Document:

EXECUTION COPY

                                BANTA CORPORATION

                                       and

                               FIRSTAR BANK, N.A.

                                  Rights Agent

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

                                RIGHTS AGREEMENT

                          Dated as of November 5, 2001

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                                TABLE OF CONTENTS

RIGHTS AGREEMENT...............................................................1

Section 1.    Certain Definitions..............................................1

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

Section 3.    Issue of Right Certificates......................................4

Section 4.    Form of Right Certificates.......................................5

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

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

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

Section 8.    Cancellation and Destruction of Right Certificates...............8

Section 9.    Reservation and Availability of Common Shares....................8

Section 10.   Common Shares Record Date........................................9

Section 11.   Adjustment of Purchase Price, Number of Shares or
              Number of Rights.................................................9

Section 12.   Certificate of Adjusted Purchase Price or Number of Shares......15

Section 13.   Consolidation, Merger, Share Exchange or Sale or Transfer
              of Assets or Earning Power......................................16

Section 14.   Fractional Rights and Fractional Shares.........................18

Section 15.   Rights of Action................................................19

Section 16.   Agreement of Right Holders......................................19

Section 17.   Right Certificate Holder Not Deemed a Shareholder...............20

Section 18.   Concerning the Rights Agent.....................................20

Section 19.   Merger or Consolidation or Change of Name of Rights Agent.......20

Section 20.   Duties of Rights Agent..........................................21

Section 21.   Change of Rights Agent..........................................22

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Section 22.   Issuance of New Right Certificates..............................23

Section 23.   Redemption......................................................23

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

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

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

Section 27.   Supplements and Amendments......................................26

Section 28.   Successors......................................................27

Section 29.   Benefits of this Agreement......................................27

Section 30.   Severability....................................................27

Section 31.   Governing Law...................................................27

Section 32.   Counterparts....................................................27

Section 33.   Descriptive Headings............................................27

Section 34.   Determinations and Actions by the Board of Directors............28

Exhibit A - Form of Right Certificate

Exhibit B - Summary of Rights to Purchase Common Shares

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                                RIGHTS AGREEMENT
                                ----------------

          THIS AGREEMENT, dated as of November 5, 2001, between BANTA
CORPORATION, a Wisconsin corporation (the "Company"), and FIRSTAR BANK, N.A.
(the "Rights Agent").

          WHEREAS, the Board of Directors of the Company authorized the Rights
Agreement, dated as of October 29, 1991 (the "1991 Rights Agreement"), between
the Company and Firstar Bank, N.A. (as successor to First Wisconsin Trust
Company); declared a dividend of one common share purchase right (a "1991
Right") for each Common Share (as hereinafter defined) of the Company
outstanding on November 15, 1991 (the "1991 Record Date"); and authorized the
issuance of one 1991 Right for each Common Share issued between the 1991 Record
Date and the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are defined in the 1991 Rights Agreement),
each 1991 Right representing the right to purchase one-half of one Common Share
of the Company, upon the terms and subject to the conditions set forth in the
1991 Rights Agreement, all such 1991 Rights and the 1991 Rights Agreement
expiring in accordance with their terms on November 15, 2001;

          WHEREAS, the Board of Directors of the Company has determined it is
desirable and in the best interests of the Company and its shareholders for the
Company to extend the benefits afforded by the 1991 Agreement and to implement
such extension by execution of this Agreement; and

          WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on November 15,
2001 (the "Record Date") payable on such date (the "Payment Date"), and has
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined), each Right representing the right to
purchase one-half of one Common Share of the Company upon the terms and subject
to the conditions hereinafter set forth;

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

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

          (a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, any entity holding
Common Shares for or pursuant to the terms of any such plan, or any trustee,
administrator or fiduciary of such a plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as a result of an acquisition of
Common Shares by the Company which, by reducing the number of

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shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person would, but for the foregoing,
become an Acquiring Person by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company at any time that the Person is or
thereby becomes the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding (other than Common Shares acquired solely as a result
of corporate action of the Company not caused, directly or indirectly, by such
Person), then such Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.

          (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 (the "Exchange Act"), as in
effect on the date of this Agreement.

          (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 beneficially owns, directly or indirectly;

                    (ii) which such Person or any of such Person's Affiliates or
          Associates has (A) the right to acquire (whether such right is
          exercisable immediately or only after the passage of time) pursuant to
          any agreement, arrangement or understanding (other than customary
          agreements with and between underwriters and selling group members
          with respect to a bona fide public offering of securities), or upon
          the exercise of conversion rights, exchange rights, rights (other than
          these Rights), warrants or options, or otherwise; provided, however,
          that a Person shall not be deemed the Beneficial Owner of, or to
          beneficially own, securities tendered pursuant to a tender or exchange
          offer made by or on behalf of such Person or any of such Person's
          Affiliates or Associates until such tendered securities are accepted
          for purchase or exchange; or (B) the right to vote pursuant to any
          agreement, arrangement or understanding; provided, however, that a
          Person shall not be deemed the Beneficial Owner of, or to beneficially
          own, any security if the agreement, arrangement or understanding to
          vote such security (1) arises solely from a revocable proxy or consent
          given to such Person in response to a public proxy or consent
          solicitation made pursuant to, and in accordance with, the applicable
          rules and regulations of the Exchange Act and (2) is not also then
          reportable on Schedule 13D under the Exchange Act (or any comparable
          or successor report); or

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                    (iii) which are beneficially owned, directly or indirectly,
          by any other Person with which such Person or any of such Person's
          Affiliates or Associates has any agreement, arrangement or
          understanding (other than customary agreements with and between
          underwriters and selling group members with respect to a bona fide
          public offering of securities) for the purpose of, or with respect to,
          acquiring, holding, voting (except to the extent contemplated by the
          proviso to Section 1(c)(ii)(B)) or disposing of any securities of the
          Company.

          Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

          (d) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Wisconsin 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.,
Menasha, Wisconsin time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Menasha, Wisconsin time, on the next
succeeding Business Day.

          (f) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $.10, of the Company, or shares having
equivalent rights, privileges and preferences to common stock. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equivalent equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.

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

          (h) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.

          (i) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.

          (j) "Redemption Date" shall have the meaning set forth in Section 7
hereof.

          (k) "Shares 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" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.

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

          Section 3. Issue of Right Certificates.

          (a) Until the earlier of (i) the tenth day after the Shares
Acquisition Date or (ii) the tenth Business Day (or such later date as may be
determined by action of the Company's Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement of,
or of the first public announcement of the intention of any Person to commence,
a tender or exchange offer the consummation of which would result in 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 entity holding
Common Shares for or pursuant to the terms of any such plan, or any trustee,
administrator, or fiduciary of such a plan) becoming the Beneficial Owner of
Common Shares of the Company aggregating 15% or more of the then outstanding
Common Shares (including in either case any such date which is after the date of
this Agreement and prior to the Payment Date; the earlier of such dates being
herein referred to as the "Distribution Date"; provided, however, that if the
tenth day or Business Day, as the case may be, after the pertinent date occurs
before the Record Date, "Distribution Date" shall mean the Record Date), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for Common Shares of the Company registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares of the Company. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit A hereto (a
"Right Certificate"), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

          (b) The Company has prepared a Summary of Rights to Purchase Common
Shares, attached as Exhibit B hereto (the "Summary of Rights"), a copy of which
is available free of charge from the Company. With respect to certificates for
Common Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof. Until the Distribution Date (or the earlier
of the Redemption Date or Final Expiration Date), the surrender for transfer of
any certificate for Common Shares of the Company outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.

          (c) Certificates for Common Shares of the Company that become
outstanding (including, without limitation, certificates for reacquired Common
Shares referred to in the last

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sentence of this paragraph (c) and certificates issued on the transfer of Common
Shares) after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them a legend in substantially
the following form (provided, however, that certificates for Common Shares in
existence on the Record Date may bear the legend required by the 1991 Rights
Agreement):

                    This certificate also evidences and entitles the
          holder hereof to certain rights as set forth in a Rights
          Agreement between Banta Corporation and Firstar Bank, N.A.,
          dated as of November 5, 2001, and as such agreement may be
          amended (the "Rights Agreement"), the terms of which are
          hereby incorporated herein by reference and a copy of which
          is on file at the principal executive offices Banta
          Corporation. 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. Banta Corporation will mail to the holder
          of this certificate a copy of the Rights Agreement without
          charge after receipt of a written request therefor. Under
          certain circumstances set forth in the Rights Agreement,
          Rights issued to, or held by, an Acquiring Person or any
          Affiliate or Associate thereof (as such terms are defined in
          the Rights Agreement), whether held by such person or any
          subsequent holder, shall become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.

          Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the purchase price per Common Share set forth therein, but the amount
and type of securities purchasable upon exercise of each Right and such purchase
price shall be subject to adjustment as provided herein.

          Section 5. Countersignature and Registration.

          (a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, Chief Executive Officer, President or any Vice
President either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and

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<PAGE>

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

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

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

          (a) Subject to the provisions of Section 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 earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
Common Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Thereupon the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right 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 Right Certificates.

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

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<PAGE>
          Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.

          (a) As provided herein, each Right shall be exercisable to purchase
one-half of one Common Share, subject to further adjustment. The registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent, together with payment of the
Purchase Price for each Common Share as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on November 15, 2011 subject
to extension (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the "Redemption Date"), and (iii)
the time at which such Rights are exchanged as provided in Section 24 hereof;
provided, however, that if the number of Rights exercised would entitle the
holder thereof to receive any fraction of a Common Share greater than one-half
of a Common Share, then the holder thereof shall not be entitled to exercise
such Rights unless such holder concurrently purchases from the Company (and in
such event the Company shall sell to such holder), at a price in proportion to
the Purchase Price, an additional fraction of a Common Share which, when added
to the number of Common Shares to be received upon such exercise, will equal an
integral number of Common Shares.

          (b) The Purchase Price for each full Common Share pursuant to the
exercise of a Right shall initially be $140 (equivalent to $70 for each one-half
of one Common Share), shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below (the
"Purchase Price").

          (c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Common Shares to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof, as set forth below,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Common Shares certificates for the number of Common Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional Common
Shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made by certified check,
cashier's check, bank draft or money order payable to the order of the Company,
except that, if so provided by the Board of Directors of the Company, the
payment of the Purchase Price following the occurrence of a Section 11(a)(ii)
Event (as hereinafter defined) and until the first occurrence of a Section 13
Event (as hereinafter defined) may be made wholly or in part by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of Common Shares of the Company equal to
the then Purchase Price divided by the closing price (as determined pursuant to
Section 11(d) hereof) per Common Share on the Trading Day (as such term is
hereinafter defined) immediately preceding the date of such exercise. If the
Company is

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<PAGE>

obligated to issue other securities 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.

          (d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.

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

          Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to 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 Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company or shall, at the written request
of the Company, destroy such cancelled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.

          Section 9. Reservation and Availability of Common Shares.

          (a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Common Shares or any
authorized and issued Common Shares held in its treasury the number of Common
Shares that will be sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7.

          (b) So long as the Common Shares issuable upon the exercise of 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 Common Shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.

          (c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares 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

                                       -8-
<PAGE>

and validly authorized and issued and fully paid and nonassessable shares
(except as otherwise provided by any corporation law applicable to the Company).

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

          Section 10. Common Shares Record Date. Each person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Common Shares
transfer books of the Company are open.

          Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of Common 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 Common Shares
          payable in Common Shares, (B) subdivide the outstanding Common Shares,
          (C) combine the outstanding Common Shares into a smaller number of
          Common Shares or (D) issue any shares of its capital stock in a
          reclassification of the Common 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), the Purchase Price in effect
          at the time of the record date for such dividend or of the effective
          date of such subdivision, combination or reclassification, and the
          number and kind of shares of capital stock issuable on such date,
          shall be proportionately adjusted so that the holder of any Right
          exercised after such time shall be entitled to receive the aggregate
          number and kind of shares of capital stock which, if such Right had
          been exercised immediately prior to such date and at a time when the
          Common Shares 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;
          provided, however, that in no event shall the consideration to be paid
          upon the

                                       -9-
<PAGE>

          exercise of one Right be less than the aggregate par value of the
          shares of capital stock of the Company issuable upon exercise of one
          Right. If an event occurs which would require an adjustment under both
          Section 11(a)(i) and Section 11(a)(ii), 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).

                    (ii) Subject to Section 24 of this Agreement, in the event
          any Person shall become an Acquiring Person, other than pursuant to
          any transaction set forth in Section 13(a), each holder of a Right
          shall thereafter have a right to receive, upon exercise thereof at a
          price equal to two times the then current Purchase Price per full
          Common Share multiplied by the number of Common Shares for which a
          Right is then exercisable, in accordance with the terms of this
          Agreement, such number of Common Shares of the Company as shall equal
          the result obtained by (x) multiplying two times the then current
          Purchase Price per full Common Share by the number of Common Shares
          for which a Right is then exercisable and dividing that product by (y)
          50% of the then current per share market price of the Common Shares of
          the Company (determined pursuant to Section 11(d)) on the date the
          Person became an Acquiring Person (such number of shares, the
          "Adjustment Shares").

                    From and after such time as a Person becomes an Acquiring
          Person (a "Section 11(a)(ii) Event"), any Rights that are or were
          acquired or beneficially owned by such Acquiring Person (or any
          Associate or Affiliate of such Acquiring Person) shall be void and any
          holder of such Rights shall thereafter have no right to exercise such
          Rights under any provision of this Agreement. No Right Certificate
          shall be issued pursuant to Section 3 that represents Rights
          beneficially owned by an Acquiring Person whose Rights would be void
          pursuant to the preceding sentence or any Associate or Affiliate
          thereof; no Right Certificate shall be issued at any time upon the
          transfer of any Rights to an Acquiring Person whose Rights would be
          void pursuant to the preceding sentence or any Associate or Affiliate
          thereof or to any nominee of such Acquiring Person, Associate or
          Affiliate; and any Right Certificate delivered to the Rights Agent for
          transfer to an Acquiring Person whose Rights would be void pursuant to
          the preceding sentence shall be cancelled. The Company shall use all
          reasonable efforts to ensure that the provisions of this paragraph are
          complied with, but shall have no liability to any holder of Right
          Certificates or other Person as a result of its failure to make any
          determinations with respect to an Acquiring Person or its Affiliates,
          Associates or transferees hereunder.

                    (iii) In the event that there shall not be sufficient Common
          Shares of the Company issued but not outstanding or authorized but
          unissued (and not reserved for issuance for purposes other than upon
          exercise of the Rights) to permit the exercise in full of the Rights
          in accordance with the foregoing subparagraph (ii), the Company shall:
          (A) determine the excess of (1) the value of the Adjustment Shares
          issuable upon the exercise of a Right (the "Current Value") over (2)
          the Purchase Price payable with respect to such Right (such excess,
          the "Spread"), and

                                       -10-
<PAGE>

          (B) with respect to each Right, make adequate provision to substitute
          for the Adjustment Shares, upon payment of the applicable Purchase
          Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
          Shares or other equity securities of the Company (including, without
          limitation, shares, or units of shares, of preferred stock, if any,
          which the Board of Directors of the Company has deemed to have the
          same value as Common Shares, (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, where such aggregate value
          has been determined by the Board of Directors of the Company based
          upon the advice of a nationally recognized investment banking firm
          selected by the Board of Directors of the Company; provided, however,
          if the Company shall not have made adequate provision to substitute
          for the Adjustment Shares pursuant to clause (B) above within thirty
          (30) days following the occurrence of a Section 11(a)(ii) Event (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 any portion 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. If the Board
          of Directors of the Company shall determine in good faith that it is
          likely that sufficient additional Common Shares might be authorized
          for issuance for exercise in full of the Rights, the thirty (30) day
          period set forth above may be extended to the extent necessary, but
          not more than ninety (90) days after the Section 11(a)(ii) Trigger
          Date, in order that the Company may seek shareholder approval for the
          authorization of such additional shares (such period, as it may be
          extended, the "Substitution Period"). To the extent that the Company
          determines that some action need be taken pursuant to the first and/or
          second sentences of this Section 11(a)(iii), the Company (x) shall
          provide, subject to the last paragraph of Section 11(a)(ii) hereof,
          that such action shall apply uniformly to all outstanding Rights, and
          (y) may suspend the exercisability of the Rights until the expiration
          of the Substitution Period to seek any authorization of additional
          shares and/or to decide the appropriate form of distribution to be
          made pursuant to such first sentence and to determine the value
          thereof. In the event of any such suspension, the Company shall issue
          a public announcement stating that the exercisability of the Rights
          has been temporarily suspended, as well as a public announcement at
          such time as the suspension is no longer in effect. For purposes of
          this Section 11(a)(iii), the value of the Common Shares shall be the
          current per share market price (as determined pursuant to Section
          11(d) hereof) of the Common Shares on the Section 11(a)(ii) Trigger
          Date and the value of any "common stock equivalent" shall be deemed to
          have the same value as the Common Shares 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 Common Shares entitling them (for
a period expiring within 45 calendar days after such record date) to subscribe
for or purchase Common Shares (or securities convertible into Common Shares) at
a price per Common Share (or having a conversion price per share, if a security
convertible into Common Shares) less than the then current per share market
price of the Common Shares (as defined in Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in

                                       -11-
<PAGE>

effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate offering price of the total
number of Common 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
Common Shares outstanding on such record date plus the number of additional
Common Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Common 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, options
or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

          (c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Common Shares) or subscription rights or warrants (excluding those referred to
in Section 11(b)), 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
then current per share market price of the Common Shares (as defined in Section
11(d)) on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Common Share and the denominator of which
shall be such current per share market price of the Common Shares; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

          (d) For the purpose of any computation hereunder, the "current per
share market price" of the Common Shares on any date shall be deemed to be the
average of the daily closing prices per Common Share for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (i) a dividend or
distribution on such Common Shares payable in Common Shares or securities
convertible into Common Shares, or (ii) any subdivision, combination or
reclassification of Common Shares and prior to the expiration of

                                       -12-
<PAGE>

30 Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per Common Share. The closing price
for each Trading 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 Quotations System ("Nasdaq") 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 of Directors of the Company. 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.

