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                                                                Exhibit 10.33

                             STOCKHOLDERS' AGREEMENT

STOCKHOLDERS' AGREEMENT, dated as of this 12th day of April, 2000, by and among
the following Stockholders in TKT Europe - 5S AB, a corporation which will be
organized under the laws of Sweden, hereinafter referred to as Company, and
Company itself:

o        Bo Ahlstrand; Danderydsvagen 22B, SE 182 63 Danderyd, Sweden;

o        Rolf Gunnarsson; Merlannavagen 50, SE 645 91 Strangnas, Sweden;

o        Jacob Kaluski; Algvagen 12, SE 13150 Saltsjo-Duvnas, Sweden;

o        Jonas Virding; Saltsjovagen 37B, SE 18162 Lidingo, Sweden; and

o        Transkaryotic Therapies Inc; 195 Albany Street, Cambridge, MA 02139,
         USA and

o        TKT Europe - 5S AB (hereunder defined as "Company"), which will sign
         the Agreement as soon as Company is incorporated.

BACKGROUND

TKT (as defined hereinafter) has developed a niche product for the treatment of
Fabry disease (the Product, as defined hereinafter) and now wishes to market the
Product in the Territory.

Managers (as defined hereinafter) have documented long term experience of
international pharmaceutical business specifically with niche products and have
acquired unique competence for marketing and medical marketing of specialty
pharmaceutical products and wishes to market the Product in the Territory.

For this purpose the Parties will together set up a company owned to 20 % by
Managers and to 80 % by TKT, for the prelaunch and launch of the Product and for
building the foundation for TKT's future European operations.

Based on the fact that TKT owns the Product and has the necessary economic
resources for the launch, whilst Managers have experience and network
connections suited for marketing the Product in the Territory, the basic
structure of the company will be that TKT will provide the necessary funding,
pursuant to an agreed upon budget, whilst Managers will appoint the majority of
the Board of Directors in order to ascertain operational freedom, within the
limitations stipulated in the Agreement.

The Agreement contains provisions entitling TKT to purchase Managers shares
after a certain period of time, with the price made dependent on the success of
the Company.

Pertaining to this Agreement, and no later than April 19th 2000, the following
related agreements will be entered into between various constellations of the
Parties:

                  TKT and Company will enter into a long term exclusive
                  Distribution Agreement with regard to the Product in the
                  Territory, including i.a. that Company will own the
                  registration for the Product in the Territory.

                  Managers, through a Management Company, will enter into
                  Consultancy Agreements with Company according to which the
                  Management Company

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                  through Managers shall perform certain services for Company.,
                  including without limitation marketing the Product in the
                  Territory.

Based on this background each of the Parties desires to promote the interests of
Company and the mutual interests of the Parties by establishing herein certain
terms and conditions upon which Company's shares will be held and voted by the
Parties, including certain provisions relating to the election of directors and
the sale or other disposition of Shares

All the provisions are in conjunction with each other and against the above
referred background deemed fair and reasonable by the Parties.

DEFINITIONS

As used herein, the following terms, unless the context clearly indicates
otherwise, shall have the following meanings:

"Additional Product"       shall mean any other prescription pharmaceutical
                           product than Product.

"Affiliate"                shall mean, with respect to any Person, any other
                           Person that, directly or indirectly, controls or is
                           controlled by or is under common control with such
                           Person. As used in this definition of. "Affiliate"
                           the term "control" and any derivatives thereof mean
                           the possession, directly or indirectly, of the power
                           to direct or cause the direction of the management
                           and policies of a Person, whether through ownership
                           of voting securities, by contract, or otherwise.

"Agreement"                shall mean this agreement.

"Annual Consideration"     shall mean 20% of Yearly Calculation

"Business Day"             shall mean any day, other than a Saturday, Sunday or
                           legal holiday under the Federal laws of the United
                           States or the laws of Sweden.

"Board"                    shall mean Company's Board of Directors.

"Buyout Period"            shall mean the period beginning on the date hereof
                           and ending on the expiration of the Managers Put
                           Period (as defined in Section 4.02) or at such
                           earlier date when TKT holds all Shares without any
                           remaining options connected to any of the Shares.

"Buyout Price"             shall mean the aggregate price for all Manager
                           Shares.

"Cause"                    Termination ' for Cause shall be deemed to occur if
                           it is made as an effect of the occurrence of one or
                           more of the following circumstances with regard to
                           said Manager:

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                           i) conviction of any felony or of any crime against
                           the interests of Company;

                           ii) any material fraud or act of material dishonesty
                           against Company; as determined by arbitrators or
                           Swedish Court

                           iii) material breach of Manager's duties to Company,
                           including his duties as director; as determined by
                           arbitrators or Swedish Court, without the Manager
                           curing such breach despite receiving written request
                           to do so within a specified, reasonable, period of
                           time.

"CEO"                      shall mean the chief executive officer of Company.

"Chairman"                 shall mean chairman of the Board.

"Change in Control"        shall be deemed to occur under the. circumstances
                           stipulated in Section 4.05 of this Agreement.

"Company"                  shall, mean the Swedish company, which will be formed
                           by the parties pursuant to this Agreement which will
                           have the name TKT Europe - 5S AB.

"Consultancy Agreement"    shall mean an agreement between Company and the
                           Management Company according to which one or several
                           Managers shall perform certain services for the
                           Company, including without limitation marketing the
                           Product in the Territory.

"Distribution Agreement"   shall mean the Distribution Agreement, dated as of
                           latest April 19th 2000, between Company and TKT
                           relating to the Product in the Territory.

"EMEA approval":           shall mean the receipt by Company of approval from
                           EMEA, The European Agency for the Evaluation of
                           Medicinal Products, for marketing authorisation of
                           the Product in the Territory.

"Immediate family"         shall mean any parent, child (adopted or natural),
                           sibling or spouse of a Stockholder, or any custodian
                           or trustee for the account or benefit of Such person.

"Managers"                 shall mean Bo Ahlstrand, Rolf Gunnarsson, Jacob
                           Kaluski and Jonas Virding and any other person
                           designated as such by the Management Company and
                           reasonably acceptable to TKT. It is anticipated that
                           a fifth person will join as Manager shortly following
                           Formation of the Company.

"Management Company"       shall mean a company owned by Managers, with planned
                           name 5S Pharma AB, in which Managers are employed and
                           with which Company will enter into Consultancy
                           Agreements.

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"Manager Share"            shall mean any Share including Option Shares
                           originally held by Managers pursuant to Section 2.01.

"Minimum sales"            Shall mean the minimum number of patients, which must
                           be achieved within 18 months after EMEA approval,
                           namely 60 patients on paid treatment in accordance
                           with the Company Price strategy, calculated as 33 %
                           of the planned number of patients, which is 180.

"Net sales"                shall mean all revenues from sales of the Product in
                           the Territory reduced by rebates, discounts or taxes
                           directly related to such sales and a reduction factor
                           per patient as per below

                           - if sales per patient are below USD 146,000 - no
                           reduction

                           - if sales per patient are more than USD 146,000 but
                           less then USD 163,000 reduction is made to USD
                           146,000

                           - if sales per patient are more than USD 163,000 -
                           reduction is made with USD 17.000 per patient

"Optionee"                 shall mean a Person to whom one or more Managers has
                           granted the right to acquire Shares from one or more
                           Managers.

"Option Shares"            shall mean such Shares, which are comprised by
                           options as per Section 4.01 b) and c). Option Shares
                           are not to vest until the end. of the Buyout Period.
                           Option Shares shall not dilute the 80 % ownership of
                           TKT.

"Permitted Transferee"     shall mean (i) in the case of a Manager, the other
                           Managers, Company subsidiary employees, the Immediate
                           family of a Manager, a trust solely for the benefit
                           of a Manager or his Immediate family, the state or
                           legal representatives of such person and any
                           partnership, corporation or other entity wholly-owned
                           by such person or his immediate family, and (ii) in
                           the case of TKT, any majority owned subsidiary of
                           TKT.

"Person"                   shall mean an individual, corporation, limited
                           liability company,. partnership,) joint venture,
                           trust or unincorporated organization, or a government
                           or any agency or political subdivision thereof

"Product"                  shall mean (a-Galactosidase-A for the treatment of
                           Fabry disease, including the finished formulation of
                           a-Galactosidase-A, its derivatives and analogues, and
                           all clinical data, regulatory filings and approvals,
                           contractual rights and intellectual property
                           associated therewith, as well as any developments
                           thereof, including systems and devices for the
                           administration of the Product.

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"Shares"                   shall mean any shares in Company, including Option
                           Shares.

"Stockholder"              shall mean any owner of Shares.

"Territory"                shall mean all countries in Europe, including members
                           of the EU but also all countries in the former
                           Eastern block and all other ' countries in the
                           geographical unit Europe, as listed in Exhibit 5.

"TKT"                      shall mean Transkaryotic. Therapies Inc, a company
                           duly incorporated under the laws of Delaware, United
                           States of America.

"Transfer"                 shall mean any transfer, sale, assignment, pledge,
                           hypothecation, grant of option or other disposition.

"USD"                      shall mean United States Dollars.

"Yearly Calculation"       shall mean actual Net Sales less Company's direct
                           marketing costs (including without limitation all
                           payments under the Consultancy Agreement and all
                           other expenses listed on Exhibit 1) all decided in
                           accordance with international accounting standards
                           consistently applied in accordance with Company's
                           audited financial statements.

