Agreement, the
entire unearned portion of the Fee shall be deemed fully earned by Haynes and
nonrefundable to TIMET.

13.                                 Lessor
Acknowledgments.  Upon the request of
TIMET, Haynes will use commercially reasonable efforts to deliver to TIMET
acknowledgements of the lessors of leased Operating Assets to TIMET’s rights
hereunder, in the form attached hereto as Schedule 13.

14.                                 Term.
The rights granted to TIMET under this Agreement shall continue until the
expiration of the term of the Conversion Agreement.

15.                                 Confidential
Information and Data.  Without
limiting TIMET’s rights under this Agreement, to the extent the Operating
Assets include, or TIMET or its designee(s) otherwise comes into possession of
or becomes aware of, Haynes’ trade secrets or proprietary information during
TIMET’s exercise of the Right of Access, TIMET and its designee(s) must (a)
keep the information, data, and trade secrets confidential; and (b) only use
the information, data, and trade secrets during an Access Period in connection
with performing the Titanium Conversion Services.  The provisions of this Section 15 shall
survive the termination of this Agreement. 
TIMET acknowledges and agrees that Haynes will suffer irreparable harm
if TIMET or its designee(s) violate or breach their obligations under this
Section 15.  TIMET agrees that Haynes
shall be entitled to injunctive relief (both prohibitive and mandatory) in
connection with any violations by TIMET or its designee(s) of their obligations
under this Section 15.

16.                                 Indemnification.  Haynes shall indemnify TIMET and each of its
affiliates and designees and their respective officers, directors, employees,
attorneys, and agents from, and hold each of them harmless against, any and all
Claims which any of them may become subject which directly or indirectly arise
from or relate to (a)  TIMET’s exercise of any rights or remedies set
forth in the Transaction Documents, (b) any breach by Haynes of any
representation, warranty, covenant, or other agreement contained in any of the
Transaction Documents, (c) the presence, release, threatened release,
disposal, removal, or cleanup of any hazardous material located on, about,
within, or affecting any of the properties or assets of Haynes, or (d) any
investigation, litigation, or other proceeding, including, without limitation,
any threatened investigation, litigation, or other proceeding, relating to any
of the foregoing; provided that such indemnity shall not be available to the
extent that such losses, liabilities, claims, damages, penalties, judgments,
disbursements, costs, expenses or fees resulted from the gross negligence or
willful misconduct of TIMET or any other indemnitee.  WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER TRANSACTION DOCUMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
UNDER THIS SECTION

 18
 

SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL CLAIMS ARISING OUT OF OR RESULTING FROM THE
SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.

17.                                 Severability.  Should any provision of this Agreement be
held invalid, prohibited or unenforceable in any one jurisdiction it shall, as
to that jurisdiction only, be ineffective to the extent of such holding without
invalidating the remaining provisions of this Agreement, and any such holding
does not invalidate or render unenforceable that provision in any other
jurisdiction wherein it would be valid and enforceable.

18.                                 Authorization.  The parties executing this Agreement as
representatives warrant that they have the power and authority to execute this
Agreement on behalf of the entity that they represent and that their signatures
bind said entities to the terms of this Agreement.

19.                                 Section
Headings.  The Section headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation of
this Agreement.  All references to
Sections and Schedules are to Sections and Schedules in or to this Agreement
unless otherwise specified.

20.                                 No
Waiver; Cumulative Remedies.  The
Parties shall not by any act, delay, indulgence, omission, or otherwise be
deemed to have waived any right or remedy under this Agreement or of any breach
of the terms and conditions of this Agreement. 
A waiver by the Parties of any right or remedy under this Agreement on
any one occasion shall not be construed as a bar to any right or remedy that
the Parties would otherwise have had on a subsequent occasion.  No failure to exercise nor any delay in
exercising on the part of either Party of any right, power, or privilege under
this Agreement, shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any
other or future exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies under
this Agreement are cumulative, may be exercised singly or concurrently, and are
not exclusive of any rights and remedies provided by any other agreements or
applicable law.

21.                                 Waivers
and Amendments; Successors and Assigns. 
No term or provision of this Agreement may be waived, altered, modified,
or amended except by a written instrument, duly executed by Haynes and
TIMET.  This Agreement and all of Haynes’
obligations are binding upon the successors and assigns of Haynes, and together
with the rights and remedies of TIMET under this Agreement, inure to the
benefit of TIMET and its successors and assigns.  Haynes may not assign or transfer any right
or obligation under this Agreement without the prior written consent of
TIMET.  Notwithstanding the foregoing,
Haynes shall be permitted to assign this Agreement to its successor in
connection with a Change in Control provided that such successor assumes all of
Haynes’ obligations under this Agreement and each of the other Transaction
Documents.

22.                                 Governing
Law and Forum.  Except with respect
to the creation, perfection, priority and enforcement of the liens and security
interests created hereby, which shall be construed in accordance with and
governed by the laws of the State of Indiana, this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware.  Each of the parties hereby
irrevocably submits to the jurisdiction of the courts of the

 19
 

State of Delaware or the
United States District Court for the District of Delaware, over any suit,
action or proceeding arising out of or relating to this Agreement and covenants
and agrees that such courts shall have exclusive jurisdiction over any such
suit, action or proceeding.  Each party
irrevocably waives, to the fullest extent permitted under applicable law, any
objections it may now or hereafter have to the venue of any suit, action or
proceeding brought in such court and any claim that the same has been brought
in an inconvenient forum.

