Document:

Exhibit 10.1

                              CONSULTING AGREEMENT

         THIS AGREEMENT (the "Agreement"), is made and entered into as of this
3rd day of January, 2002, by and between Carl Serres of Stooss U.S.A., with
offices at 3303 Candleoak Dr. Spring, Texas, 77388 ("Consultant") and American
Energy Services, Inc., with offices at 7224 Lawndale, Houston, Texas 77012
("Company") (together the "Parties").

         WHEREAS, the Parties desire to formalize the terms and conditions under
which Consultant shall provide consulting services to the Company;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other valid consideration, receipt of which is hereby
acknowledged, the Parties agree as follows:

1.   Term of Agreement and Renewal.

     The Agreement shall remain in effect from the date of execution hereof
through the expiration of a one year period, and may be renewed upon the mutual
consent of the Parties.

2.   Nature of Services to be Rendered.

     Consultant shall provide the Company with consulting services, including,
but not limited to, Quality assurance, confirmation of API compliance,
inspection audit of foreign forge houses for AES product line.

3.   Compensation.

     As compensation for his consulting services rendered hereunder, the
Company, shall issue to the Consultant 100,000 shares of the Company's common
stock, par value per share.

4.   Warranties and Representations of the Consultant.

     In order to induce the Company to enter into this Agreement, the Consultant
hereby makes the following unconditional warranties and representations:

     (a)  Consultant is not now a party to a consulting agreement with any other
corporation or entity involved in a business which is the same as or similar to
the Company's.

     (b)  Consultant is permitted to provide consulting services to any
corporation or entity engaged in a business identical or similar to the
Company's, provided, however, that the Consultant shall keep confidential all
information it receives from the Company which is of a confidential or
proprietary nature, without disclosure to or for the benefit of any third
parties.

<PAGE>

5.   Warranties and Representations of the Company.

     In order to induce the Consultant to enter into this Agreement, the Company
hereby makes the following unconditional warranties and representations:

     (a)  The Company is not a party to any other contract or agreement with
terms identical to those contained herein.

     (b)  The Company acknowledges that Consultant does not guarantee its
ability to cause the consumption of any contract or merger or acquisition with
any corporate candidate.

6.   Issuance of Stock Certificate to Consultant.

     The Company shall cause to be issued and delivered to Consultant the Stock
Certificate bearing the signatures of its President and Secretary. The Company
shall take all corporate action necessary for the Stock Certificate issuance to
be legally valid and irrevocable, including obtaining the prior unanimous
written consent of its Board of Directors.

7.   Registration Obligations.

     The Company expressly agrees to register, with the Securities and Exchange
Commission, the shares of common stock underlying the options issued herein in a
registration statement on Form S-8, if and when available (and all related
qualifications under the state securities laws.

8.   Expense Reimbursement.

     Consultant shall be entitled to receive cash reimbursement, and the Company
shall provide cash reimbursement, of all cash expenses paid by Consultant on
behalf of the Company in performance of his duties hereunder. Such expenses
shall include without limitation expenses for communications and travel. In no
event, however, will Consultant incur on behalf of the Company an expense in
excess of $1,000 per month without the prior written consent of the Company.

9.   Indemnification of Consultant by the Company.

     The Company shall indemnify and hold harmless Consultant from and against
any and all liabilities and damages in connection with the Company's ownership
and operation and, without limiting the foregoing, shall pay the Consultant's
legal fees and expenses if Consultant is named as a defendant in any proceedings
brought in connection with the services provided hereunder.

10.  Indemnification of the Company by the Consultant.

     Consultant shall indemnify and hold harmless the Company and its principals
from and against any and all liabilities and damages arising out of actions
taken by Consultant in connection with his services as consultant, which actions
were not authorized by the Company.

<PAGE>

11.  Arbitration.

     Any and all conflicts, disputes and disagreements arising out of or in
connection with any aspect of the Agreement shall be subject to arbitration in
accordance with the rules of The American Arbitration Association then in
effect. Written Notice of Dispute shall be served by either Party upon the other
Party at its address set forth herein or such other address as it shall have
provided in writing for that purpose, and the arbitration date shall be set no
later than two months from the date such Notice is served. The dispute shall be
submitted to The American Arbitration Association in the headquarters nearest to
the Company's office. The Parties designate any State or Federal court in the
State of Texas as the court in which any arbitration award shall be subject to
confirmation, and will abide by such confirmation.