FORMATION, FUNDING AND OPERATIONS OF COMPANY

SECTION 1.01               FORMATION OF COMPANY

The Parties will jointly form Company under the laws of Sweden in accordance
with the following:

a)       The Parties shall form Company by subscribing to shares in accordance
         with Deed of Foundation as per EXHIBIT 3, as an effect of which TKT
         will hold 80 % of the shares and the Managers jointly 20 %.

b)       Payment for shares in accordance with the above shall be made no later
         am May 1st 2000, to an account opened in Skandinaviska Enskilda Banken,
         Djursholm in the name of "TKT Europe - 5S AB under bildande".

c)       At a statutory meeting with Stockholders to be held no later than May
         3, 2000, Company shall

              - adopt Bylaws in accordance with EXHIBIT 4

              - elect a Board as per section 3.02 of this Agreement

              - appoint Ernst & Young as the Company's auditors

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d)       The stockholding as per this Article 2 shall immediately after the
         Statutory Stockholder's meeting be entered in a Stockholder's register,
         held by Company. Share certificates shall be issued as soon as Company
         is registered.

e)       The Company shall join this Agreement as a party in order to bind also
         Company as such.

SECTION 1.02 FUNDING OF COMPANY

Company shall be wholly funded by TKT, pursuant to the plan referenced below, to
the extent that revenue is not sufficient to meet the Company's expenses as set
forth in the plan plus the cost of purchasing Product from TKT, which will be
the case for at least a number of years.

TKT is aware of the capital requirements of Company as per above, and undertakes
to provide the funding -required by, such plan, with such increased or decreased
costs and other deviations which follow from adoption of annual budgets and
other decisions by the Board, taken by a majority including at least one TKT
representative.

If TKT fails -its undertaking according to this Section 2,02, with the
consequence that Company can not fulfill its undertakings to the Managers, then
Managers shall have the right to claim payment directly from TKT.

SECTION 1.03 OPERATIONS OF COMPANY

a)       Company shall in accordance with the terms of Distribution Agreement
         market the Product in the Territory.

b)       Managers, through the Management Company, shall manage Company in
         accordance with the terms of the Consultancy Agreements.

c)       In case the Management Company commits a breach against a Consultancy
         Agreement, Company may institute arbitration proceedings to rectify
         such breach. In such a decision such Manager(s) who has participated in
         the breach may not participate. Such an action maybe taken by, TKT on
         behalf of Company.

d)       The Consultancy Agreements allow for Company to reduce the scope of
         appointment Of the Management Company in that the services of a
         particular Manager will no longer be asked for, thus reducing the fee
         to the Management Company. This is in the following referred to as
         terminating a Consultancy Agreement as concerns a specific Manager.
         Such termination may result in the obligation of Company to pay
         severance pay to the Management Company, as provided for in the
         Consultancy Agreement. When Company takes a decision to terminate a
         Consultancy Agreement as concerns a specific Manager, this Manager may
         not participate in the decision, due to the conflict of interest, and
         such decision shall be subject to section 3.02(b). Action with regard
         to terminating the Consultancy Agreement as concerns a specific Manager
         may be taken by TKT on behalf of Company, provided that there are
         sufficient grounds for such termination in accordance with the
         Consultancy Agreement, due to Cause.

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e)       If TKT determines that there is Cause to terminate the Consultancy
         Agreement as to a particular Manager, it shall notify the Chairman, who
         shall call a meeting of the Board to determine whether such Cause, in
         the Board's opinion, exists. If the Chairman does not call a meeting of
         the Board to consider TKT's determination, or if the Board determines
         not to act on such determination, then TKT may institute arbitration
         proceeding to determine whether there is Cause to terminate the
         Consultancy Agreement as to such Manager.

MANAGEMENT OF COMPANY

SECTION 1.04  MANAGEMENT OF COMPANY.

Except as otherwise reserved to the Stockholders of Company, the business and
a6iirs; of Company shall be managed under the direction of the Board and the
Board shall have all power and authority to manage, and direct the management
and the business and affairs of, Company. The Managers, in their individual
capacity as executive officers of Company, Shall manage the day-to-day
operations of Company, subject to the general oversight and directional role of
the Board and the matters requiring special Board or Stockholder approval, as
set forth herein. The right to sign for Company shall vest in any two Directors
jointly, provided that at least one of them is nominated by the Managers. It is
noted that the CEO under Swedish law has the mandate to sign for Company in
matters regarding day-to-day management.

SECTION 1.05  ELECTION AND REMOVAL OF DIRECTORS.

Pursuant to the Bylaws of Company, the number of directors comprising the Board
shall be fixed by resolution of the Stockholders meeting at five, with up to
four alternate directors. The Stockholders will vote their respective Shares and
take all other actions necessary to maintain the number of members of the Board
at five,

During the term of this Agreement, all the Shares held by the Stockholders,
whether owned now or hereafter acquired, shall be voted in accordance with the
provisions hereof on all of the following matters on which the Stockholders
vote:

a)       Immediately upon receiving notice of any Stockholders' meeting at which
         members of the Board are to be elected, the Managers shall have the
         right to designate three directors and up to two alternates and TKT
         shall have the right to designate two directors and up to two
         alternates; provided, however, that the Managers, with exception for
         the situation described in b) may only designate persons who constitute
         the Managers to Serve as directors, and Managers may only serve as
         directors as long as they are consultants to Company, and employees of
         the Management Company.

b)       In the situation where there is an insufficient number of Managers to
         fill the positions that can be designated by Managers, Managers shall
         have the right to appoint another Person who serves as employee of or
         consultant to Company (as an employee of the Management Company). Such
         new director shall be approved by one of the TKT designated directors,
         such approval not to be unreasonably withheld.

c)       One of the candidates designated by Managers shall serve as Chairman.

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d)       Each Stockholder hereby agrees (i) to be present in person or by proxy
         at any meeting of Stockholders to elect directors for purposes of
         establishing a quorum and (ii) to vote his or its Shares for, or give
         his or its written consent to,. the election of each of the candidates
         designated by the Managers and TKT pursuant to this paragraph

e)       In the event any director elected to the Board after being designated
         as a candidate for membership by one of the Persons entitled to
         designate candidates pursuant to this Agreement dies, resigns, is
         removed or otherwise ceases to serve as a member of the Board, Company
         shall give notice thereof to the Person entitled to designate such
         candidate and such Person(s) shall promptly designate a successor and
         notify the Board of his selection, and the Parties shall act promptly
         to fill the vacancy with such designee in accordance with Swedish
         Company law.

f)       Within ten (10) working days after a record date is set for any annual
         or special meeting for the election of directors or for the mailing of
         any consent solicited for such purpose, the Chairman shall notify each
         Person entitled to designate candidates of the upcoming election and
         anticipated date thereof and request that each Person entitled to
         designate candidates take all necessary action to designate his
         candidate(s). Each Person entitled to designate candidates shall notify
         the Chairman at least fifteen (15) days before such election of such
         Person's respective candidate(s), or such other date as the Board may
         designate. A failure by a Person entitled to designate candidates to
         provide such notification shall be deemed to be a designation by such
         Person of the same candidates as were last designated by such Person.
         Any designation pursuant to this Article 3 shall be made in writing.

g)       The parties hereto agree to cast their votes for, or give their written
         consent to, the removal of a designee on the Board at any time upon
         receipt of instructions in writing to such effect, signed by the Person
         entitled to designate that candidate.

h)       The Stockholders shall have no right to fill any vacancy on the Board
         for which any Person has the right to designate a candidate unless such
         vacancy is filled by the designee of the Person having the right to
         designate such director.

i)       Each of the parties- hereto hereby consents to and agrees that the
         following persons shall be the initial directors of Company: William
         Pursley, Richard Selden, Bo Ahlstrand, Jonas Virding and Rolf
         Gunnarsson (Chairman).

j)       Each of the parties hereby consents to and agrees that the following
         persons shall be the initial alternate directors of Company: William
         Aliski, Daniel Geffken, Jacob Kaluski and an anticipated fifth Manager.