23.                                 Notices.  All notices, requests, and other
communications that are required or may be given under this Agreement must be
in writing, and shall be deemed to have been given on the date of delivery, if
delivered by hand, telecopy or courier, or three days after mailing, if mailed
by certified or registered mail, postage prepaid, return receipt requested,
addressed as set forth below (which addresses may be changed, from time to
time, by notice given in the manner provided in this Section 22):

	
  

  	
  If to Haynes,
  to:

  	
   

  	
  Haynes International, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  1020 West Park Avenue

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box 9013

  	
   

  	
   

  
	
   

  	
   

  	
  Kokomo, Indiana 46904-9013

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Marcel Martin, Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (765) 456-6526

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Stacy S. Kilian, V.P. – General Counsel

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (765) 456-6935

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Ice Miller LLP

  	
   

  	
   

  
	
   

  	
   

  	
  One American Square

  	
   

  	
   

  
	
   

  	
   

  	
  34th Floor

  	
   

  	
   

  
	
   

  	
   

  	
  Indianapolis, IN 46282-0200

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Stephen J. Hackman

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (317) 592-4666

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to TIMET, to:

  	
   

  	
  Titanium Metals Corporation

  	
   

  	
   

  
	
   

  	
   

  	
  3 Lincoln Centre

  	
   

  	
   

  
	
   

  	
   

  	
  5430 LBJ Freeway, Suite 1700

  	
   

  	
   

  
	
   

  	
   

  	
  Dallas, Texas 75240

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (972) 448-1445

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: General Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Locke Liddell & Sapp LLP

  	
   

  	
   

  
	
   

  	
   

  	
  2200 Ross Avenue, Suite 2200

  	
   

  	
   

  
	
   

  	
   

  	
  Dallas, Texas 75201

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (214) 740-8800

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Don M. Glendenning, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Toni Weinstein, Esq.

  	
   

  	
   

  

 

24.                                 No
Intended Third Party Beneficiary. 
The parties hereto acknowledge and agree that, other than the rights of
the indemnitees named herein, the rights and interests of the parties under
this Agreement are intended to benefit solely the parties to this Agreement.

 20
 

25.                                 Effectiveness
of this Agreement.  This Agreement
shall be effective upon the completion of the following conditions:

(i)  TIMET’s perfection of its first priority
interest in the Collateral; and

(ii) TIMET’s payment of
the Fee.

26.                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by each party hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.  For purposes of
this Agreement, signatures obtained by facsimile shall constitute original
signatures.

27.                                 Entire
Agreement; Conflicts.  This Agreement
together with the other Transaction Documents and the exhibits and schedules
hereto and thereto, and any other agreements executed in connection herewith or
therewith, constitutes the entire understanding of the parties in connection
with the subject matter hereof.  The
terms and conditions of the Conversion Agreement shall be unaffected by this
Agreement.  To the extent any term or
condition of this Agreement is inconsistent or in conflict with the terms of any
Transaction Document, the terms of this Agreement shall govern and control.

28.                                 CONSULTATION
WITH COUNSEL.  THE PARTIES HERETO
ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH COUNSEL
BEFORE EXECUTING THIS AGREEMENT AND ARE EXECUTING SUCH AGREEMENT WITHOUT DURESS
OR COERCION AND WITHOUT RELIANCE ON ANY REPRESENTATIONS, WARRANTIES OR
COMMITMENTS OTHER THAN THOSE REPRESENTATIONS, WARRANTIES AND COMMITMENTS SET
FORTH IN THIS AGREEMENT.

29.                                 WAIVER
OF JURY TRIAL.  THE PARTIES HERETO
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT
THIS RIGHT MAY BE WAIVED.  THE PARTIES
EACH HEREBY KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO A
TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS AGREEMENT
OR ANY OTHER AGREEMENTS BETWEEN THE PARTIES. NO PARTY SHALL BE DEEMED TO HAVE
RELINQUISHED THE BENEFIT OF THIS WAIVER OF JURY TRIAL UNLESS SUCH
RELINQUISHMENT IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY TO WHICH SUCH
RELINQUISHMENT WILL BE CHARGED.

 21
 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.

	
   

  	
  HAYNES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis J. Petro

  	
   

  
	
   

  	
   

  	
  Name: Francis J. Petro

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  TITANIUM METALS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bobby D. O’Brien

  	
   

  
	
   

  	
   

  	
  Name: Bobby D. O’Brien

  
	
   

  	
   

  	
  Title: Executive Vice President and

  
	
   

  	
   

  	
  Chief Financial
  Officer

  

 

 22

SCHEDULE 13

LESSOR’S
ACKNOWLEDGMENT AND CONSENT

While not a party to the Access and Security Agreement
(the “Access Agreement”) between Titanium Metals Corporation (“TIMET”) and
Haynes International, Inc. (“Haynes”) dated November 17, 2006 the undersigned leases
certain real estate and/or equipment to Haynes and, in such capacity, the
undersigned acknowledges, consents to, and agrees with, and agrees to be bound
by, the terms and conditions of the foregoing Agreement, including TIMET’s
right to use the Operating Assets during an Access Period.  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Access
Agreement.

	
  

  	
  LESSOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]