          (e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made 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 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 years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.

          (f) If, as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Common Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Common 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 Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.

          (h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment

                                       -13-
<PAGE>

shall thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of Common Shares (calculated to the nearest ten-thousandth of a
Common Share) obtained by (i) multiplying (x) the number of Common Shares
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 substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares 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 Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right 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 Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.

          (k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the Common Shares 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 (except as otherwise
provided by any corporation law applicable to the Company) Common Shares 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 issuing to the holder of any Right exercised after

                                       -14-
<PAGE>

such record date of the Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
Common Shares 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 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 it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Shares, issuance
wholly for cash of any Common Shares at less than the current market price,
issuance wholly for cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares, dividends on Common Shares
payable in Common Shares or issuance of rights, options or warrants referred to
in Section 11(b), hereafter made by the Company to holders of its Common Shares
shall not be taxable to such shareholders.

          (n) The Company covenants and agrees that it shall not, at any time
after the earlier of the Distribution Date or the Shares Acquisition 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), (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof) or
(iv) consummate a share exchange with any other Person, if at the time of or
immediately after such consolidation, merger, sale or share exchange (A) there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights, (B) prior to, simultaneously
with or immediately after such consolidation, merger, sale or share exchange the
shareholders of the Person who constitute, 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 or (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights.

          (o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.

          Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares of the Company a copy of such certificate and (c) mail (or, if deemed
appropriate

                                       -15-
<PAGE>

by the Board of Directors of the Company, make available at no charge) a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.

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

          (a) In the event that, following the Shares 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, or any Person or Persons (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof) shall
consummate a share exchange with the Company, and, in connection with such
consolidation, merger or share exchange, all or part of the outstanding Common
Shares of the Company shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) 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, proper provision shall be made so that:
(i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to two times the then current Purchase Price per full Common Share multiplied by
the number of Common Shares for which a Right is then exercisable (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of any of the
events described in clauses (x), (y) or (z) above (a "Section 13 Event"), two
times the Purchase Price per full Common Share in effect immediately prior to
the first occurrence of a Section 11(a)(ii) Event multiplied by the number of
Common Shares for which a Right was exercisable immediately prior to such first
occurrence), in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable (except as otherwise
required by any corporation law applicable to the Principal Party (as such term
is hereinafter defined)) and freely tradeable Common Shares of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying two
times the then current Purchase Price per full Common Share by the number of
Common Shares 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 two times the
number of such shares for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price per full
Common Share 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) 50% of the current market price (determined pursuant to
Section 11(d) 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

                                       -16-
<PAGE>

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, consolidation or share exchange, and if no
          securities are so issued, (A) the Person that is the other party to
          the merger, consolidation or share exchange and that survives such
          merger or consolidation, or, if there is more than one such Person,
          the Person the Common Shares of which have the greatest aggregate
          market value of shares outstanding or (B) if the Person that is the
          other party to the merger or consolidation does not survive the merger
          or consolidation, the Person that does survive the merger or
          consolidation (including the Company if it survives); and

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

provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have 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,
share exchange, 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, share exchange 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
          Securities Act of 1933, as amended (the "Act"), with respect to the
          Rights and the securities

                                       -17-
<PAGE>

          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 Final Expiration Date; and

                    (ii) 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,
consolidations, share exchanges, 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).

          Section 14. Fractional Rights and Fractional Shares.

          (a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right 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 the 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 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 of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.

          (b) 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, equal to one-half
of a Common Share or less, the Company shall pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Common Share. Any exercise of Rights that would entitle the holder thereof to
receive any fraction of a Common Share greater than one-half of a Common Share
shall be governed by Section 7(a) hereof. For purposes of this Section 14(b),
the current market value of a Common

                                       -18-
<PAGE>

Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.

          (c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).

          Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right 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 Right 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 Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.

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

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

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

          (c) the Company and the Rights Agent may deem and treat the person in
whose name the Right 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 Right 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 shall be
affected by any notice to the contrary; and

          (d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as 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 or 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,

                                       -19-
<PAGE>

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

          Section 18. Concerning the Rights Agent.

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

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

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

          (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent

                                       -20-
<PAGE>

shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.

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

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

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

          (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.

          (c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.

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

          (e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any

                                       -21-
<PAGE>

Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Section
3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); 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 other securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares or other securities will, when
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 any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions.

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

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

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

                                       -22-
<PAGE>

transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of the State of New York or the State of Wisconsin
(or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York or
the State of Wisconsin), in good standing, having an office or agency in the
State of Wisconsin or the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer 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 $50 million, or (b) an Affiliate of a corporation described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and 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 mail a notice thereof in writing to the registered
holders of the Right 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 Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.

          Section 23. Redemption.

          (a) The Rights may be redeemed by action of the Board of Directors
pursuant to subsection (b) of this Section 23 and shall not be redeemed in any
other manner.

          (b) The Board of Directors of the Company may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, redeem all
but not less than all the then outstanding Rights at a redemption price of $.001
per Right, 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"). The redemption of the Rights
by the Board of Directors may be made effective at such time on such basis and
with such conditions

                                       -23-
<PAGE>

as the Board of Directors in its sole discretion may establish. 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.

          (c) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the redemption of the Rights pursuant to
subsection (b) of this Section 23, 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.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after the effectiveness
of the action of the Board of Directors ordering the redemption of the Rights
pursuant to subsection (b), the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common 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.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of Common Shares prior to the Distribution
Date.

          Section 24. Exchange.

          (a) The Board of Directors of the Company 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 11(a)(ii) hereof) for
Common Shares of the Company 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 of Directors 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, any entity
holding Common Shares for or pursuant to the terms of any such plan, or any
trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares of the Company then outstanding.

          (b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last

                                       -24-
<PAGE>

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 11(a)(ii) hereof) held by each holder of Rights.

          (c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute common stock equivalents (as such term is defined in
Section 11(a)(iii) hereof) for some or all of the Common Shares exchangeable for
Rights.

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

          (e) 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, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issued an amount in cash equal to the same fraction of
the current market value of a whole Common Share. For the purposes of this
paragraph (e), 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) 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, after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders of Common
Shares or to make any other distribution to the holders of Common Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of Common
Shares rights or warrants to subscribe for or to purchase any additional Common
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of Common Shares (other than a
reclassification involving only the subdivision of outstanding Common Shares),
(iv) to effect any consolidation or merger into or with (other than a merger of
a Subsidiary into or with the Company), to effect any share exchange with 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 or more transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person, or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, 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, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, share exchange,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common 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

                                       -25-
<PAGE>

at least 10 days prior to the record date for determining holders of Common
Shares for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares, whichever
shall be the earlier.

          (b) In case any of Section 11(a)(ii) Event or Section 13 Event shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice shall
include a brief summary of the Section 11(a)(ii) Event or Section 13 Event, as
the case may be, and the consequences thereof to holders of Rights.

          Section 26. Notices.

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

              Banta Corporation
              225 Main Street
              Menasha, WI  54952
              Attention:   Secretary

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

              Firstar Bank, N.A.
              1555 North Rivercenter Drive, Suite 301
              Milwaukee, Wisconsin 53212
              Attention:   Corporate Trust Department

          (c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
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 may and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing Common Shares of the Company. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the thresholds set forth in Sections 1(a)
and 3(a) hereof from 15% to not less than 10%, with appropriate exceptions for
persons then beneficially owning Common Shares of the Company constituting a
percentage of the number of Common Shares then outstanding equal to or in excess
of the new threshold. From and after the Distribution

                                       -26-
<PAGE>

Date and subject to the penultimate sentence of this Section 27, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision 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 Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, that from and after the
Distribution Date this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
reduces the then effective Redemption Price or moves to an earlier date the then
effective Final Expiration Date. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares of the Company.