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SECTION 1.06  QUORUM, BOARD APPROVALS, NOTICE; PROXIES; WRITTEN ACTION.

a)       The presence in person or by proxy of a majority of the directors,
         including at least one director or alternate director appointed by the
         Managers and at least one director or alternate director appointed by
         TKT, shall constitute a quorum for the transaction of business at a
         meeting of the Board. In the absence of a director an alternate
         director shall serve, provided however that alternates designated by
         Managers may only serve instead of directors designated by Managers,
         and vice versa. Alternates shall have the right to attend board
         meetings also when they are not serving instead of an absent director.
         If quorum is not reached at a duly convened meeting, the meeting will
         be adjourned for a period of 15-30 days, giving all directors and
         alternates notice of the new date. If at this date also no quorum is
         reached, then any three directors or alternates shall constitute a
         quorum. In the event TKT shall have called a meeting of the Board and
         the Manager designees on the Board do not attend the meeting (or any
         adjournment thereof) such that a quorum is not present to consider the
         matter for which TKT desired a meeting, then TKT may institute an
         arbitration to determine such matter.

b)       The vote of a majority of the Directors present at a duly constituted
         meeting shall constitute approval by the Board, except that the
         following actions must be approved by a majority of the directors
         (including at least one director appointed by TKT) present at a duly
         constituted meeting:

1.       approval of, and amendments to, Company's business plan;

2.       approval of, and amendments to, Company's annual budget; with the
         understanding that until a new budget is approved, Company will operate
         on the level of the currently adopted budget;

3.       approval of, and amendments to, Product pricing strategy;

4.       borrowing of monies in excess of $50,000 at any one time or $ 100,000
         in the aggregate, other than as provided for in the annual budget or
         business plan approved by the Board, outstanding at any time;

5.       incurring any long-ten-n liabilities (such as capital or operating
         leases), other than as provided for in the annual budget or business
         plan approved by the Board, unless such agreements can be terminated
         with a notice period of 90 days or less, without any other consequences
         for Company other than current payments during such notice period;

6.       approval of, amendment to, or consent or waiver under any agreement,
         document or other arrangements between Company and any Stockholder or
         Affiliate, including without limitation a Consultancy Agreement, and
         termination of a Consultancy Agreement without Cause with respect to
         one or several Managers;

7.       establishment of, and appointment of members of, any committee
         established by the Board, which committee, unless otherwise accepted by
         a majority as stipulated in this section 3.03 b), must include at least
         one person designated by each of TKT and the Managers;

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8.       any sale, transfer or other disposition of assets (including by way of
         license of intellectual property rights or lien on assets, but
         excluding sales of inventory or physical assets to a value of $50,000
         in the ordinary course of business) not contemplated by the business
         plan approved by the Board;

9.       proposal for any dividends or distributions to Stockholders;

10.      approval of any contract agreement or commitment (fixed or contingent),
         including without limitation any guarantee, with a value, or requiring
         payments, in excess of $50,000 or a term longer than twelve months (or
         a group of related contracts, agreements and commitments with an
         aggregate value or payments in excess of $100,000 over the life of such
         contract, agreement or commitment not included in the annual budget
         approved by the Board;

11.      submission of matters to a vote of Stockholders in accordance with
         Section 3.04;

12.      approving the entry of Company into any partnership or joint venture;

13.      any change in accounting principles used by Company, except to the
         extent required by international accounting standards;

14.      the formation of, and the making of any loans or advances to, any
         subsidiary of Company, other than as provided for in the annual budget
         or business plan approved by the Board;

15.      approving the acquisition of any business from any Person, whether by
         asset purchase, stock purchase, merger or other business combination;

16.      appointment of the CEO and the hiring of any executive officers, other
         than the Managers, and the firing of any executive officer, including
         Managers, without Cause;

17.      commencement of litigation against any of the Stockholders, other than
         by means of arbitration in accordance with this Agreement, the
         Distribution Agreement or the Consultancy Agreement, provided that
         Company may commence litigation against any Manager terminated for
         Cause in respect of the actions giving rise to Cause;

18.      adoption of any bonus plan or similar incentive scheme for employees;
         and

19.      adoption of any investment policy for Company's funds.

c)       Regular meetings of the Board shall be held at least once a quarter at
         the offices of Company or at such other times and places as may be
         fixed by the Board. Special meetings of the Board may be called by the
         Chairman, the CEO, or by any two directors. Special meetings shall be
         held at. the offices of Company or at such other times and places as
         may be fixed by the Board. The Chairman shall give at least 15 days
         prior written notice of any regular or special meeting of the Board,
         which notice shall specify the business to be conducted at the meeting.
         Notice of a meeting may be waived before or after a meeting by a
         written waiver of notice signed by the member entitled to notice.

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d)       The Board may act without a meeting if the action taken is approved in
         advance in writing by the unanimous consent of all the directors.

e)       The Chairman shall cause written minutes to be prepared of all actions
         taken by the Board and shall cause a copy thereof to be delivered to
         each director within 15 days after the meeting.

SECTION 1.07  STOCKHOLDER MATTERS.

a)       The vote of a majority of the outstanding Shares present at a duly
         constituted meeting of Stockholders shall with exception for what is
         stipulated in section 3.04 b) of this Agreement, constitute approval by
         the Stockholders, except that the following actions must be approved by
         TKT and a majority of the Managers, in their capacity as Stockholders,
         present at a duly constituted meeting:

1.       Changes in the share capital of Company including issues of new shares
         and the issue of convertible debt instruments, debt instruments with a
         right of option to subscribe to new shares and participating debt
         instruments;

2.       sale or transfer of the Company's business or assets, or a substantial
         part thereof, other than pursuant to the buyout of the Managers as
         provided in Article 4 below;

3.       amendment of Company's organizational documents (Bolagsordning); and

4.       liquidation, dissolution or winding up of Company.

b)       Except as in cases where this is an obligation by law, no action may be
         taken by the Stockholders unless proposed by the Board as per section
         3.03 hereof and no decision of the Board covered by Section 3.03 may be
         overturned by a vote of the Stockholders unless TKT and such Managers
         holding a majority-in-interest of the Manager Shares votes in favor
         thereof.

c)       With regard to the appointment of Auditors, as proscribed by law,
         auditor shall be appointed from the same firm of accountants as TKT's
         auditors, and shall initially be from Ernst & Young. Upon any change in
         auditing firms by TKT, the Company shall, if requested by TKT, remove
         its current auditors and appoint a new auditor from the firm then being
         used by TKT. If Managers so request, a second auditor shall be
         appointed, nominated and paid for, by Managers. It is the understanding
         between the parties that initially no such second auditor will be
         appointed. If Managers do not appoint a second auditor, they shall have
         the right to let Company appoint an auditor to perform specific tasks,
         such as verifying the calculation of Yearly Calculation etc.

d)       TKT undertakes not to use its right to redeem Manager Shares according
         to provisions Swedish Company Law even if TKT would get a majority of
         more than 90 % of both capital and votes for all shares in Company and
         TKT furthermore undertakes that it will still honor the rights granted
         to Managers and Optionees hereunder notwithstanding the provisions of
         Swedish Company Law.

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SECTION 1.08  EXECUTIVE OFFICERS.

a)       The Board shall appoint a CEO who will manage the day-to-day affairs of
         Company, carry out the directions of the Board and effectuate the
         business plan as set forth in the annual budget and business plan
         approved by the Board. It is understood that it is not necessary that
         the CEO is formally appointed as Verkstande Direktor for Company.

b)       The initial CEO will be Bo Ahlstrand. In the event of Bo Ahlstrand's
         death, retirement, resignation, termination or inability to serve, a
         successor CEO shall be appointed by the Board as provided in Section
         3.03.

c)       CEO shall prepare, and submit to the Board, at least ninety (90) days
         prior to the commencement of each fiscal year, commencing with the
         fiscal year ending December 31, 2001, a business plan (the "Annual
         Plan") which describes the business plan and preliminary annual budget
         for Company for such fiscal year. A definitive annual budget shall be
         submitted at least sixty (60) days prior to the commencement of the
         fiscal year. Each Annual Plan (including the definitive annual budget
         approved by the Board) shall remain operative until amended by the
         Board or a successor Annual Plan has been approved by the Board, all in
         accordance with Section 3.03.

d)       CEO shall conduct day-to-day affairs of Company in accordance with the
         approved Annual Plan. CEO shall additionally make all decisions for
         Company, which are not reserved to the Board or Stockholders pursuant
         to this Agreement or by law.

SECTION 1.09  DEFAULT

a)       TKT shall if the provisions safeguarding this, as defined in Section
         3.06 (d), are violated, and if so is requested by one or more of the
         Managers, purchase such Manager's shares at a price calculated in
         accordance with section 4.08 (c) (Buyout upon change in control)
         provided however that the price for each Manager's Shares (including
         Option Shares, such option shares remaining subject to Buyout) shall
         never be below USD 2,000,000 (USD two million). Under no circumstance,
         shall TKT pay more than 1.85% of the Yearly Calculation for the 12
         months following the second anniversary of EI\EA approval to any one
         Optionee, corresponding to the number of outstanding Option Shares.

b)       In case Persons holding a majority-in-interest of all Manager Shares
         all request Buyout in accordance with Section 3.06a, then if requested
         by TKT all other Managers shall also be deemed to have made the same
         request and shares held by them (including Option Shares, such Option
         Shares remaining subject to Buyout) shall thus also be the subject of
         such Buyout. Under no circumstance, shall TKT pay more than 1.85 % of
         the Yearly Calculation for the 12 months following the second
         anniversary of EMEA approval to any one Optionee, corresponding to the
         number of outstanding Option Shares.

c)       Any request for a buyout by a Manager must be requested within (ten) 10
         days after being informed of the occurrence of such violation, or in
         case of a violation capable to be rectified, within ten (10) days of
         the expiry of a 30-day-period during which TKT has had the possibility
         to rectify such breach, after receipt of written notice from the
         Managers

                                       12

<PAGE>

         specifying in reasonable detail such violation. Upon such request
         calculation of Buyout Price shall forthwith commence and closing
         subsequently be made in accordance with the rules in Section 4.06 and
         4.07 hereunder.

d)       The violations by TKT covered by this section 3.06 are such violations
         which interfere with the composition of the Board, as outlined in
         Section 3.02, and violations of the restrictions regarding matters
         requiring stockholder approval, as defined in Section 3.04, with its
         references to Section 3.03. In addition violations as per above consist
         of removal of one or more of the Persons designated by the Managers as
         a director of Company, other changes in the composition of the Board,
         other than TKT exchanging its designated two directors or alternates or
         any obstruction by TKT against Managers rights to fill a vacancy.