12.  Entire Understanding/Incorporation of other Documents.

     This Agreement contains the entire understanding of the Parties with regard
to the subject matter hereof, superseding any and all prior agreements or
understandings whether oral or written, and no further or additional agreements,
promises, representations or covenants may be inferred or construed to exist
between the Parties.

13.  No Assignment or Delegation Without Prior Approval.

     No portion of the Agreement or any of its provisions may be assigned, nor
obligations delegated, to any other person or party without the prior written
consent of the Parties except by operation of law or as otherwise set forth
herein.

14.  Survival of Agreement.

     The Agreement and all of its terms shall inure to the benefit of any
permitted assignees of or lawful successors to either Party.

15.  No Amendment Except in Writing.

     Neither the Agreement nor any of its provisions may be altered or amended
except in a dated writing signed by the Parties.

16.  Waiver of Breach.

     No waiver of any breach of any provision hereof shall be deemed to
constitute a continuing waiver or a waiver of any other portion of the
Agreement.

17.  Severability of the Agreement.

     Except as otherwise provided herein, if any provision hereof is deemed by
arbitration or a court of competent jurisdiction to be legally unenforceable or
void, such provision shall be stricken from the Agreement and the remainder
hereof shall remain in full force and effect.

<PAGE>

18.  Governing Law.

     The Agreement and its provisions shall be construed in accordance with and
pursuant to, and governed by, the laws of the State of Texas, as applicable to
agreements to be performed solely within the State of Texas, without regard to
its conflict-of-laws provisions then in effect.

19.  No Construction Against Drafter.

     The Agreement shall be construed without regard to any presumption or other
rule requiring construction against the Party causing the drafting hereof.

     IN WITNESS WHEREOF, the Parties have executed the Agreement as of the date
first above written.

     By:  /s/ CARL J. SERRES
         ------------------------------------
         Carl J. Serres, Consultant

     American Energy Services, Inc.

     By:  /s/ PATRICK S. ELLIOT
        --------------------------------------
        Patrick S. Elliot, President<PAGE>
                                                                     Exhibit 4.1

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

                             THE STANLEY WORKS, LTD.

                                       and

                          Mellon Investor Services LLC,
                                 as Rights Agent

                                Rights Agreement

                          Dated as of [month, day] 2002

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

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                 Page
<S>                                                                                          <C>
Section 1.        Certain Definitions.....................................................    1

Section 2.        Appointment of Rights Agent.............................................    4

Section 3.        Issuance of Rights Certificates.........................................    4

Section 4.        Form of Rights Certificates.............................................    6

Section 5.        Countersignature and Registration.......................................    6

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

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

Section 8.        Cancellation and Destruction of Rights Certificates.....................   10

Section 9.        Reservation and Availability of Capital Stock...........................   10

Section 10.       Preferred Shares Record Date............................................   12

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

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

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

Section 14.       Fractional Rights and Fractional Shares.................................   23

Section 15.       Rights of Action........................................................   24

Section 16.       Agreement of Rights Holders.............................................   24

Section 17.       Rights Certificate Holder Not Deemed a Shareholder......................   25

Section 18.       Concerning the Rights Agent.............................................   25

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

Section 20.       Duties of Rights Agent..................................................   27

Section 21.       Change of Rights Agent..................................................   29

Section 22.       Issuance of New Rights Certificates.....................................   30
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                          <C>
Section 23.       Redemption and Termination..............................................   30

Section 24.       Exchange................................................................   31

Section 25.       Notice of Certain Events ...............................................   32

Section 26.       Notices.................................................................   33

Section 27.       Supplements and Amendments..............................................   34

Section 28.       Successors..............................................................   35

Section 29.       Determinations and Actions by the Board, etc............................   35

Section 30.       Benefits of this Agreement..............................................   35