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

          Section 30. 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.

          Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Wisconsin and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

          Section 32. 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.

                                       -27-
<PAGE>

          Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

          Section 34. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of Common Shares
of the Company 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 of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement and any determination as to whether
actions or any Person shall be such as to cause such Person to beneficially own
shares held by another Person). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (ii) below, all omissions
with respect to the foregoing) which are done or made by the Board of the
Company in good faith, shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(ii) not subject the Board of the Company to any liability to the holders of the
Rights.

                                       -28-
<PAGE>

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

                                        BANTA CORPORATION

Attest:

By: /s/ Ronald D. Kneezel               By: /s/ Donald D. Belcher
   -----------------------------------     -------------------------------------
Title: Vice President, General          Title: Chairman and Chief
      --------------------------------        ----------------------------------
       Counsel and Secretary                   Executive Officer
      --------------------------------        ----------------------------------

                                        FIRSTAR BANK, N.A.

Attest:

By: /s/ Toula Akladios                  By: /s/ Barbara R. Bahr
   -----------------------------------     -------------------------------------
Title: Vice President & Trust Officer   Title:  Trust Officer
      --------------------------------        ----------------------------------

                                       -29-
<PAGE>
                                                                    ============
                                                                     EXHIBIT A
                                                                    ============

                           [Form of Right Certificate]

Certificate No. R-                                                _______ Rights

          NOT EXERCISABLE AFTER NOVEMBER 15, 2011 (SUBJECT TO
          EXTENSION) OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
          RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO
          EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

                                Right Certificate

                                BANTA CORPORATION

          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 November 5, 2001, and as such agreement may be amended
(the "Rights Agreement"), between Banta Corporation, a Wisconsin corporation
(the "Company"), and Firstar Bank, N.A. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., Menasha, Wisconsin time, on
November 15, 2011, subject to extension, at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one-half of one fully
paid nonassessable (except as otherwise provided by any corporation law
applicable to the Company) share of common stock, par value $.10 ("Common
Shares"), of the Company, at a purchase price of $140 per Common Share (the
"Purchase Price") (equivalent to $70 for each one-half of a Common Share), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of Common Shares which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of November 15, 2001, based on the Common
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of Common Shares which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

          This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of

                                      A-1
<PAGE>

the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.

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

          Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.001 per Right or (ii) may be exchanged in whole or in part for Common
Shares. The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, but prior to such Person's
acquisition of 50% or more of the outstanding Common Shares, exchange the Rights
evidenced by this Certificate for Common Shares, at an exchange ratio of one
Common Share per Right, subject to adjustment, as provided in the Rights
Agreement.

          No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement. No Rights may be exercised that would
entitle the holder to any fraction of a Common Share greater than one-half of a
Common Share unless concurrently therewith such holder purchases an additional
fraction of a Common Share which, when added to the number of Common Shares to
be received upon such exercise, equals an integral number of Common Shares, as
provided in the Rights Agreement.

          No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common 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 Right Certificate shall have been
exercised as provided in the Rights Agreement.

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

                                      A-2
<PAGE>

          WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________, ____.

ATTEST:                                 BANTA CORPORATION

_____________________________________   By: _______________________________
                                            Title: _________________________

Countersigned:

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

By:  _______________________________
     Authorized Signature

                                      A-3
<PAGE>
                   [Form of Reverse Side of Right Certificate]

                               FORM OF ASSIGNMENT

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

          FOR VALUE RECEIVED _______________________________ hereby sells,
assigns and transfers unto __________________________________________________
                          (Please print name and address of transferee)

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

Dated:   ____________, ____

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

Signature Guaranteed:

          The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

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

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

                                      A-4
<PAGE>
            [Form of Reverse Side of Right Certificate -- continued]

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Right Certificate.)

To BANTA CORPORATION:

          The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares be issued in the name of:

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 Right
Certificate, a new Right Certificate for the balance remaining 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:

          Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.

                                      A-5
<PAGE>
            [Form of Reverse Side of Right Certificate -- continued]

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

          The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

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

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

                                     NOTICE
                                     ------

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

          In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

                                      A-6
<PAGE>
                                                                    ============
                                                                     EXHIBIT B
                                                                    ============

                                BANTA CORPORATION

                          SUMMARY OF RIGHTS TO PURCHASE
                                  COMMON SHARES

          On November 5, 2001, the Board of Directors of Banta Corporation (the
"Company") declared a dividend of one common share purchase right (a "Right")
for each outstanding share of common stock, $.10 par value (the "Common
Shares"), of the Company. The dividend is payable on November 15, 2001 to the
shareholders of record on that date (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one-half of one Common Share, at
a price of $140 per Common Share (equivalent to $70 for each one-half of a
Common Share), subject to adjustment (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Firstar Bank, N.A., as Rights Agent (the "Rights
Agent").

          Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (other
than the Company, a subsidiary of the Company or an employee benefit plan of the
Company or a subsidiary) (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding Common Shares (the "Shares
Acquisition Date") or (ii) 10 business days (or such later date as may be
determined by action of the Company's Board of Directors prior to such time as
any person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group (other than the Company, a subsidiary of the Company or an employee
benefit plan of the Company or a subsidiary) of 15% or more of such outstanding
Common Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate.

          The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without such notation,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

                                      B-1
<PAGE>

          The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 15, 2011 (the "Final Expiration Date"), unless the
Rights are earlier redeemed or exchanged by the Company, or the Rights Agreement
is amended, in each case as described below.

          The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the then
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
regular quarterly cash dividends or dividends payable in Common Shares) or of
subscription rights or warrants (other than those referred to above).

          In the event that any person becomes an Acquiring Person (a "Flip-In
Event"), each holder of a Right (except as otherwise provided in the Rights
Agreement) will thereafter have the right to receive upon exercise that number
of Common Shares (or, in certain circumstances cash, property or other
securities of the Company or a reduction in the Purchase Price) having a market
value of two times the then current Purchase Price. Notwithstanding any of the
foregoing, following the occurrence of a Flip-In Event all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were, or
subsequently become beneficially owned by an Acquiring Person, related persons
and transferees will be null and void.

          In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of its consolidated assets or earning power are
sold (the events described in clauses (i) and (ii) are herein referred to as
"Flip-Over Events"), proper provision will be made so that holders of Rights
(except as otherwise provided in the Rights Agreement) will thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price,
that number of shares of common stock of the acquiring company which at the time
of such transaction will have a market value of two times the then current
Purchase Price.

          With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued. In lieu of
fractional Common Shares equal to one-half of a Common Share or less, an
adjustment in cash will be made based on the market price of the Common Shares
on the last trading day prior to the date of exercise. No Rights may be
exercised that would entitle the holder thereof to any fractional Common Share
greater than one-half of a Common Share unless concurrently therewith such
holder purchases an additional fraction of a Common Share which when added to
the number of Common Shares to be received upon such exercise, equals an
integral number of Common Shares.

          The Purchase Price is payable by certified check, cashier's check,
bank draft or money order or, if so provided by the Company, the Purchase Price
following the occurrence of a Flip-In Event and until the first occurrence of a
Flip-Over Event may be paid in Common Shares having an equivalent value.

                                      B-2
<PAGE>

          At any time after a person becomes an Acquiring Person and prior to
the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by any Acquiring Person which have become void), in
whole or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).

          At any time prior to a person becoming an Acquiring Person, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.001 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

          Other than amendments that would change the Redemption Price or move
to an earlier date the expiration of the Rights, the terms of the Rights may be
amended by the Board of Directors of the Company without the consent of the
holders of the Rights, including an amendment to lower the threshold for
exercisability of the Rights from 15% to not less than 10%, with appropriate
exceptions for any person then beneficially owning a percentage of the number of
Common Shares then outstanding equal to or in excess of the new threshold,
except that from and after the Distribution Date no such amendment may adversely
affect the interests of the holders of the Rights. The Rights may also be
amended to extend the expiration date thereof.

          Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.

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

                                      B-3Employment Agreement

 Exhibit 10.3
 EMPLOYMENT AGREEMENT

	1.	PARTIES: The Parties to this Employment Agreement (hereafter referred to as the “Agreement”) are DR. RONALD D. SUGAR (hereafter referred to as
“Executive”) and NORTHROP GRUMMAN CORPORATION (hereafter referred to as “Northrop Grumman” or “the Company”).
	 	 	 
	2.	EMPLOYMENT: For the past several months, Executive has been employed by Northrop Grumman as Corporate Vice President and President of Litton Industries, Inc.
(“Litton”), a wholly owned subsidiary of Northrop Grumman. Executive’s employment has been governed by the terms of several employment agreements, including but not limited to his Change of Control Employment Agreement and letter
agreements dated June 21, 2000 and December 21, 2000 (hereafter collectively referred to as the “Litton Agreements”). Northrop Grumman and Executive now wish to terminate the Litton Agreements and to enter into new employment terms and
conditions as set forth in this Agreement in connection with Executive’s election to the position of President and Chief Operating Officer of Northrop Grumman on September 19, 2001.
	 	 	 