e)       If Company is forced into liquidation, dissolution or is wound up as an
         effect of TKT's omission to fulfill its obligations under Section 2.02,
         then this shall be deemed as equal to TKT taking such a decision in
         violation of Section 3.04 a), unless such a situation has arisen as an
         effect of actions on behalf of Managers to the detriment of Company.

f)       If a Manager due to TKT's actions as per above is entitled to and
         elects a buyout, this shall at the same time be regarded as termination
         without Cause of the Consultancy Agreement as concerns said Manager,
         leading to the obligation for Company to pay severance pay to the
         Management Company for twenty-four months, as provided for in the
         Consultancy Agreement.

g)       If Managers violate the provisions of Section 3.03 of this Agreement,
         by using its majority in the Board to decide on a matter covered by the
         list in section 3.03 (b), despite not having received the support of at
         least one TKT-representative or if the Company takes one of the actions
         described in 3.03 without seeking Board approval and if such a
         violation is not rectified within 30-days after receipt of written
         notice from the TKT specifying in reasonable detail such violation,
         then the Buyout-price, as defined in Section 4.08 of this Agreement,
         shall be reduced, provided that TKT so demands within 10 days after the
         expiry of the above mentioned 30-day-period. In case directors
         appointed by TKT would not turn up for a duly convened Board meeting
         called for in order to rectify such violation, thus causing that no
         quorum is constituted, then the 30-day-period shall be prolonged in
         order f6r a second meeting to be held, but nothing herein shall
         obligate such TKT designated directors to approve any action proposed
         to be taken to rectify such violation.

h)       The reduction as per section g) above shall correspond to the net
         monetary cost inflicted to the Company by such decision, multiplied
         with the factor three (3), the multiplication done in order to achieve
         an effective penalty effect of the reduction.

i)       It is noted that Company will adopt Rules of Procedure for the Board,
         ensuring that all matters covered by Section 3.03 (b) will be decided
         only by the Board.

                                       13

<PAGE>

j)       The parties agree that the provisions of this section 3.06 are
         reasonable and necessary to protect the respective rights of the
         Stockholders hereunder, and each agrees not to challenge the
         reasonableness of this Section 3.06.

SECTION 1.10  TRANSFEREES.

It shall be a condition to the Transfer of any Shares, other than Option Shares
(which is covered by special provisions under Section 4.01), that the transferee
thereof (including, without limitation, a Permitted Transferee) agrees to be
bound by the provisions of this Agreement, and upon such Transfer shall be a
Stockholder for all purposes hereunder. In case such a Permitted Transferee to
Managers is also a consultant to Company and is a director or an alternate to
the Board, said Permitted Transferee shall after the transfer be deemed to be a
Manager, with the rights and obligations connected hereto under this Agreement.

SECTION 1.11  ISSUANCE OF CAPITAL STOCK.

During the term of this Agreement, Company shall not issue any shares of capital
stock to any Person (including without limitation issuances pursuant to any
stock option or stock purchase plan adopted by Company) unless such Person
agrees to vote his shares in accordance with this Article 3.

SECTION 1.12  DIRECTORS OF SUBSIDIARIES.

Company and the Stockholders shall take all such action as may be necessary to
cause the Persons who are directors of Company to be elected as the directors of
each subsidiary of Company.

SECTION 1.13  EXPENSES.

Company will reimburse each director for his or her reasonable out-of-pocket
travel expenses incurred in attending any meeting of the Board.

SHARES

SECTION 1.14  TRANSFER OF SHARES.

a)       During the Buyout Period no Stockholder may Transfer any of his Shares,
         except for transfer to a Permitted Transferee.

b)       In addition, each Manager may grant options with respect to a portion
         of up to 40 % of his Shares (the Option Shares) to other employees of
         Company and its Subsidiaries; provided, however, that all Option Shares
         shall remain subject to TKT's purchase rights under Article 4, and the
         Managers shall be responsible for insuring compliance by the Optionees
         with the terms of this Agreement.

c)       All Option Shares shall be held in custody by the Managers, in order to
         protect i) TKT's purchase rights, ii) Managers right to repurchase the
         Options and iii) the Optionees' put rights.

                                       14

<PAGE>

d)       Apart from as provided for in subsections a) and b) of this Section
         4.01, Shares are transferable only in accordance with this Article 4;
         provided, however, that in no event may any Stockholder Transfer Shares
         pursuant to this Section to any Person (or an Affiliate of such Person)
         which competes directly with Company.

e)       In connection with the Transfer of any Shares, the holder thereof will
         deliver written notice to Company describing in reasonable detail the
         Transfer or proposed Transfer, together with written confirmation from
         the prospective transferee of his agreement to be bound by the
         conditions contained in this Agreement, as documented in a separate
         Term Sheet for such transferees. In the case of TKT Transfer of shares
         to its subsidiaries, TKT will remain jointly and severally responsible
         for all obligations assignable to TKT under this agreement and the
         Distribution Agreement, including but not restricted to TKT's
         obligation to fund Company's operations in accordance with Section
         2.02.

SECTION 1.15  TKT BUYOUT RIGHT.

a)       TKT shall have the right, exercisable for a period of two (2) months
         following the date of the third anniversary of EMEA approval (the
         "Exercise Period"), to purchase all, but not less than all Manager
         Shares, including Option Shares, at a price decided pursuant to Section
         4.08 of this Agreement ("the Buyout Price").

b)       In case all Consultancy Agreements are terminated as concerns all
         Managers, as an effect of the non-fulfillment of Minimum Sales, then
         TKT shall have the right to purchase all Managers' Shares including, at
         TKT's option, Option Shares, at nominal value. Such termination can be
         demanded by TKT within 60 days after the expiry of the period during
         which the Minimum Sales are calculated, namely the 18 months following
         EMEA approval.

c)       If any of the Managers permanently ceases to work under the Consultancy
         Agreement (hereinafter "Quits") without this being due to health
         reasons or other reasons outside Managers control which significantly
         limits said Manager's ability to work, then such quitting Manager shall
         be obliged to sell his Shares to the extent hereinafter stipulated:

         i)       If one Manager Quits then TKT shall not have any buyout right
                  as effect thereof. It is noted that the Managers internally
                  have agreed that in such a case the other Managers shall
                  purchase the Shares of the Quitting Manager and the purchased
                  shares may be used to attract a new manager approved by one of
                  the TKT designated directors, such approval not to be
                  unreasonably withheld.

         ii)      If a second Manager Quits before the Managers have filled the
                  place of the first quitting Manager with a new Person,
                  approved by one of the TKT designated directors, such approval
                  not to be unreasonably withheld (such a replacement having the
                  effect that it shall be deemed as if no Manager has Quit),
                  then TKT shall have the right, if TKT so demands within 30
                  days after the date the second Manager Quits, to purchase 50%
                  of the Shares held by such Manager, including Option Shares,
                  for their nominal value (such option *Shares remaining subject
                  to Buyout). Under no circumstance, shall TKT pay more than
                  1.85% of the Yearly

                                       15

<PAGE>

                  Calculation for the 12 months following the second anniversary
                  of EI~IEA approval to any one Optionee, corresponding to the
                  number of outstanding Option Shares. Remaining Managers will
                  purchase the other 50% of the Shares

         iii)     If a third Manager Quits, also before either of the previous
                  vacancies have been filled as per above, then TKT shall have
                  the right to purchase all Manager Shares if TKT so demands
                  within 30 days after the date when the third Manager quitted.
                  The price for such purchase shall be nominal value.

d)       It is noted that if a Manager dies or becomes incapable to continue as
         Manager due to accident or illness, this is not to be regarded as
         Quitting. For such cases Managers will agree between themselves what
         will happen with Shares held by such a Manager.

e)       If the Consultancy Agreements with regard to two or more Managers is
         terminated for Cause, defined as follows, this shall be deemed as if
         said Manager has Quit, and Section 4.02 (c) shall be applied, with the
         difference however that in case ii) TKT shall have the right to buy not
         50% but 100% of the Shares held by such a Manager, including Option
         Shares, for their nominal value (such Option Shares remaining subject
         to Buyout). Under no circumstance, shall TKT pay more than 1.85% of the
         Yearly Calculation for the 12 months following the second anniversary
         of EMEA approval to any one Optionee, corresponding to the number of
         outstanding Option Shares.

f)       If the Consultancy Agreement of a specific Manager is terminated for
         Cause, then TKT, at it's option, shall have the right to buy back that
         Manager's shares, except for Option Shares, for nominal value (such
         Option Shares remaining subject to Buyout). Under no circumstance,
         shall TKT pay more than 1.85% of the Yearly Calculation for the 12
         months following the second anniversary of EMEA approval to any one
         Optionee, corresponding to the number of outstanding Option Shares.

SECTION 1.16  MANAGERS' PUT RIGHT.

a)       In the event TKT does not exercise its option set forth in Section 4.02
         hereof, then holders of a majority-in-interest of all Manager Shares
         not as yet purchased by TKT, including Option Shares, shall have the
         right, exercisable for a period of two months following the last day of
         the Exercise Period, (the "Put Period"), to require TKT to purchase
         all, but not less than all Manager Shares, including Option Shares, at
         the Buyout Price.

b)       A decision by Persons holding a majority-in-interest of all Manager
         Shares as defined in Section 4.03 a, shall, with reference to this
         Section 4.03, be binding on all holders of Manager Shares, including
         Option Shares.