Section 31.       Severability............................................................   35

Section 32.       Governing Law...........................................................   35

Section 33.       Counterparts............................................................   36

Section 34.       Descriptive Headings....................................................   36

Exhibit A         Board of Directors
                  Resolution..............................................................   A-1

Exhibit B         Form of Rights
                  Certificate.............................................................   B-1
</TABLE>

                                       ii

<PAGE>
                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT, dated as of [month, day] 2002 (this "Agreement"),
between The Stanley Works, Ltd., a Bermuda company (the "Company"), and Mellon
Investor Services LLC, a New Jersey limited liability company, as Rights Agent
(the "Rights Agent").

                               W I T N E S S E T H

         WHEREAS, on May 24, 2002, the Board of Directors of the Company (the
"Board") approved and adopted the Agreement and Plan of Merger, dated as of May
24, 2002, among the Company, The Stanley Works, Stanley US Holdings, Inc. and
Stanley Mergerco, Inc. pursuant to which Stanley Mergerco, Inc., will be merged
with and into The Stanley Works (the "Merger"), and pursuant to which each
issued and outstanding share of common stock, par value $2.50 per share, of The
Stanley Works (together with the associated preferred stock purchase rights
issued pursuant to the Rights Agreement, dated as of January 31, 1996, between
The Stanley Works and the Rights Agent named therein) will automatically convert
into the right to receive one of the Company's common shares, par value US$.01
per share (the "Common Shares") (together with a Right issued hereunder) such
that The Stanley Works will become an indirect, wholly-owned subsidiary of the
Company; and

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

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

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

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

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

            (a) "Acquiring Person" shall mean any Person who or which, together

<PAGE>

with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of ten percent (10%) or more of the Common Shares then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, (iv) any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan or (v) any Person who
becomes the Beneficial Owner of ten percent (10%) or more of the Common Shares
then outstanding as a result of a reduction in the number of Common Shares then
outstanding due to the repurchase of Common Shares by the Company unless and
until such Person, after becoming aware that such Person has become the
Beneficial Owner of ten percent (10%) or more of the then outstanding Common
Shares, acquires beneficial ownership of additional Common Shares representing
one percent (1%) or more of the then outstanding Common Shares.

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

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

                  (i) which such Person or any of such Person's Affiliates or
         Associates, directly or indirectly, has the right to acquire (whether
         such right is exercisable immediately or only after the passage of
         time) pursuant to any agreement, arrangement or understanding (whether
         or not in writing) or upon the exercise of conversion rights, exchange
         rights, rights, warrants or options, or otherwise; provided, however,
         that a Person shall not be deemed the "Beneficial Owner" of, or to
         "beneficially own," (A) securities tendered pursuant to a tender or
         exchange offer made by such Person or any of such Person's Affiliates
         or Associates until such tendered securities are accepted for purchase
         or exchange, (B) securities issuable upon exercise of Rights at any
         time prior to the occurrence of a Triggering Event or (C) securities
         issuable upon exercise of Rights from and after the occurrence of a
         Triggering Event which Rights were acquired by such Person or any of
         such Person's Affiliates or Associates prior to the Distribution Date
         or pursuant to Section 3(a) or Section 22 hereof (the "Original
         Rights") or pursuant to Section 11(i) hereof in connection with an
         adjustment made with respect to any Original Rights;

                  (ii) which such Person or any of such Person's Affiliates or
         Associates, directly or indirectly, has the right to vote or dispose of
         or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
         of the General Rules and Regulations under the Exchange Act), including
         pursuant to any agreement, arrangement or understanding, whether or not
         in writing; provided, however, that a Person shall not be deemed the
         "Beneficial Owner"of, or to "beneficially own," any security

                                       2

<PAGE>

         under this subparagraph (ii) as a result of an agreement, arrangement
         or understanding to vote such security if such agreement, arrangement
         or understanding: (A) arises solely from a revocable proxy given in
         response to a public proxy or consent solicitation made pursuant to,
         and in accordance with, the applicable provisions of the General Rules
         and Regulations under the Exchange Act, and (B) is not reportable by
         such Person on Schedule 13D under the Exchange Act (or any comparable
         or successor report); or

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

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

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

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

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

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

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

                                       3

<PAGE>

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

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

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

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

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

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable.