	3.	TERM: The term of this Agreement shall commence as of September 19, 2001 (the “Effective Date”) and shall end three years thereafter, unless sooner terminated as
hereinafter provided.

 
 
  
  
  
 

  
  
  

	4.	POSITION AND DUTIES: Executive shall serve as President and Chief Operating Officer (or such other higher office to which Executive is elected) and shall be an elected
officer of the Company. He will also continue as a member of the Company’s Board of Directors (the “Board”). Executive shall, during the term hereof:
	 	 	 
	 	A.	have such duties and responsibilities as the Chief Executive Officer (“CEO”) of the Company shall designate that are consistent with the Executive’s position as
President and Chief Operating Officer of the Company. The Executive shall perform such duties and responsibilities in accordance with the practices and policies of the Company as are in effect from time to time. While employed as President and Chief
Operating Officer, the Executive shall report exclusively to the CEO.
	 	 	 
	 	B.	devote all of his business time (excluding periods of vacations and absences made necessary because of illness or other traditionally approved leave purposes), energy and skill in
the performance of his duties with the Company; provided, however, that the foregoing will not prevent the Executive from (i) participating in charitable, civic, educational, professional, community or industry affairs or serving on the boards of
directors or advisory boards of other companies, and (ii) managing his and his family’s personal investments.

	5.	COMPENSATION AND BENEFITS: During the term of this Agreement, the following terms shall apply:
	 	 	 
	 	A.	Base Salary: Executive’s base salary during the term of this Agreement shall be no less than $750,000 per year, which amount shall be subject to periodic increases, but not
decreases, in accordance with the Company’s normal salary review process.
	 	 	 
	 	B.	ICP Bonus: Commencing on the Effective Date, Executive shall participate in the Incentive Compensation Plan (“ICP”), a bonus plan for elected officers of the Company. His
target bonus under this plan shall be 70%. He shall receive a pro-rata ICP bonus for the period of time from the Effective Date through December 31, 2001. This pro-rata ICP bonus shall be paid at the time that other elected officers receive their
ICP bonuses in 2002.
	 	 	 
	 	C.	Pro-Rata Bonus: For the period April 3, 2001 to the Effective Date, Executive shall receive a pro-rata bonus. The pro-rata calculation shall be made by using a fraction, the
numerator of which is the number of days since April 3, 2001 to the Effective Date, and the denominator of which is 365, multiplied times $775,000, for a total pro-rata bonus of $358,836. This pro-rata bonus shall be paid at the time that elected
officers receive their ICP bonuses in 2002, but no later than March 31, 2002. Executive

  

	 	acknowledges that payment of this bonus, combined with other bonuses previously paid to him, fully satisfies all requirements in his Litton Agreements to pay him bonuses for his services through
the Effective Date. 
	 	 	 
	D.	Benefits: Executive is currently covered by benefit plans of Litton. Executive shall continue to be covered by his current Litton pension plans (including the Litton Industries Inc.
Retirement Plan B, the Litton Industries Inc. Restoration Plan, the Litton Financial Security and Savings Program and the Litton Industries Inc. Supplemental Executive Retirement Plan)(the “Litton pension plans”) as well as various Litton
welfare plans through December 31, 2001. The Company acknowledges that Executive is fully vested in the Litton Industries Inc. Restoration Plan and the Litton Industries Inc. Supplemental Executive Retirement Plan by virtue of his June 21, 2000
letter agreement. Effective January 1, 2002, Executive shall no longer accrue benefits (except with respect to vesting service in the qualified plan) under the Litton pension plans nor participate in the Litton welfare plans, but rather shall
participate in the Northrop Grumman welfare plans and commence benefit accruals under the Northrop Grumman pension plans in which Northrop Grumman elected officers who are direct reports to the Company’s CEO participate. These plans include,
but are not limited to, the Northrop Grumman Retirement Plan, the Northrop Grumman Savings and Investment Plan, and three non-qualified

  

	 	 	supplemental executive retirement plans known as “ERISA 1”, “ERISA 2” and the “CPC SERP.” As of the Effective Date, Executive shall be credited with five years of vesting service
(but not benefit service) under each of the three non-qualified supplemental executive retirement plans.
	 	 	 
		E.	Stock and Stock Options: As of the Effective Date, Executive has been awarded a grant of 30,000 non-qualified stock options and 10,000 Restricted Performance Stock Rights (“RPSRs”). These
options and RPSRs shall be subject to the terms and conditions of the Company’s 2001 Long Term Incentive Stock Plan (“LTISP”), the Guide to Administration for the LTISP (“Guide”) and the grant certificates provided to
Executive. Executive shall also be eligible to receive future grants under the LTISP in accordance with the Company’s normal practice of awarding such grants to elected officers.
	 	 	 
	6.	PERQUISITES: Executive shall continue to be eligible for his current Litton perquisites through December 31, 2001. Effective January 1, 2002,Executive shall be eligible for the perquisites
provided to Company elected officers who are direct reports to the Company’s CEO. These perquisites, which are periodically modified by the Company, are listed on Exhibit A of this Agreement. Notwithstanding Exhibit A, Executive’s
Financial Planning and Income Tax Preparation Benefit shall be subject to a maximum of $15,000 (not $9,000) per year. In addition, Executive shall be entitled to four weeks vacation per year.

  

	7.	RETIREE MEDICAL BENEFIT: Executive shall be eligible to participate in the Special Officer Retiree Medical Program on the same terms and conditions as
other elected officers. That program currently provides lifetime medical benefits to elected officers who retire and to their spouses, if the Executive has at least 5 years of service as an elected officer. The program further provides that it may
be modified or terminated by the Company at any time. Executive’s service as an elected officer commenced April 3, 2001. 
	 	 	 
		In the event that the Executive is not eligible to receive medical benefits under the Special Officer Retiree Medical Program, the Company will make the benefits otherwise provided
under such program available to Executive and his spouse (during the lifetime of each) provided that the Executive (or, after his death, his spouse) reimburses the Company for the full premium for such coverage.
	 	 	 
	8.	SPECIAL AGREEMENT: As of the Effective Date, Executive shall be provided with a March 2000
Special Agreement (“Special Agreement”) with the Company providing the same protection for Executive in the event of a Change in Control of the Company as is provided to other elected officers.
	 	 	 
	9.	TERMINATION OF LITTON AGREEMENTS: Executive hereby waives and relinquishes any and all rights and benefits he may have under his Litton Agreements, and he agrees not to make
any claim, now or in the future, for

 

	 	 benefits under the Litton Agreements. Executive acknowledges that he has been paid all sums due under the terms of those Agreements with the exception of the pro-rata bonus
referenced in Section 5.C. of this Agreement. Executive and Northrop Grumman hereby agree to terminate the Litton Agreements in their entirety as of the Effective Date; provided, however, that this termination shall not affect Executive’s
rights to any pension benefits in which he is vested by virtue of the Litton Agreements.
 
	 	 	 
	10.	SPECIAL RETENTION BENEFITS: As of the Effective Date, Executive has been awarded a grant of 66,480 Restricted Stock Rights (“RSRs”). One third of these RSRs shall
vest on September 18, 2002, one third shall vest on September 18, 2003, and the remaining one third shall vest on September 18, 2004; provided, however, that in the event Executive’s employment is terminated for any of the following reasons,
all remaining RSRs shall vest and all shares not yet issued pursuant to the grant certificate shall be issued as of the date of such termination: (i) the death of Executive; or (ii) Executive’s “Disability” (as hereinafter defined);
or (iii) termination by Northrop Grumman without “Cause” (as hereinafter defined); or (iv) termination by Executive for “Good Reason” (as hereinafter defined); provided further, that the Company shall have the right to pay
equivalent cash value in lieu of issuing all or a portion of the shares of stock required by this Section 10. Except as otherwise modified by this Section 10, the RSR grant shall be governed by the terms of the LTISP, the Guide, and the grant
certificate.

 

	11.	TERMINATION OF EMPLOYMENT BY THE COMPANY:
	 	 	 
	 	A.	The Company shall have the right to terminate Executive’s employment at any time, with or without Cause, upon giving at least 10 day’s advance written notice to the
Executive of the date when such termination shall become effective. If the Company terminates Executive’s employment without “Cause” (as that term is defined below), then Executive shall receive, within 30 days after he signs a
release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (as defined below) (with the exception of certain benefits under Accrued Obligations, which will be paid as soon as administratively practicable),
and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall commence as of the date of such termination.
	 	 	 