SECTION 1.17  MANAGERS' PUT RIGHT UPON CHANGE IN CONTROL.

a)       In the event of a Change in Control, as defined in Section 4.05, then
         each Manager shall have the right, exercisable for a period of six (6)
         months following the information to Managers of the occurrence of such
         Change in Control, to require TKT to purchase all,

                                       16

<PAGE>

         but not less than all, the Shares owned by such Manager, not including
         option Shares, at Buyout Price, calculated in accordance with Section
         4.08 (c).

b)       The election of a Manager not to exercise his rights under this Section
         4.04 shall not effect his ability to exercise his rights under Section
         4.03.

c)       In case the Consultancy Agreement(s) is terminated without Cause with
         regard to one or several Managers, then such Managers shall have the
         same right as in case of Change in Control, and pursuant to Sections
         4.06 - 4.08 where applicable.

SECTION 1.18  CHANGE IN CONTROL.

Change in Control shall be deemed to occur in any of the following
circumstances, the occurrence of which TKT must inform the Managers of within 30
days after their occurrence:

a)       If there shall be consummated any consolidation or merger of TKT in
         which TKT is not the continuing or surviving corporation or pursuant to
         which shares of TKT's common stock would be converted into cash,
         securities or other property, other than a merger of TKT in which the
         holders of TKT common stock immediately prior to the merger own at
         least a majority of the outstanding common stock of the surviving
         corporation immediately after the merger, or any sale, lease, exchange
         or other transfer (in one transaction or a series of related
         transactions) of all, or substantially all, of the assets of TKT;

b)       If the Stockholders of TKT shall approve any plan or proposal for
         liquidation or dissolution of TKT;

c)       If any Person shall become the beneficial owner (within the meaning of
         Rule l3d-3 under the Exchange Act) of 50% or more of TKT's outstanding
         common stock counting also such stock which said Person may acquire by
         using stock options;

d)       If during any period of two consecutive years, individuals who at the
         beginning of such period constitute the entire Board of Directors of
         TKT shall cease for any reason to constitute a majority thereof unless
         the election, or the nomination for election by TKT's stockholders, of
         each new director was approved by a vote of at least two-thirds of the
         directors then still in office who were directors at the beginning of
         the period, or became directors in accordance with this clause;

e)       If TKT or a Permitted Transferee no longer should hold all the Shares
         which pursuant to Section 2.01 of this agreement will initially be held
         by TKT, or if TKT or a Permitted Transferee has granted stock options
         over such Shares to any other Person than a Permitted Transferee;

f)       If TKT would Transfer or license or otherwise dispose of any rights for
         the Product, including the fact that any other party than TKT will act
         as licensee, - regarding any country in the Territory to another Person
         than Company; or

                                       17

<PAGE>

g)       If Company against the wish of Managers would transfer or license or
         otherwise dispose of any rights for the Product in the Territory to
         another Person

SECTION 1.19  CLOSING AND PAYMENT, BANK GUARANTEE

The closing of the purchase and sale of the Managers' Shares shall take place at
the offices of Company on a date specified by TKT in writing to the Managers
which date (the "Due Payment Date") shall be no later than forty-five (45) days
following the final determination of the Buyout Price.

a)       The Buyout Price shall be payable in cash at closing unless otherwise
         agreed.

b)       In case of late payment TKT shall pay interest in accordance with the
         Swedish Interest Act from the Due Payment Date until payment is
         received.

c)       If an audit shows that it is uncertain whether TKT will be able to
         fulfill its undertakings under this Article 4, then Managers may
         request TKT to provide a Letter of Credit from a financial institution
         reasonably acceptable to Managers, and TKT shall provide such a Letter
         of Credit in any amount up to USD 15,000,000, valid until three months
         after the time when the buyout-price has been finally decided, or such
         shorter time as Managers request.

SECTION 1.20  EXERCISE OF RIGHTS AND PROCEDURE FOR COMPUTING BUYOUT PRICE

a)       Rights pursuant to this Article 4 shall be exercised by giving written
         notice to the other party of the exercise, i.e. if a Manager exercises
         his right then notice shall be given to TKT and if TKT exercises its
         right then notice shall be given to each of the Managers.

b)       Upon the giving or receipt of notice Managers shall cause Company's
         auditor(s) to compute the Buyout Price and Managers shall give TKT and
         its auditors access to Company's books and records and necessary
         workpapers needed to compute the Buyout Price.

c)       If TKT or Managers holding a majority-in-interest of all Manager
         Shares, excluding Option Shares, held by Managers disputes Company's
         auditor's computation of the Buyout Price, then TKT and the Managers
         shall negotiate in good faith for a period of thirty (30) days to
         resolve any differences.

d)       If TKT and the Managers have not agreed on the Buyout Price at the end
         of such thirty (30) day period, then either Party shall within 30 days
         thereafter have the right to refer the calculation of the final Buyout
         Price to Arbitration in accordance with this Agreement, including
         reasonable compensation for loss of interest, taking into regard the
         circumstances with regard to the arbitration, such as the amount of the
         difference between the final buyout price and the price calculated by
         Company's auditor. In the absence of such referral, the Buyout Price
         shall be as calculated by the Company's auditor.

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<PAGE>

SECTION 1.21               BUYOUT PRICE

a)       The Buyout Price, namely the price for all shares held by Managers,
         including Option Shares (i.e. representing the 20% of the Company held
         by the Managers), shall be calculated as follows.

b)       Pursuant to section 4.02 and section 4.03 the Buyout Price shall be
         equal to the product determined by multiplying (i) 20% of the Yearly
         Calculation for the one year period commencing on the first day of the
         month following the second anniversary of Company's receipt of EMEA
         Approval (the "Measurement Period") by (ii) the buy-out factor four (4)
         plus (+) the accumulated positive Annual Consideration to the date of
         Buyout. (The Annual Consideration shall be equally divided between such
         Managers who remained as Managers at the end of the year for which the
         Annual Consideration in question was calculated.)

c)       It is understood that such accumulated positive Annual Consideration
         shall be added to the price, even if the shares are bought out at
         nominal value, irrespective at the time and reason of the Buyout.

d)       In case of substantially lower revenue per patient than planned, the
         buyout factor shall be adjusted as follows:

         At 150,000 USD or more per Patient Treatment Year       factor 4
         At 125,000-149,999 USD per Patient Treatment Year       factor 4.25
         At 100,000-124,999 USD per Patient Treatment Year       factor 4.50
         At 75,000- 99,999 USD per Patient Treatment Year        factor 4.75
         At less than 75,000 USD per Patient Treatment Year      factor 5

The revenue per Patient Treatment Year shall be calculated as total net sales
for the Measurement Period, divided by the number of patients to which such
revenue refers.

e)       In the case of Buyout pursuant to section 4.04 the Buyout Price shall
         be the higher of the two following formulas:

         i)       a price calculated as per above, but multiplying 20% of the
                  Yearly Calculation for the four (4) full calendar months
                  immediately preceding the effective date of the Change in
                  Control by three (3), to get a period equivalent to twelve
                  months, and thereafter multiplying this product by the buy-out
                  factor three (3) plus (+) the Annual Consideration as per
                  Section 4.08 (b).

         ii)      a price calculated as a certain percentage of the Managers'
                  share of the Yearly Calculation for year three after EMEA
                  Approval as per Exhibit 2, namely USD 19,306,800, which amount
                  represents 20% of estimated Yearly Calculation multiplied by
                  the buyout factor three (3) (+) the Annual Consideration as
                  per Section 4.08 (b).

Such percentage is:

                                       19

<PAGE>

    If termination occurs prior to filing for EMEA approval                10%
    If termination occurs between filing for EMEA approval and receipt of  25%
    EMEA approval
    If termination occurs between receipt of EMEA Approval and the first   33%
    anniversary of receipt of EMEA approval
    If termination occurs between the first and second anniversaries of    66%
    receipt of EMEA Approval
    If termination occurs between the second and third anniversaries of    100%
    receipt of EMEA Approval

         EXAMPLE: IF CHANGE OF CONTROL OCCURS BETWEEN RECEIPT OF EMEA APPROVAL
         AND THE FIRST ANNIVERSARY THEREOF, AND IF YEARLY CALCULATION FOR THE
         FOUR FULL CALENDAR MONTHS IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF
         THE CHANGE IN CONTROL IS USD 4,000,000, THEN THE BUYOUT PRICE IS
         CALCULATED AS FOLLOWS.

         I) GIVES A BUYOUT PRICE FOR ALL MANAGERS' SHARES OF 20% X 3 X 4,000,000
         X 3 = USD 7,200,000

         II) GIVES A BUYOUT-PRICE FOR ALL MANAGERS' SHARES OF 33% X 19,306,800 =
         USD 6,371 244

         I. E. IF NONE OF THE FOUR MANAGERS PRIOR TO THE BUYOUT HAS TRANSFERRED
         ANY OF HIS SHARES THEN THE BUYOUT PRICE FOR EACH MANAGER, WILL BE 1/4
         OF THE TOTAL BUYOUT PRICE, NAMELY USD 1,800,000, CALCULATED ACCORDING
         TO I), AS COMPARED TO THE PRICE ACCORDING TO II) WHICH WOULD BE USD
         1,592,811

f)       The Buyout Price shall always be divided by the total number of Manager
         Shares (including Option Shares) to get the Buyout Price per share,
         even if some Manager Shares have already been purchased by TKT. If no
         Buyout has been performed prior to the Exercise Period, as defined in
         Section 4.02, and if Buyout shall take place in accordance with Section
         4.02 or 4.03 then all Manager Shares (including Option Shares) will be
         affected by said buyout. If at this stage some Manager Shares have
         already been purchased by TKT pursuant to the provisions of this
         Article 4 then the remaining shares will be affected by the buyout. If
         some Option Shares are no longer held by Optionees, then the Manager
         holding such shares shall be entitled to the Buyout Price per share for
         these Shares, even if such Manager has previously sold his other Shares
         to TKT. Under no circumstance, shall TKT pay more than once for each
         share including option Shares.