         Section 3. Issuance of Rights Certificates.

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

                                       4

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

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

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

                  This certificate also evidences and entitles the holder hereof
         to certain Rights as set forth in the Rights Agreement, date as of
         [month, date], 2002, between The Stanley Works, Ltd. (the "Company")
         and the Rights Agent thereunder (the "Rights Agreement"), the terms of
         which are hereby incorporated herein by reference and a copy of which
         is on file at the principal offices of the Company. Under certain
         circumstances, as set forth in the Rights Agreement, such Rights will
         be evidenced by separate certificates and will no longer be evidenced
         by this certificate. The Company will mail the holder of this
         certificate a copy of the Rights Agreement, as in effect on the date of
         mailing, without charge, promptly after receipt of a written request
         therefor. Under certain circumstances set forth in the Rights
         Agreement, Rights issued to, or held by, any Person who is, was or
         becomes an Acquiring Person or any Affiliate or Associate thereof (as
         such terms are defined in the Rights Agreement), whether currently held
         by or on behalf of such Person or by any subsequent holder, may become
         null and void.

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

                                       5

<PAGE>

         Section 4. Form of Rights Certificates.

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

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

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

         Section 5. Countersignature and Registration.

            (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, the Deputy Chairman of the Board, its
President

                                       6

<PAGE>

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

            (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.

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

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

                                       7

<PAGE>

Section 4(b), Section 7(e), Section 14 and Section 24 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.

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

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

            (a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one two-hundredths of a Preferred Share (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earliest of (i) the
close of business on March 10, 2006 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof, or (iii) the
time at which such Rights are exchanged pursuant to Section 24 hereof (the
earliest of (i), (ii) and (iii) being herein referred to as the "Expiration
Date").

            (b) The Purchase Price for each one two-hundredth of a Preferred
Share pursuant to the exercise of a Right shall initially be US$220.00, and
shall be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph (c) below.

            (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one two-hundredths of a Preferred Share (or other shares, securities,
cash or other assets, as the case may be) to be purchased as set forth below and
an amount equal to any applicable transfer tax, the Rights Agent shall, subject
to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of one
two-hundredths of a Preferred Share to be purchased and the Company

                                       8

<PAGE>

hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one two-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or, upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check or bank draft payable
to the order of the Company. In the event that the Company is obligated to issue
other securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Shares would be issued.

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

            (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are

                                       9

<PAGE>

complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.

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

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

         Section 9. Reservation and Availability of Capital Stock.

            (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares and/or other securities), the number of Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.

            (b) So long as the Preferred Shares (and, following the occurrence
of a Triggering Event, Common Shares and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

            (c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration

                                       10

<PAGE>

statement under the Securities Act of 1933 (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction has not been obtained, the exercise thereof is not permitted
under applicable law or a registration statement shall not have been declared
effective.

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

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

                                       11

<PAGE>

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

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

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

                  (a) (i) In the event the Company shall at any time after the
         date of this Agreement (A) declare a dividend on the Preferred Shares
         payable in Preferred Shares, (B) subdivide the outstanding Preferred
         Shares, (C) combine the outstanding Preferred Shares into a smaller
         number of shares or (D) issue any shares of its capital stock in a
         reclassification of the Preferred Shares (including any such
         reclassification in connection with a consolidation or merger in which
         the Company is the continuing or surviving corporation), except as
         otherwise provided in this Section 11(a) and Section 7(e) hereof, the
         Purchase Price in effect at the time of the record date for such
         dividend or of the effective date of such subdivision, combination or
         reclassification, and the number and kind of Preferred Shares or
         capital stock, as the case may be, issuable on such date, shall be
         proportionately adjusted so that the holder of any Right exercised
         after such time shall be entitled to receive, upon payment of the
         Purchase Price then in effect, the aggregate number and kind of
         Preferred Shares or capital stock, as the case may be, which, if such
         Right had been exercised immediately prior to such date and at a time
         when the Preferred Share transfer books of the Company were open, such
         holder would have owned upon such exercise and been entitled to receive
         by virtue of such dividend, subdivision, combination or
         reclassification. If an event occurs which would require an adjustment
         under both this Section 11(a)(i) and