	 	 	For purposes of this Agreement, “Cause” shall mean the occurrence of either or both of the following: (i) the willful misconduct by the Executive with regard to the
Company that is significantly injurious to the Company, provided, however, that no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in the best interests of the Company; or (ii) the conviction of the Executive of (or the pleading by the Executive of nolo contendere to)

 

	 	any felony (other than traffic related offenses or as a result of vicarious liability).
	 	 	 
	B. 	Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless the provisions of this paragraph B are complied with. Executive shall be given written notice by the CEO of the
intention to terminate him for Cause, and he shall then be entitled to a meeting before the Board to present his position, provided he requests in writing such a meeting within ten calendar days of his receipt of the written notice from the CEO of
the intention to terminate him. Following such a meeting, if Executive is then furnished written notice by the Board confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, Executive shall thereupon be
terminated for Cause, which determination shall be subject to review by the arbitrator on a de novo basis.
	 	 	 
	C.	In the event that Executive is terminated for “Cause,” Executive will be entitled to receive only (w) any unpaid base salary through the date of termination and any accrued vacation; (x) any unpaid bonus for
services rendered during the calendar year prior to the calendar year in which the termination occurs; (y) reimbursement for any unreimbursed expenses incurred through the date of termination; and (z) all other payments, benefits or fringe benefits
to which the Executive may be entitled subject

 

	 	 	to, and in accordance with, the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant (including, but not limited to, any
then vested stock options, RPSRs or RSRs) (collectively, (w) through (z) are referred to as “Accrued Obligations”), and will not receive any of the Special Severance Benefits set forth in Section 15. 
	 	 	 
	12.	TERMINATION OF EMPLOYMENT BY DEATH OR DISABILITY OF EXECUTIVE:
	 	 	 
	 	A.	Death: In the event that Executive dies during the term of this Agreement, this Agreement shall automatically terminate as of the date of death without further
obligation on the part of the Company, except that the Company shall pay to Executive’s estate, within 30 days of death, the Accrued Obligations (with the exception of certain benefits under certain Accrued Obligations, which shall be paid as
soon as administratively practicable), all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall apply to his eligible dependents commencing as of the
date of death.
	 	 	 
	 	B.	Disability: If the Executive’s employment terminates by reason of his Disability (as defined below) during the term of this Agreement, this

 

	 	 	Agreement shall terminate without further obligation to Executive, except that the Company shall provide to Executive, within 30 days after he signs a release (substantially in the form of Exhibit
C hereto) which is not revoked, the Accrued Obligations (with the exception of certain benefits under Accrued Obligations, which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections
15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall commence as of the date of such termination. For purposes of this Agreement, “Disability” shall be defined as the inability of the Executive to
perform his material duties hereunder due to the same or a related physical or mental injury, infirmity or incapacity for 180 days in any 365-day period. The Company may terminate the Executive for a Disability as of the end of the aforementioned
period or at any time thereafter during which the Disability continues upon 30 days prior written notice provided the Executive has not returned to full time employment prior to the end of such 30-day period.
	 	 	 
	13. 	TERMINATION OF EMPLOYMENT BY EXECUTIVE FOR GOOD REASON: Executive shall have the right to terminate his employment with Northrop Grumman for “Good Reason” as that term is defined
below. If he terminates his employment for “Good Reason,” the Executive shall receive, within 30 days after he signs a release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (with the
exception of certain benefits under

 

	 	Accrued Obligations which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit
Continuation in Section 15.B shall commence as of the date of such termination. For purposes of this Agreement, “Good Reason” shall mean without the Executive’s express written consent, the occurrence of any one or more of the
following:
	 	 	 
	 	A.	failure of the Company to elect Executive to the position of CEO on or before March 1, 2003;
	 	 	 
	 	B.	the election of a person other than Kent Kresa or Executive as CEO of the Company;
	 	 	 
	 	C.	the election of a Company employee other than Kent Kresa or Executive as Chairman of the Board of Northrop Grumman (the election of a non-employee to be Chairman shall not be “Good
Reason”);
	 	 	 
	 	D.	any reduction or diminution in the Executive’s then titles or positions (including as a Director), a material reduction in the nature or status of the Executive’s then authorities,
duties, and/or responsibilities (when such authorities, duties, and/or responsibilities are viewed in the aggregate), other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by
the Executive;

 

	 	 	provided that Good Reason will be deemed to exist if the Executive’s reporting relationship is changed such that the Executive does not report to the Company’s CEO;
	 	 	 
	 	E.	a reduction by the Company of the Executive’s base salary as in effect on the Effective Date, or as the same shall be increased from time to time; 
	 	 	 
	 	F.	any material failure by the Company to comply with any of the provisions of this Agreement, other than isolated and inadvertent failure(s) not occurring in bad faith and remedied by the Company
promptly after receipt of notice thereof given by the Executive;
	 	 	 
	 	G. 	the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement, as contemplated
in Section 19 herein;
	 	 	 
	 	 	Provided, however, that after April 30, 2003, Executive shall only be entitled to terminate for “Good Reason” for the reasons set forth in Paragraphs D, E, F and G of this Section
13.
	 	 	 
	 	 	 Should Executive desire to terminate his employment for “Good Reason,” he shall first give at least 30 days prior written notice of his intent to so
 

	 	 	terminate to the CEO of the Company, and give the Company an opportunity to cure the event giving rise to “Good Reason.”
	 	 	 
	14. 	 TERMINATION OF EMPLOYMENT WITHOUT GOOD REASON: The Executive shall have the right to terminate his employment with Northrop Grumman at any time
without Good Reason by giving written notice to the CEO at least thirty days in advance of such termination. In the event that Executive’s employment with the Company is terminated during the term of this Agreement by Executive without Good
Reason, Executive shall not be entitled to any additional payments or benefits hereunder, other than Accrued Obligations. 
 
	 	 	 
	15.	SPECIAL SEVERANCE BENEFITS: In the event Executive’s employment terminates due to his death or Disability, or if he is terminated by Northrop Grumman without “Cause,” or if he
terminates employment for “Good Reason,” then he shall be entitled to receive the following Special Severance Benefits, provided, however, that he first signs a release of claims in a form substantially similar to Exhibit C: 
	 	 	 
	 	A.	Salary and Bonus: A payment equal to the sum of (i) one times the Executive’s current annual base salary and (ii) the highest of any of the following: (x) Executive’s target bonus
percentage under the ICP multiplied by his then current annual base salary; or (y) the last bonus paid to Executive under the ICP prior to his termination; or (z) $775,000, and

 

	 	 	(iii) a pro-rata portion of the Executive’s target bonus under the ICP for the calendar year in which the Executive’s termination occurs (determined by multiplying such amount by a
fraction, the numerator of which is the number of days during the calendar year in which the termination occurs, and the denominator of which is 365). 
	 	 	 
	 	B. 	Benefit Continuation: Three years of continued coverage for Executive and his eligible dependents under the Company’s medical, dental, vision and life insurance plans and programs
applicable to Executive at the time of his termination, on the same terms and conditions as apply to other elected officers during this three-year period. 
	 	 	 
	 	C.	Other Benefits: In addition to the benefits noted above, the following additional benefits shall be paid Executive: (i) a lump sum payment equal to three times the value of his annual car
allowance; (ii) continuation of his then current financial planning benefits through the end of his third financial planning year; (iii) the income tax preparation reimbursement benefit for the year in which he terminates employment and for the
following two full calendar years; and (iv) outplacement benefits provided through an outside provider selected by the Executive, at a cost not to exceed $50,000 in total. 

 

	 	The foregoing severance benefits shall be offset by any severance benefits Executive is entitled to receive under any other Company plan, program, practice or agreement.
	 	 	 
	16.	GROSS-UP FOR SECTION 280G PURPOSES: In the event that the Executive becomes or has already become entitled to payments and/or benefits or any other amounts in the “nature of
compensation” which would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (including without limitation as a result of this Agreement, the
Litton Agreements (including the Change in Control Employment Agreement) or any other plan, arrangement or agreement with the Company or any affiliate (including Litton), or from any person whose actions result in a change of ownership or effective
control of the Company or Litton covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or Litton or such person), the provisions of Exhibit B shall apply. For purposes of Exhibit B, the term “Change in
Control” shall mean a change of ownership or effective control (as such terms area used in Section 280G and the proposed regulations thereunder) heretofore or hereafter of the Company or Litton.
	 	 	 
	17.	NO MITIGATION; NO OFFSET: Except as set forth in this Agreement, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without limitation, set-off, counterclaim, recoupment,

 

	 	defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obliged to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment thereunder be reduced by any compensation earned by the Executive as a result of employment by another
employer. 
	 	 	 