SECTION 1.22  LEGENDS.

Each certificate for the Shares will be imprinted with a legend indicating that
the transfer of the shares are restricted by pre-emptory rights in Company's
bylaws and that the shares are subject to certain restrictions on transfer,
voting agreements and other conditions specified in a Stockholders' Agreement,
and giving the date of this Agreement.

SECTION 1.23  VIOLATIONS OF THIS AGREEMENT.

a)       For purposes of this Article 4, any Stockholder who has failed to give
         notice of the election of an option hereunder within the specified time
         period will be deemed to have

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<PAGE>

         waived his rights in such option on the day after the last day of such
         period, provided, however, that such failure give notice of election
         shall not be construed to constitute a waiver of any future right to
         participate under any section of this Article.

b)       The bylaws of Company shall include a pre-emption clause designed to
         safeguard the restrictions of this Article 4. The parties waive their
         rights under such clause to the extent Transfers have been conducted as
         permitted by this Article 4.

RESOLUTION OF DISPUTES

SECTION 1.24  MEDIATION.

a)       If a disagreement exists between TKT and the Managers concerning their
         exercise of business judgment related to matters referred to in Section
         3.03 above, as manifested by its designees' vote on the Board, of
         Directors, either TKT or the Managers may require the other to submit
         the reasons for its position, in writing, and to then enter into good
         faith negotiations to attempt to resolve the disagreement. If such
         disagreement cannot be settled by good faith negotiation between TKT
         and the Managers, and if the continued failure to settle such
         disagreement is likely to have a material adverse impact on Company,
         either TKT or the Managers may elect to submit the disagreement to
         mediation in London, or such other place as agreed, under the Mediation
         Rules of the Stockholm Chamber of Commerce Mediation Institute.

b)       The mediator shall not have authority to impose a settlement upon the
         Stockholders, but will attempt to help them reach a satisfactory
         resolution of the disagreement. The mediator shall end the mediation
         whenever, in his judgment further efforts at mediation would not
         contribute to a resolution of the submitted disagreement.

SECTION 1.25  ARBITRATION.

a)       All claims, disputes and other matters in question arising out of, or
         relating to, this Agreement or the performance thereof shall be
         submitted to, and finally determined by, arbitration if good faith
         negotiations among the parties do not resolve such claim, dispute or
         other matter within 60 days and the parties have not elected to submit
         such claim, dispute or other matter to mediation pursuant to Section
         5.01, provided that any disagreement between the TKT designated
         directors and Manager designated directors which results in the Company
         not being able to take an action shall not be subject to arbitration,
         except as set forth in section 2.03 hereof.

b)       Such arbitration shall proceed in accordance with the then prevailing
         rules of the Stockholm Chamber of Commerce, with the proceedings held
         in London in the English language, unless otherwise agreed.

c)       Reasonable discovery shall be allowed in arbitration to the extent
         decided by the Arbitration Tribunal.

d)       All proceedings before the arbitrators shall be held in London, UK, or
         such other place as the Parties may agree. The governing law shall be
         as specified in Section 7.11.

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<PAGE>

e)       In such case where the Arbitral Tribunal determines that costs for the
         arbitration, as determined by the Arbitral Tribunal in according with
         the applicable arbitration rules, to any part shall be borne by
         Managers, TKT will pay such cost and later reduce the Buyout Price with
         the equivalent amount.

f)       The award rendered by the arbitrators shall be final and judgment maybe
         entered in accordance with applicable law and in any court having
         jurisdiction thereof.

EFFECTIVE DATE AND TERM OF AGREEMENT

SECTION 1.26  EFFECTIVE DATE.

The effective date of this Agreement shall be the date set forth in the first
sentence of this Agreement.

SECTION 1.27  TERM.

This Agreement shall continue in effect from and after the date set forth in the
first sentence hereof until 31 December 2006 or to such earlier date when
Managers (and their Permitted Transferees) no longer own any Shares; provided
that Article 4 shall not terminate until there are also no Optionees.

MISCELLANEOUS

SECTION 1.28  ADDITIONAL PRODUCT

If TKT wishes the Company to work with Additional Product, then this shall be
negotiated in good faith.

SECTION 1.29  SPECIFIC PERFORMANCE.

The parties hereby declare that it is impossible to measure in money the damages
which will accrue to a party hereto by reason of a failure to perform any of the
obligations under this Agreement. Therefore, all parties hereto shall have the
right to specific performance of the obligations of the other parties under this
Agreement, and if any party hereto shall institute any action or proceeding to
enforce the provisions hereof, any person (including Company) against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party has or have an adequate remedy at law, and such person shall not urge
in any such action or proceeding the claim or defense that such remedy at law
exists.

SECTION 1.30  NAME CHANGE.

Upon TKT's purchase of all the Shares owned by the Managers, TKT shall cause
Company to change its name to delete "5S" from the name, and the Managers shall
be free to continue to use "5S" or any similar name thereafter.

                                       22

<PAGE>

SECTION 1.31 NON-SOLICITATION.

a)       Each Manager agrees not to hire Company employees for a period of two
         (2) years after the buyout by TKT of his Shares directly from the
         Manager, without written. permission from TKT.

b)       It is noted that the Consultancy Agreement contains certain
         non-competition provisions with regard to the Managers.

c)       Each Manager acknowledges and agrees that the agreements and covenants
         contained in this Section 7.04 are essential to protect Company's
         business, that TKT would not consummate the transactions contemplated
         hereby but for such agreements and covenants, and that a substantial
         and legally sufficient portion of the purchase price to be paid in the
         buyout of the Managers' Shares, is attributable to the provisions of
         this Section 7.04 and each Manager expressly waives any right to assert
         inadequacy of consideration as a defense to enforcement of the
         provisions of this Section 7.04 should such enforcement ever become
         necessary.

SECTION 1.32  NOTICES

a)       All notices or other communications hereunder shall be in writing and
         shall be deemed to have been duly given if delivered personally or sent
         by telefax, by overnight courier or by registered or certified mail,
         postage prepaid, addressed as follows: (a) if to a Stockholder, to the
         address in the beginning of this Agreement, or at such other address as
         such Stockholder shall have furnished to Company in writing, or (b) if
         to any other holder of any shares of Common Stock at such address as
         such holder shall have furnished Company in writing, or, until any such
         holder so furnishes an address to Company, then to and at the address
         of the last holder thereof who has so furnished an address to Company,
         or (c) if to Company, at its registered address, Sweden,

b)       a notice shall be deemed to have been given:

                  when delivered personally: at the time of service;

                  when sent by telefax: on the date the telefax is sent,
                  provided receipt is confirmed by the other party.

                  when sent by mail or by overnight courier: when received by
                  the addressee

SECTION 1.33  EFFECTIVE AGREEMENT

This Agreement shall be binding on and enforceable against each Stockholder and
his or its respective successors and assigns.

SECTION 1.34  SEVERABILITY.

Whenever possible, each provision of this Agreement shall be interpreted in such
manner so as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be

                                       23

<PAGE>

invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement. If any provision contained in
this Agreement is determined to be invalid, illegal or unenforceable as written,
a court of competent jurisdiction shall, at any party's request, reform the
terms of this Agreement to the extent necessary to cause such otherwise invalid
provisions to be enforceable under applicable law.

SECTION 1.35  AMENDMENT AND WAIVER.

This Agreement may be amended only by written instruments signed by all Parties.
No waiver of any right or remedy provided for in this Agreement shall be
effective unless it is set forth in writing signed by TKT and all Managers still
being Parties of the Agreement. It is in particular noted that no waiver of any
right set forth in Article 4 of this Agreement shall be effective against any
Stockholder which has not waived any of his rights under such Article. No waiver
of any right or remedy granted in one instance shall be deemed to be a
continuing waiver under the same or similar circumstances thereafter arising.

SECTION 1.36  FURTHER DOCUMENTATION.

Each Stockholder shall execute and deliver such other agreements and instruments
as from time to time may be deemed advisable or appropriate to effect the intent
and purpose of this Agreement.

SECTION 1.37  SECTION HEADINGS AND GENDERS.

The captions to the Sections in this Agreement are for reference only and shall
not affect the meaning or interpretation hereof

When the words "he" and denominations thereof are used in the agreement, this
shall be deemed to comprise also "she" and "it" and denominations thereof, and
vice versa.

SECTION 1.38  CHOICE OF LAW.

All questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement shall
be governed by and construed in accordance with the laws of Sweden.

SECTION 1.39  MULTIPLE COUNTERPARTS.

This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which will constitute one and the same
instrument.