                                       12

<PAGE>

         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 Section 24 of this Agreement, in the event any
         Person, alone or together with its Affiliates and Associates, shall,
         becomes an Acquiring Person, unless the event causing such Person to
         become an Acquiring Person is a transaction set forth in Section 13(a)
         hereof, or is an acquisition of Common Shares pursuant to a tender
         offer or an exchange offer for all outstanding Common Shares at a price
         and on terms determined by at least a majority of the members of the
         Board who are not officers of the Company and who are not
         representatives, nominees, Affiliates or Associates of an Acquiring
         Person, after receiving advice from one or more investment banking
         firms, to be (a) at a price which is fair to shareholders (taking into
         account all factors which such members of the Board deem relevant
         including, without limitation, prices which could reasonably be
         achieved if the Company or its assets were sold on an orderly basis
         designed to realize maximum value) and (b) otherwise in the best
         interests of the Company and its shareholders, then, promptly following
         the occurrence of such event, proper provision shall be made so that
         each holder of a Right (except as provided below and in Section 7(e)
         hereof) shall thereafter have the right to receive, upon exercise
         thereof at the then current Purchase Price in accordance with the terms
         of this Agreement, in lieu of a number of one two-hundredths of a
         Preferred Share, such number of Common Shares of the Company as shall
         equal the result obtained by (x) multiplying the then current Purchase
         Price by the then number of one two-hundredths of a Preferred Share for
         which a Right was exercisable immediately prior to the first occurrence
         of a Section 11(a)(ii) Event, and (y) dividing that product (which,
         following such first occurrence, shall thereafter be referred to as the
         "Purchase Price" for each Right and for all purposes of this Agreement)
         by fifty percent (50%) of the Current Market Price (determined pursuant
         to Section 11(d) hereof) per Common Share on the date of such first
         occurrence (such number of shares, the "Adjustment Shares").

                  (iii) In the event that the number of Common Shares which are
         authorized by the Company's Memorandum of Association but not
         outstanding or reserved for issuance for purposes other than upon
         exercise of the Rights are not sufficient to permit the exercise in
         full of the Rights in accordance with the foregoing subparagraph (ii)
         of this Section 11(a), the Company shall (A) determine the value of the
         Adjustment Shares issuable upon the exercise of a Right (the "Current
         Value"), and (B) with respect to each Right (subject to Section 7(e)
         hereof), make adequate provision to substitute for the Adjustment
         Shares, upon the exercise of a Right and payment of the applicable
         Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
         Common Shares or other equity

                                       13

<PAGE>

         securities of the Company (including, without limitation, preferred
         shares, or units of preferred shares which the Board has deemed to have
         essentially the same value or economic rights as Common Shares (such
         preferred shares being referred to as "Common Share Equivalents")), (4)
         debt securities of the Company, (5) other assets or (6) any combination
         of the foregoing, having an aggregate value equal to the Current Value
         (less the amount of any reduction in the Purchase Price), where such
         aggregate value has been determined by the Board based upon the advice
         of a nationally recognized investment banking firm selected by the
         Board; provided, however, that if the Company shall not have made
         adequate provision to deliver value pursuant to clause (B) above within
         thirty (30) days following the later of (x) the first occurrence of a
         Section 11(a)(ii) Event and (y) the date on which the Company's right
         of redemption pursuant to Section 23(a) expires (the later of (x) and
         (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"),
         then the Company shall be obligated to deliver, upon the surrender for
         exercise of a Right and without requiring payment of the Purchase
         Price, Common Shares (to the extent available) and then, if necessary,
         cash, which shares and/or cash have an aggregate value equal to the
         Spread. For purposes of the preceding sentence, the term "Spread" shall
         mean the excess of (i) the Current Value over (ii) the Purchase Price.
         If the Board determines in good faith that it is likely that sufficient
         additional Common Shares could be authorized for issuance upon exercise
         in full of the Rights, the thirty (30) day period set forth above may
         be extended to the extent necessary, but not more than ninety (90) days
         after the Section 11(a)(ii) Trigger Date, in order that the Company may
         seek shareholder approval for the authorization of such additional
         shares (such thirty (30) day period, as it may be extended, is herein
         called the "Substitution Period"). To the extent that action is to be
         taken pursuant to the first and/or third sentences of this Section
         11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
         hereof, that such action shall apply uniformly to all outstanding
         Rights and (2) may suspend the exercisability of the Rights until the
         expiration of the Substitution Period in order to seek such shareholder
         approval for such authorization of additional shares and/or to decide
         the appropriate form of distribution to be made pursuant to such first
         sentence and to determine the value thereof. In the event of any such
         suspension, the Company shall issue a public announcement stating that
         the exercisability of the Rights has been temporarily suspended, as
         well as a public announcement at such time as the suspension is no
         longer in effect. For purposes of this Section 11(a)(iii), the value of
         each Adjustment Share shall be the current market price per Common
         Share on the Section 11(a)(ii) Trigger Date and the per share or per
         unit value of any Common Share Equivalent shall be deemed to equal the
         current market price per Common Share on such date.