	18.	TRADE SECRETS: In the course of performing his duties for his former employer Litton and for the Company, Executive will receive, and acknowledges that he has received, confidential
information, including without limitation, information not available to competitors relating to the Company’s existing and contemplated financial plans, products, business plans, operating plans, research and development information, and
customer information, all of which is hereinafter referred to as “Trade Secrets.” Executive agrees that he will not, either during his employment or subsequent to the termination of his employment with the Company, directly or indirectly
disclose, publish or otherwise divulge any Northrop Grumman or Litton Trade Secrets to anyone outside the Company, or use such information in any manner which would adversely affect the business or business prospects of the Company; provided,
however, that the foregoing shall not preclude Executive from complying with due legal process or governmental inquiry or from taking actions or making disclosures while employed by the Company in good faith performance of his duties and obligations
hereunder. Executive further agrees that if, at the time of the termination of his employment

 

	 	with the Company, he is in possession of any documents or other written or electronic materials constituting, containing or reflecting Trade Secrets, he will return and surrender all such documents
and materials to the Company upon leaving its employ. The restrictions and protection provided for in this paragraph shall be in addition to any protection afforded to Trade Secrets by law or equity. 
	 	 	 
	19. 	INVENTIONS: Executive agrees that all inventions, discoveries and improvements, and all new ideas for manufacturing and marketing products or services of the Company, which Executive has
conceived during his prior employment with Litton or may conceive while employed by the Company, whether during or outside business hours, on the premises of the Company or elsewhere, alone or in collaboration with others, or which he has acquired
or may acquire from others, whether or not the same can be patented or registered under patent, copyright, or trademark laws, shall be and become the sole and exclusive property of the Company. Executive agrees to promptly disclose and fully
acquaint his management with any such inventions, discoveries, improvements and ideas which he has conceived, made or acquired, and shall, at the request of the Company, make a written disclosure of the same and execute such applications,
assignments, and other written instruments as may reasonably be required to grant to the Company sole and exclusive right, title and interest thereto and therein and to enable the Company to obtain and maintain patent, copyright and trademark
protection therefore. 

 

	20.	NON-SOLICITATION AND NON-DISPARAGEMENT:
	 	 	 
	 	A.	For a period of one year following Executive’s termination of employment, Executive shall not, directly or indirectly, through aid, assistance or counsel, on his own behalf or on behalf of
another person or entity (i) solicit or offer to hire any person who was, within a period of six months prior to Executive’s termination, employed by the Company, or (ii) by any means issue or communicate any public statement that may be
critical or disparaging of the Company, its products, services, officers, directors or employees; provided the foregoing shall not apply to truthful statements made in compliance with legal process or governmental inquiry.
	 	 	 
	 	B.	For a period of one year following Executive’s termination from employment, the Company shall not by any means issue or communicate any public statement that may be critical or disparaging of
the Executive, provided the foregoing shall not apply to truthful statements made in compliance with legal process, governmental inquiry or as required by legal filing or disclosure requirements.
	 	 	 
	21.	ASSIGNMENT: This Agreement is personal to Executive and shall not be assigned by him. However, this Agreement shall be binding upon any entity succeeding to all or substantially all of the
assets or business of the Company,

 

	 	whether by merger, consolidation, acquisition or otherwise and may not otherwise be assigned by the Company. 
	 	 	 
	22.	TAX WITHHOLDING: The Company shall be entitled to withhold from any amounts payable pursuant to this Agreement all taxes as legally shall be required (including without limitation United
States federal taxes, and any other state, city or local taxes).
	 	 	 
	23.	SAVINGS CLAUSE: If any provision under this Agreement or its application is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other
provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application. 
	 	 	 
	24.	ENTIRE AGREEMENT: This Agreement represents the complete agreement and understanding between Executive and the Company pertaining to the subject matters contained herein, and supersedes all
prior agreements or understandings, written or oral, between the Parties with respect to such subject matters.
	 	 	 
	25.	INDEMNIFICATION: The Company hereby covenants and agrees to indemnify the Executive and hold him harmless to the fullest extent permitted by law and under the By-laws of the Company against and
in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including

 

	 	attorney’s fees), losses, and damages resulting from the Executive’s good faith performance of his duties and obligations with the Company or with Litton (including service prior to the
Effective Date hereof). The Company, within 30 days of presentation of invoices, shall advance to the Executive reimbursement of all legal fees and disbursements incurred by the Executive in connection with any potentially indemnifiable matter;
provided, however, that in order to receive such advanced fees and disbursements, Executive must first sign an undertaking reasonably satisfactory to the Company that he will promptly repay the Company all advanced fees and disbursements in the
event it is finally determined that Executive cannot be indemnified for the matter at issue under applicable law or Company By-laws; and provided further, that Executive shall consult with the Company prior to selecting his counsel and shall make a
reasonable effort to select counsel reasonably acceptable to the Company. 
	 	 	 
	26.	LIABILITY INSURANCE: The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists (but no less than six years),
after the term of this Agreement in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

 

	27.	ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in the State of
California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final
and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the arbitrator) its or his
legal fees and expenses.
	 	 	 
	28.	SURVIVAL OF CERTAIN PROVISIONS. The following provisions of this Agreement shall survive and continue to be in effect to the extent applicable following Executive’s termination of
employment: Section 7 (retiree medical benefit); Section 10 (special retention benefits); Section 11 (termination of employment by the Company); Section 12 (termination of employment by death or disability of Executive); Section 13 (termination of
employment by Executive for good reason); Section 14 (termination of employment without good reason); Section 15 (special severance benefits); Section 16 (gross-up for Section 280G purposes); Section 17 (no mitigation; no offset); Section 18 (trade
secrets); Section 19 (inventions); Section 20 (non-solicitation and non-disparagement); Section 22 (tax withholding); Section 25 (indemnification); Section 26 (liability insurance); and Section 27(arbitration). The survival of Section 16 shall also
cover payments or benefits received after the termination of employment and this

 

	 	Agreement if resulting from a Change in Control (as defined in Section 16) prior to such termination.
	 	 	 
	29. 	GOVERNING LAW: This Agreement shall be construed in accordance with and governed by the laws of the State of California without regard to principles of conflict of law.

  

	Dated:	 
 
 	Executive
	 	 	 
	 	 	 
	 	 	 
 By Ronald D. Sugar
	 	 	 
	 	 	 
	Dated:	 
 
 	NORTHROP GRUMMAN CORPORATION
	 	 	 
	 	 	 	 

	 	By:	 
 
 

 
 Exhibit A to Employment Agreement
 Executive Perquisites for Elected Officers Who
Report to the CEO
  

	 	

		Deferred Compensation Plan
	 	

		Executive Life Insurance—three times base salary, up to a maximum of $600,000
	 	

		Executive Accidental Death and Dismemberment Insurance—6 times base salary, up to a maximum of $1,000,000
	 	

		Travel Accident Insurance
	 	

		Long Term Disability—covers 65% of base pay up to a maximum of $15,000 per month including social security
	 	

		Executive Medical—covers 100% of covered charges for Executive and dependents
	 	

		Executive Dental—covers 100% of covered benefits for Executive and dependents with a $2,000 annual maximum
	 	

		Annual Executive Physical Exam
	 	

		Personal Liability Insurance of $5,000,000
	 	

		Car Allowance of $15,000 per year
	 	

		Financial Planning and Income Tax Preparation Benefit—covers 100% of combined charges up to a maximum of $9,000 per year
	 	

		First Class Air Travel
	 	

		Payment for Two Airline Clubs
	 	

		Reimbursement for Two Private Club Membership up to $5,000 per year

 These perquisites are periodically modified by the Company. 
  

   Exhibit B: Gross-Up Provisions
             Equalization Payment. If upon or following a Change in Control, the tax imposed by Section 4999 of the Code or any similar or successor tax (the “Excise Tax”) applies, solely because of the Change in Control,
to any payments, benefits and/or amounts received by the Executive as Severance Benefits or otherwise, including without limitation, any fees, costs and expenses paid under this Agreement and/or any amounts received or deemed received, within the
meaning of any provision of the Code, by the Executive as a result of (and not by way of limitation) any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to
outstanding grants or awards to the Executive under any of the Company’s incentive plans, including without limitation, the 1993 Long Term Incentive Stock Plan, the 1987 Long Term Incentive Plan and the 1981 Long-Term Incentive Plan, the
Company shall pay to the Executive in cash an additional amount or amounts (the “Gross-Up Payment(s)”)) such that the net amount retained by the Executive after the deduction of any Excise Tax on such payments, benefits and/or amounts so
received and any Federal, state and local income tax and Excise Tax upon the Gross-Up Payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such
payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such payment(s) shall be made by the Company to the Executive as soon as practicable following
the receipt or deemed receipt of any such payments, benefits and/or amounts so received, and may be satisfied by the Company making a payment or payments on Executive’s account in lieu of withholding for tax purposes but in all events shall be
made within thirty (30) days of the receipt or deemed receipt by the Executive of any such payment, benefit and/or amount. 
 