SECTION 1.40  COMPLETE AGREEMENT

Except as set forth herein, this Agreement, the Distribution Agreement and the
Consultancy Agreement contain the complete agreement between the parties, save
for an internal agreement between the Managers, and between the Parties and
Company. These agreements, control and supersede any prior understandings,
agreements or representations by or between the parties,

                                       24

<PAGE>

written or oral, which conflicts with, or may have related to, the subject
matter hereof in any way, including without limitation that certain proposal
letter, dated as of October 28th 1999 among TKT and, the Managers.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.

TRANSKARYOTIC THERAPIES, INC.            TKT Europe - 5 S AB
                                         under formation

By: /s/ William Pursley                  /s/ Rolf Gunnarsson   /s/ Bo Ahlstrand
    --------------------------           -------------------   ----------------
Name:    William Pursley                 Rolf Gunnarsson       Bo Ahlstrand

Title:   Sr. V.P.

/s/ Bo Ahlstrand                         /s/ Rolf Gunnarsson
------------------------------           ------------------------------
Bo Ahlstrand                             Rolf Gunnarsson

/s/ Jacob Kaluski                        /s/ Jonas Virding
------------------------------           ------------------------------
Jacob Kaluski                            Jonas Virding

                                       25Prepared by MERRILL CORPORATION

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Exhibit 4.1  

REMEC, INC.  

 and  

 MELLON INVESTOR SERVICES LLC, AS RIGHTS AGENT  

 RIGHTS AGREEMENT  

 DATED AS OF JUNE 15, 2001  

 
 

RIGHTS AGREEMENT    
  

    THIS RIGHTS AGREEMENT (the "Agreement") is made as of this 15th day of June, 2001 by and between
REMEC, Inc., a California corporation (the "Corporation"), and Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights Agent"), with respect to the following facts and circumstances. 

    A.  The
Board of Directors of the Corporation has authorized and declared a dividend of one preferred share purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) of the Corporation outstanding at the Close of Business (as hereinafter defined) on
June 26, 2001 (the "Record Date"), each Right representing the right to purchase one one-thousandth (1/1000th) of a share of
Preferred Stock (as hereinafter defined), upon the terms and subject to the conditions herein set forth. 

    B.  The
Board of Directors of the Corporation has further authorized and directed the issuance of one Right with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date (as such terms are hereinafter defined);  provided, however, that Rights
may be issued with respect to shares of Common Stock that shall become outstanding after the Distribution Date and prior
to the earlier of the Redemption Date and the Final Expiration Date in accordance with the provisions of Section 22 of this Agreement. 

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

    1.  Certain Definitions.  

    For
purposes of this Agreement, the following terms have the meanings indicated: 

    1.1. "Acquiring Person" means any Person who or which, together with all Affiliates and Associates of such Person,
without the prior approval of the Corporation's Board of Directors, shall be the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock (other than as a result of a Permitted
Offer) or was such a Beneficial Owner at any time after the date hereof, whether or not such person continues to be the Beneficial Owner of 15% or more of the then outstanding shares of
Common Stock. Notwithstanding the foregoing: (A) the term "Acquiring Person" shall not include (i) the Corporation, (ii) any Subsidiary of the Corporation, (iii) any
employee benefit plan of the Corporation or of any Subsidiary of the Corporation, (iv) any Person or entity organized, appointed or established by the Corporation or any Subsidiary of the
Corporation for or pursuant to the terms of any such plan, or (v) any Person who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 15% or
more of the then outstanding shares of Common Stock as a result of the acquisition of shares of Common Stock directly from the Corporation; and (B) no Person shall be deemed to be an "Acquiring
Person" either (i) as a result of the acquisition of Common Stock by the Corporation which, by reducing the number of shares of Common Stock outstanding, increases the proportional number of
shares beneficially owned by such Person together with all Affiliates and Associates of such Person; provided, however, that if (1) a Person
would become an Acquiring Person (but for the operation of this subclause (B)(i)) as a result of the acquisition of shares of Common Stock by the Corporation, and (2) after such share
acquisition by the Corporation, such Person, or an Affiliate or Associate of such Person, becomes the Beneficial Owner of any additional shares of Common Stock, then such Person shall be deemed an
Acquiring Person, or (ii) if (1) within eight (8) days after such Person would otherwise have become an Acquiring Person (but for the operation of this subclause (B)(ii)), such
Person notifies the Board of Directors of the Corporation that such Person did so inadvertently and (2) within two (2) Business Days (as defined in Section 1.8 hereof) after such
notification, such Person is the Beneficial Owner of less than 15% of the outstanding shares of Common Stock. 

    1.2. "Act" means the Securities Act of 1933, as amended. 

 

    1.3. "Adjusted Number of Shares" and "Adjusted Purchase Price" have the
respective meanings set forth in Section 11.1.3 hereof. 

    1.4. "Adjustment Shares" has the meaning set forth in Section 11.1.2 hereof. 

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

    1.6. The
term "current per share market price" shall have the meaning set forth in Section 11.4.1 hereof when
used with respect to a "Security" (as defined in said Section 11.4.1) and shall have the meaning set forth in Section 11.4.2 when used with respect to the Preferred Stock. 

    1.7. A
Person is the "Beneficial Owner" of and "beneficially owns" any
securities which: (A) such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (B) such Person
or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however,  that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, 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 (ii) 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 promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (C) are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement, arrangement or understanding relating to the acquisition, holding, voting (except to the extent contemplated by the proviso to subclause
(ii) of Section 1.7(B)), or disposing of any securities of the Corporation. 

    Notwithstanding
anything in this Section 1.7 to the contrary, the phrase "then outstanding," when used with reference to a Person's Beneficial Ownership of securities of the
Corporation, 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. 

    Notwithstanding
anything in this Section 1.7 to the contrary, no Person shall be deemed to beneficially own any securities solely by reason of such Person being a party to a
customary agreement pursuant to which such Person acts or agrees to act as an underwriter with respect to a bona fide public offering of securities. 

    No
decision reached, or action taken, by the Board of Directors of the Corporation or any committee thereof shall cause any Person (or any Affiliate or Associate of such Person) who
is a member of the Board of Directors of the Corporation or such committee to be deemed, for the purposes of this Agreement, to be a Beneficial Owner of any securities beneficially owned by any other
Person (or any Affiliate or Associate of such Person) who is a member of the Board of Directors of the Corporation or any committee thereof solely by reason of such membership of the Board of
Directors or any committee thereof or participation in the decisions or actions thereof on the part of either or both of such Persons. 

2

 

    1.8. "Business Day" means any day other than a Saturday, a Sunday, a day on which banking institutions in the State of
New York are obligated by law or executive order to close, or a United States federal holiday. 

    1.9. "Capital Stock Equivalents" has the meaning set forth in Section 11.1.3 hereof. 

    1.10. "Close of Business" on any given date means 5:00 P.M., California time, on such date;  provided, however, that if such date is not a Business Day it means
5:00 P.M., California time, on the next succeeding Business Day. 

    1.11. "Common Stock" when used with reference to the Corporation means the Common Stock of the
Corporation or, in the event of a subdivision, combination or consolidation with respect to such shares of Common Stock, the shares of Common Stock resulting from such subdivision, combination or
consolidation. "Common Stock" when used with reference to any Person other than the Corporation means the capital stock (or 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 that ultimately control such first-mentioned Person. 

    1.12. "Corporation" means REMEC, Inc., a California corporation, and also means a Principal Party
to the extent provided in Section 13.1 hereof. 

    1.13. "Distribution Date" has the meaning set forth in Section 3.1 hereof. 

    1.14. "Equivalent Preferred Stock" has the meaning set forth in Section 11.2 hereof. 

    1.15. "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

    1.16. "Exchange Ratio" has the meaning set forth in Section 26.1 hereof. 

    1.17. "Final Expiration Date" has the meaning set forth in Section 7.1 hereof. 

    1.18. "Interested Shareholder" means any Acquiring Person or any Affiliate or Associate of an Acquiring
Person or any other Person in which any such Acquiring Person, Affiliate or Associate has an interest,
or any other Person acting directly or indirectly on behalf of or in concert with any such Acquiring Person, Affiliate or Associate. 

    1.19. "NASDAQ" has the meaning set forth in Section 11.4.1 hereof. 

    1.20. "Permitted Offer" means a tender or exchange offer which is for all outstanding shares of Common
Stock of the Corporation at a price and on terms determined, prior to the purchase of shares under such tender or exchange offer, by at least a majority of the members of the Board of Directors who
are not officers of the Corporation and who are not Acquiring Persons or Affiliates, Associates, nominees or representatives of an Acquiring Person, to be adequate (taking into account all factors
that such directors deem pertinent including, without limitation, prices that could reasonably be achieved if the Corporation or its assets were sold on an orderly basis designed to realize maximum
value) and otherwise in the best interests of the Corporation, its shareholders (other than the Person or any Affiliate or Associate thereof on whose basis the offer is being made) and other relevant
constituencies, taking into account all factors that such directors may deem pertinent. 

    1.21. "Person" means any individual, firm, partnership, corporation, limited liability company, limited
liability partnership, trust, association, joint venture or other entity, and includes any successor (by merger or otherwise) of such entity. 

    1.22. "Preferred Stock" means shares of the Corporation's Series RP Preferred Stock, par value $0.01 per
share, having the relative rights, preferences and limitations set forth in the Form of Certificate of Determination, Preferences and Rights of Series RP Preferred Stock attached to this Agreement as
Exhibit A. 