            (b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them to
subscribe

                                       14

<PAGE>

for or purchase (for a period expiring within forty-five (45) calendar days
after such record date) Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("Equivalent Preferred
Shares")) or securities convertible into Preferred Shares or Equivalent
Preferred Shares at a price per Preferred Share or per Equivalent Preferred
Share (or having a conversion price per share, if a security convertible into
Preferred Shares or Equivalent Preferred Shares) less than the Current Market
Price (as determined pursuant to Section 11(d) hereof) per Preferred Share on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of Preferred Shares outstanding on such record date,
plus the number of additional Preferred Shares and/or Equivalent Preferred
Shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.

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

                                       15

<PAGE>

Purchase Price which would have been in effect if such record date had not been
fixed.

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

                                       16

<PAGE>

         and shall be conclusive for all purposes.

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

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

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

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

                                       17

<PAGE>

further adjustment as provided herein.

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

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

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

                                       18

<PAGE>

hereunder.

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

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

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

            (n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the

                                       19

<PAGE>

Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.

            (o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.

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

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Shares and the Common Shares, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 26 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained.

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

            (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding Common Shares shall be

                                       20

<PAGE>

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

            (b) "Principal Party" shall mean:

                  (i) in the case of any transaction described in clause (x) or
         (y) of the first sentence of Section 13(a), the Person that is the
         issuer of any securities into which Common Shares of the Company are
         converted in such merger or consolidation, and if no securities are so
         issued, the Person that is the other party to such merger or
         consolidation; and

                                       21

<PAGE>

                  (ii) in the case of any transaction described in clause (z) of
         the first sentence of Section 13(a), the Person that is the party
         receiving the greatest portion of the assets or earning power
         transferred pursuant to such transaction or transactions;

provided, however, that in any such case, (1) if the Common Shares of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, "Principal Party" shall refer
to such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value.

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

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

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

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

            (d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y)

                                       22

<PAGE>

of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a tender offer or exchange offer for all
outstanding Common Shares which complies with the provisions of Section
11(a)(ii) hereof (or a wholly owned subsidiary of any such Person or Persons),
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such tender offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of Common Shares pursuant
to such transaction is the same as the form of consideration paid pursuant to
such tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.

         Section 14. Fractional Rights and Fractional Shares.

            (a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights the
fair value of the Rights on such date as determined in good faith by the Board
shall be used.

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

                                       23

<PAGE>

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

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

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

         Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and that it is the Company's intention that
such holders shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.

         Section 16. Agreement of Rights Holders.

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

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

            (b) after the Distribution Date, the Rights Certificates are
transferable

                                       24

<PAGE>

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

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

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

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

         Section 18. Concerning the Rights Agent.

            (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the preparation,
administration, delivery, execution and amendment of this Agreement and the
exercise and performance of its duties hereunder.