            Tax Computation. For purposes of determining whether any payments, benefits and/or amounts, including amounts paid as
Severance Benefits, will be subject to Excise Tax, and the amount of any such Excise Tax:

	 	(a)	Any other payments, benefits and/or amounts received or to be received by the Executive in connection with or contingent upon a Change in Control of the Company or the Executive’s termination of employment, (whether
pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or with any Person whose actions result in a Change in Control of the Company or any person affiliated with the Company or such Persons) shall be
combined to determine whether the Executive has received any “parachute payment” within the meaning of Section 280G(b)(2) of the code, and if so, the amount of any “excess parachute payments” within the meaning of Section
280(G)(b)(1) that shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to the Executive, such other

  

	 	 	payments, benefits and/or amounts (in whole or in part) do not constitute parachute payments, or such excess parachute payments represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
	 	 	 
	 	(b)	The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code.

	 	 	 
	 	For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar
year in which the Gross-Up Payment is to be made. Such highest marginal rate shall take into account the loss of itemized deduction by the Executive and shall also include the Executive’s share of the hospital insurance portion of FICA and
state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Effective Date of termination, net of the maximum reduction in Federal income taxes that could be obtained from
the deduction of such state and local taxes.

             Subsequent Recalculation. In the event the Internal Revenue
Service adjusts the computation of the Company under this Section herein, so that the Executive did not receive the greatest net benefit, the Company shall reimburse the Executive as provided herein for the full amount necessary to place the
Executive in the same after-tax position as he would have been in had no Excise Tax applied. 
 
   EXHIBIT C
 RELEASE AGREEMENT 

	1.	PARTIES: The parties to this Release Agreement (referred to hereafter as “Agreement”) are DR. RONALD D. SUGAR (referred to hereafter as
“Executive”) and NORTHROP GRUMMAN CORPORATION (referred to hereafter as “Northrop Grumman” or the “Company”).
	 	 	 
	2.	RECITALS: This Agreement is made with reference to the following facts:
	 	 	 
	 	2.1	Executive and Northrop Grumman are parties to an Employment Agreement, one of the terms of which provides Executive, under certain conditions, with Special Severance Benefits in exchange for a release.
	 	 	 
	 	2.2	This Agreement is the release Executive is required to sign in order to receive those Special Severance Benefits. 
	 	 	 
	3.	CONSIDERATION: In exchange for the Executive’s agreement to abide by all of the terms of this Agreement, Northrop Grumman will provide Executive with the
Special Severance Benefits set forth in Section 15 of the Employment Agreement. 

 

	4.	COMPLETE RELEASE: In consideration of the promises contained herein, and for other good and valuable consideration the receipt of which is hereby acknowledged,
Executive does hereby acknowledge full and complete satisfaction of and does hereby agree to release, absolve and discharge Releasees (as defined below) from all claims, causes of action, demands, damages or costs he may have against Releasees on
behalf of himself or others arising prior to the date he signs this Agreement. “Releasees” shall mean the Company, its subsidiaries, affiliated and related companies, past, present and future, and each of them, as well as its and their
employees, officers, directors, and agents (in their capacities as employees, officers, directors and agents), past and present, and each of them in such capacities. 
	 	 	 
	 	4.1	This waiver and release includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the Age Discrimination in Employment Act, which prohibits discrimination in
employment based on age, and retaliation; Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on race, color, religion, sex or national origin, and retaliation; the Americans with Disabilities Act, which
prohibits discrimination based on disability and retaliation; the California Fair Employment and Housing Act, which prohibits discrimination in employment based on race, color, religion, sex, national origin, ancestry, physical disability, mental
disability, medical condition, marital status or age, and retaliation; or any other federal, state or local laws or regulations prohibiting employment discrimination or retaliation

 

	 	 whether such claim be based upon an action filed by Executive or by any governmental agency. 
 
	 	 	 
	4.2	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under Executive’s Employment Agreement, or in relation to the Company’s
employee handbook and personnel policies, or any oral or written representations or statements made by officers, directors, lawyers, employees or agents of the Company, past and present, and each of them, or under any state or federal law regulating
wage, hours, compensation or employment, or any claim for retaliation, wrongful discharge, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional or negligent infliction of emotional distress, intentional or
negligent misrepresentation, or defamation.
	 	 	 
	4.3	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under or in relation to any severance plan, program, or arrangement.
	 	 	 
	4.4	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the federal False Claims Act.

 

	4.5	This release covers both claims that Executive knows about and those he may not know about. Executive hereby specifically waives and relinquishes all rights and benefits provided by Section 1542 of the Civil Code of the
State of California, and does so understanding and acknowledging the significance of this specific waiver of Section 1542. Section 1542 of the Civil Code of the State of California states as follows: 
	 	 	 

	 	“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially
affected his settlement with the debtor.”	 

	 	 
	4.6	Notwithstanding the provisions of Section 1542 and for the purpose of implementing a full and complete release, Executive expressly acknowledges that this Agreement is intended to include all claims which he does not
know or suspect to exist in his favor at the time of his signature on the Agreement, and that this Agreement will extinguish any such claims 
	 	 	 
	4.7	Notwithstanding anything to the contrary herein, this Agreement does not waive or release: (i) any rights or claims which Executive may have under the Age Discrimination in Employment Act or other laws which arise after
the date he signs this Agreement, (ii) any rights or claims Executive may have under his Employment Agreement with the Company which survive

 

	 	 	termination of employment; (iii) any rights Executive may have for indemnification from the Company; (iv) any rights which Executive may have under the Company’s Directors and Officers
liability insurance policy; (v) any rights Executive may have under stock grants provided to him by the Company; (vi) any rights Executive may have as a shareholder of Northrop Grumman; and (vii) any rights Executive may have to vested benefits
under any Company employee benefit plan. 
	 	 	 
	5. 	ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator in the State of California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the
arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the
arbitrator) its or his legal fees and expenses.
	 	 	 
	6.	PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Executive agrees and understands that he has been given a period of twenty-one (21) calendar
days from his receipt of this Agreement to review and consider this Agreement before signing it. Executive further understands that he may use as much of this review period as he wishes prior to signing; he can

 

	 	sign this Agreement at any time prior to the expiration of the twenty-one calendar day period. At the end of this period, this offer of Special Severance Benefits will be deemed automatically
withdrawn if not earlier signed by Executive and delivered to the Company. Executive is advised and encouraged to consult with his own legal counsel prior to signing this Agreement.
	 	 	 
	7.	RIGHT TO REVOKE AGREEMENT: Executive may revoke this Agreement within seven (7) calendar days of signing it. Revocation can be made by delivering a written
notice of revocation to Chief Human Resources Officer, Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA 90067. For this revocation to be effective, written notice must be received by the Chief Human Resources Officer no later
than 5:00 p.m. PST on the seventh calendar day after Executive signs this Agreement. If Executive revokes this Agreement, it shall not be effective or enforceable, and Executive will not receive the benefits described in Section 3 of this Agreement.

	 	 	 
	8.	NON-ADMISSION OF LIABILITY: Nothing contained herein shall be construed as an admission by either Executive or by Northrop Grumman of liability of any kind.

	 	 	 
	9. 	SEVERABILITY: The provisions of this Agreement are severable, and if any part of it is found to be illegal or invalid and thereby unenforceable, the validity of
the remaining parts, terms or provisions shall not be affected and shall remain fully enforceable. The unenforceable part, term or provision shall be deemed not to be a part of this Agreement. 

 

	10. 	SOLE AND ENTIRE AGREEMENT: Except as otherwise expressly set forth herein, this Agreement sets forth the entire agreement between the parties hereto, and fully
supersedes any and all discussions, prior agreements or understandings between the parties hereto pertaining to the subject matter of this Agreement. 
	 	 	 
	11.	 GOVERNING LAW: This Agreement shall be interpreted and enforced in accordance with the laws of the State of California without regard to rules regarding
conflicts of law. 
 

 EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS, CONFER WITH COUNSEL, AND TO CAREFULLY CONSIDER ALL OF THE PROVISIONS OF THIS AGREEMENT
BEFORE SIGNING IT. HE FURTHER AGREES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. 
 PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS. 

	 	EXECUTIVE	 

  

	DATED:	 
 
 	BY:	 
 
 

  

	 	NORTHROP GRUMMAN CORPORATION

  

	DATED:	 
 
 	BY:	 
 
 

	 	TITLE:

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