                                       25

<PAGE>

The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense, incurred without gross negligence, bad
faith or willful misconduct (each as determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction) on the
part of the Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises. The costs and expenses incurred
in enforcing this right of indemnification shall be paid by the Company unless
it is determined by a final, non-appealable order, judgment, decree or ruling of
a court of competent jurisdiction that the Rights Agent is not entitled to
indemnification due to the Rights Agent's gross negligence, bad faith or willful
misconduct. The provisions of this Section 18 and Section 20 below shall survive
the termination of this Agreement, the exercise or expiration of the Rights and
the resignation or removal of the Rights Agent.

            (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 acceptance and administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20. The Rights Agent shall not be deemed to have knowledge of any event
of which it was supposed to receive notice thereof hereunder, and the Rights
Agent shall be fully protected and shall incur no liability for failing to take
any action in connection therewith unless and until it has received such notice
in writing.

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

                                       26

<PAGE>

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

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

         Section 20. Duties of Rights Agent.

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

            (a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent, and the Rights
Agent shall incur no liability for, or in respect of, any action taken, suffered
or omitted by it in accordance with such opinion.

            (b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the Deputy Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or

                                       27

<PAGE>

any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

            (c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct (each as determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage. Any liability of the Rights Agent under this Rights
Agreement will be limited to $50,000.

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

            (e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11, Section 13 or Section 24 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Common
Shares or Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares or Preferred Shares will, when so
issued, be validly authorized and issued, fully paid and nonassessable.

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

            (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Deputy Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the

                                       28

<PAGE>

Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.

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

            (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(each as determined by a final, non-appealable order, judgment decree or ruling
of a court of competent jurisdiction) in the selection and continued employment
thereof.

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

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

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Shares and Preferred Shares, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or

                                       29

<PAGE>

after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person organized and doing business under the laws of the United
States or of any State thereof, in good standing, which is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
US$50,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and the Preferred Shares, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

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

         Section 23. Redemption and Termination.

            (a) The Board may, at its option, at any time prior to the earlier
of (i) the close of business on the tenth day following the Stock Acquisition
Date (or, if the

                                       30

<PAGE>

Stock Acquisition Date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of US$.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, Common Shares (based on the Current Market Price,
as defined in Section 11(d)(i) hereof, of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by the Board.

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

         Section 24. Exchange.

            (a) The Board may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the Common Shares
then outstanding.

            (b) Immediately upon the action of the Board ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares

                                       31

<PAGE>

equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.

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

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

         Section 25. Notice of Certain Events.

            (a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular quarterly cash dividend out of earnings
or retained earnings of the Company), or (ii) to offer to the holders of
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than fifty percent (50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution

                                       32

<PAGE>

or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares whichever shall be
the earlier.

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

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

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

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

                                    Mellon Investor Services LLC
                                    44 Wall Street, 7th Floor
                                    New York, NY  10005
                                    Attention: Relationship Manager
                                    Facsimile No.:  (917) 320-6309/6310

                           with a copy to:

                                    Mellon Investor Services LLC
                                    85 Challenger Road

                                       33

<PAGE>

                                    Ridgefield Park, New Jersey 07660
                                    Attention:  General Counsel
                                    Facsimile No.: (201) 296-4004

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

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

                                       34

<PAGE>

be deemed coincident with the interests of the holders of Common Shares.

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

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

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

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

                                       35

<PAGE>

obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.

         Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each 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.

                                       36

<PAGE>

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

Attest:                                          THE STANLEY WORKS, LTD.

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

Attest:                                          MELLON INVESTOR SERVICES LLC

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

                                       37

<PAGE>

                                                                       Exhibit A

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

                                       of

                             THE STANLEY WORKS, LTD.

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

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

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

                  RESOLVED: that, pursuant to the authority vested in the Board
         of Directors of the Company in accordance with the provisions of its
         Bye-laws and Memorandum of Association, a series of Preferred Shares of
         the Company be and it hereby is created, and the designation and amount
         thereof and the voting powers, preferences and relative, participating,
         optional and other special rights of the shares of such series, and the
         qualifications, limitations or restrictions thereof are as follows:

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

            (b) Dividends and Distributions.

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

                                       A-1

<PAGE>

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

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

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

                                       A-2

<PAGE>

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

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

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

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

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

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

                                       A-3

<PAGE>

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

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

                                       A-4

<PAGE>

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

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

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

            (d) Certain Restrictions.

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

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

                                       A-5

<PAGE>

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

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

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

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

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

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

            (f) Liquidation, Dissolution or Winding Up.

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

                                       A-6

<PAGE>

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

                  (2) In the event, however, that there are not sufficient
         assets available to permit payment in full of the Series A Liquidation
         Preference and the liquidation preferences of all other series of
         Preferred Shares, if any, which rank on a parity with the Series A
         Junior Participating Preferred Shares, then such remaining assets shall
         be distributed ratably to the holders of such parity shares in
         proportion to their respective liquidation preferences. In the event,
         however, that there are not sufficient assets available to permit
         payment in full of the Common Adjustment, then such remaining assets
         shall be distributed ratably to the holders of Common Shares.

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

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

                                       A-7

<PAGE>

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

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

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

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

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

                                       A-8

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

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

                                       A-9

<PAGE>
                                                                       Exhibit B

                           Form of Rights Certificate

                                                              Certificate No. R-
                                                                 ________ Rights

         NOT EXERCISABLE AFTER MARCH 10, 2006 OR EARLIER IF REDEEMED BY THE
         COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
         COMPANY, AT US$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
         AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
         ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
         ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
         RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
         OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
         OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
         RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
         REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
         SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]/1/

                               Rights Certificate

                             THE STANLEY WORKS, LTD.

         This certifies that            , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of [month, day] 2002 (the "Rights Agreement"), between The
Stanley Works, Ltd., a Bermuda corporation (the "Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 P.M. (New York City time) on
March 10, 2006 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one two-hundredths of a fully paid,
non-assessable share of Series A Junior Participating Preferred Shares (the
"Preferred Shares") of the Company, at a purchase price of US$220.00 per one
two-hundredths of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be

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

                                       B-1

<PAGE>

purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of [month day],
2002, based on the Preferred Shares as constituted at such date. The Company
reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that a number of Rights be
exercised so that only whole shares of Preferred Shares will be issued.

         Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.

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

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

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

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

                                       B-2

<PAGE>

to the Rights Agreement) and (ii) the Final Expiration Date.

         No fractional shares of Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one two-hundredths of a Preferred Share to the extent
permitted by Bermuda law, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.

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

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

                                       B-3

<PAGE>

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

Dated as of __________________

ATTEST:                                      THE STANLEY WORKS, LTD.

_________________                            By_________________
Secretary                                       Name:
                                                Title:

Countersigned:

MELLON INVESTOR SERVICES LLC

By ______________________
    Authorized Signature

                                       B-4

<PAGE>
                  [Form of Reverse Side of Rights Certificate)

                               FORM OF ASSIGNMENT

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

  FOR VALUE RECEIVED ______________________________________________
hereby sells, assigns and transfers unto _______________________
_______________________________________________________________________________
                 (Please print name and address of transferee)

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

Dated: __________, _____            ________________________________
                                    Signature

Signature Guaranteed:

                                       B-5

<PAGE>

                                   Certificate

                  The undersigned hereby certifies by checking the appropriate
boxes that:

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

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

Dated:  _________, ____             ________________________________________
                                    Signature

Signature Guaranteed:

NOTICE

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

                                       B-6

<PAGE>

                          FORM OF ELECTION TO PURCHASE

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

To:  THE STANLEY WORKS, LTD.:

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

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

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

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

Please insert social security
or other identifying number

--------------------------------------------------------------------------------
                         (Please print name and address)

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

Dated:____________, ____                 _______________________________________
                                         Signature

Signature Guaranteed:

                                       B-7

<PAGE>

                                   Certificate

                  The undersigned hereby certifies by checking the appropriate
boxes that:

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

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

Dated:  __________, _____                   ________________________________
                                            Signature

Signature Guaranteed:

NOTICE

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

                                       B-8

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