3

 

    1.23. "Principal Party" has the meaning set forth in Section 13.2 hereof. 

    1.24. "Proration Factor" has the meaning set forth in Section 11.1.3 hereof. 

    1.25. "Purchase Price" has the meaning set forth in Section 4.1 hereof. 

    1.26. "Record Date" has the meaning set forth in Recital A hereof. 

    1.27. "Redemption Date" has the meaning set forth in Section 7.1 hereof. 

    1.28. "Redemption Price" has the meaning set forth in Section 23.1.1 hereof. 

    1.29. "Right Certificate" has the meaning set forth in Section 3.1 hereof. 

    1.30. "Rights" has the meaning set forth in Recital A hereof. 

    1.31. "Rights Agent" means Mellon Investor Services LLC, a New Jersey limited liability company, as
Rights Agent hereunder, and, from the time of its succession, any successor Rights Agent selected pursuant to Section 19 or Section 21 hereof. 

    1.32. "Section 11.1.2 Event" has the meaning set forth in Section 11.1.2 hereof. 

    1.33. "Section 13 Event" means any event described in clause (A), (B) or
(C) of Section 13.1 hereof. 

    1.34. "Shares Acquisition Date" means the first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to the Exchange Act) by the Corporation or an Acquiring Person that an Acquiring Person has become such or that facts exist as a
result of which there exists an Acquiring Person; provided, that, if such Person is determined by the Board of Directors of the Corporation not to have
become an Acquiring Person pursuant to subclause (B)(ii) of Section 1.1 hereof, then no Shares Acquisition Date shall be deemed to have occurred. 

    1.35. "Subsidiary" of any Person means any corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person. 

    1.36. "Summary of Rights" has the meaning set forth in Section 3.2 hereof. 

    1.37. "Trading Day" has the meaning set forth in Section 11.4.1 hereof. 

    1.38. "Triggering Event" means any Section 11.1.2 Event or any Section 13 Event. 

    1.39. The
term "voting securities" has the meaning set forth in Section 13.1 hereof. 

    2.  Appointment of Rights Agent.  

    2.1. The
Corporation hereby appoints the Rights Agent to act as agent for the Corporation in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Corporation may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any such co-Rights Agent. 

    3.  Issuance of Right Certificates.  

    3.1. Until
the earlier of (A) the Shares Acquisition Date or (B) the Close of Business on the tenth (10th) day (or such later date as may be determined by
action of the Corporation's Board of Directors) after the date of the commencement by any Person (other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person or entity organized, appointed or established by the Corporation or any Subsidiary of the Corporation for or pursuant to the terms of
any such plan) of, or after the 

4

 

date of the first public announcement of the intention of any Person (other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or of any Subsidiary
of the Corporation or any Person or entity organized, appointed or established by the Corporation or any Subsidiary of the Corporation for or pursuant to the terms of any such plan) to commence (which
intention to commence remains in effect for five (5) Business Days after such announcement), a tender or exchange offer the consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both (A) and (B), any such date which is after the date of this Agreement and prior to the issuance of the Rights) (the
"Distribution Date"), (i) the Rights will be evidenced (subject to the provisions of Section 3.2 hereof) by the certificates for shares of
Common Stock 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 (ii) the right to
receive Right Certificates will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Corporation);  provided, however, that if a
tender or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall
occur as a result of such tender or exchange offer. As soon as practicable after the Distribution Date, the Corporation will prepare and execute, the Rights Agent will countersign, and the Corporation
will send or cause to be sent by first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Corporation, a Right Certificate, substantially in the form of Exhibit B
hereto (a "Right Certificate"), evidencing one Right for each share of Common Stock so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates. 

    3.2. As
promptly as practicable following the Record Date, the Corporation will send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by first-class, postage-prepaid mail, to each record holder of shares of Common Stock as of
the Close of Business on the Record Date, at the address of such holder shown on the records of the Corporation. With respect to certificates for shares of Common Stock 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 together with a copy of the Summary of Rights attached thereto. Until
the Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), the surrender for transfer of any certificate for shares of Common Stock 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 such shares of Common Stock. 

    3.3. Certificates
for shares of Common Stock that become outstanding (including, without limitation, reacquired shares of Common Stock referred to in the last sentence
of this Section 3.3) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, shall be deemed also to be certificates for
Rights, and shall bear the following legend: 

This
certificate also evidences and entitles the holder hereof to certain rights as set forth in a Rights Agreement between REMEC, Inc. and Mellon Investor Services LLC, a New Jersey limited
liability company, as Rights Agent, dated as of June 15, 2001 (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 of REMEC, Inc. 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. REMEC, Inc. 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, any Person who is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof 

5

 

(as defined in the Rights Agreement) and certain related persons, whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. 

With
respect to such certificates containing the foregoing legend, until the Distribution Date the Rights associated with the shares of Common Stock 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 shares of Common Stock represented thereby. In
the event that the Corporation purchases or acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), any Rights associated with such shares of Common Stock shall be deemed cancelled and retired so that the
Corporation shall not be entitled to exercise any Rights associated with the Common Stock that are no longer outstanding. 

    4.  Form of Right Certificate.  

    4.1. The
Right Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Corporation may deem appropriate (which may not
affect the duties and responsibilities of the Rights Agent) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates shall entitle the holders thereof to purchase such number of one one-thousandths (1/1000ths) of a share of Preferred
Stock as shall be set forth therein at the price per one one-thousandth (1/1000th) of a share of Preferred Stock set forth therein in accordance with Section 7.2 hereof (the  "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein. 

    4.2. Any
Right Certificate issued pursuant to Section 3.1 or Section 22 hereof that represents Rights that are null and void pursuant to
Section 7.6 of this Agreement and any Right Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent feasible and upon notice by the Corporation to the Rights Agent that this Section 4.2 has become applicable) the following
legend: 

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

The
provisions of Section 7.6 of this Agreement shall be operative whether or not the foregoing legend is contained on any such Right Certificate. 

    5.  Countersignature and Registration.  

    5.1. The
Right Certificates shall be executed on behalf of the Corporation by its President or any Vice President and the Secretary or an Assistant Secretary, either
manually or by facsimile signature, shall have affixed thereto the Corporation's seal or a facsimile thereof, and shall be attested by the Secretary
or an Assistant Secretary of the Corporation, either manually or by facsimile signature. The Right Certificates shall be countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any officer of the Corporation who shall have signed any of the Right Certificates shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and issuance 

6

 

and delivery by the Corporation, such Right Certificates may nevertheless be countersigned by the Rights Agent and issued and delivered by the Corporation with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of the Corporation; and any Right Certificate may be signed on behalf of the Corporation by any Person who, at the actual
date of the execution of such Right Certificate, shall be a proper officer of the Corporation to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such
Person was not such an officer. 

    5.2. Following
the Distribution Date, and receipt by the Rights Agent of a list of record holders of Rights, the Rights Agent will keep or cause to be kept, at its
office designated pursuant to Section 25 hereof as the appropriate place for surrender or transfer of the Right Certificates, 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 the face of each of the Right Certificates and
the certificate number and the date of each of the Right Certificates. 

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

    6.1. Subject
to the provisions of Section 4.2, Section 7.6 and Section 14 hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates 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 one one-thousandths (1/1000ths) of a share of Preferred Stock
(or, following a Triggering Event, other securities, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any 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 office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Corporation shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Corporation or the Rights Agent shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4.2, Section 7.6 and Section 14 hereof, countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Corporation 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. The Rights Agent may in its sole discretion require the Corporation or the Person entitled to such Right Certificate to provide evidence that such payment has been
made prior to countersigning and delivering any Right Certificate pursuant to this Section 6.1 and shall have no duty or obligation under this Section 6 unless and until it is satisfied
that all such taxes and/or charges have been paid. 

    6.2. Upon
receipt by the Corporation and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and, at the Corporation's request, reimbursement to the Corporation 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 Corporation will make and deliver a new Right Certificate of
like 

7

 

tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 

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

    7.1. Subject
to Section 7.6 hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price for the total number of one
one-thousandths (1/1000ths) of a share of Preferred Stock (or other securities, as the case may be) as to which such surrendered Rights are exercised, at or prior to the earlier of
(A) the Close of Business on June 15, 2011 (the "Final Expiration Date"), or (B) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"). 

    7.2. The
Purchase Price for each one one-thousandth (1/1000th) of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $60.00,
shall be subject to adjustment from time to time as provided in the next sentence and in Sections 11 and 13.1 hereof and shall be payable in accordance with paragraph 7.3 below. Anything in
this Agreement to the contrary notwithstanding, in the event that at any time after the date of this Agreement and prior to the Distribution Date, the Corporation shall (A) declare or pay any
dividend on the Common Stock payable in Common Stock or (B) effect a subdivision, combination or consolidation of the Common Stock (by reclassification or otherwise than by payment of dividends
in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then, in any such case, each share of Common Stock outstanding following such subdivision, combination or
consolidation shall continue to have a Right associated therewith and the Purchase Price following any such event shall be proportionately adjusted to equal the result obtained
by multiplying the Purchase Price immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. The adjustment provided for in
the preceding sentence shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. 

    7.3. Upon
receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate on the reverse side thereof duly and
properly executed, accompanied by payment of the Purchase Price for the Preferred Stock (or other securities, as the case may be) to be purchased and an amount equal to any applicable tax or
governmental charge required to be paid by the holder of such Right Certificate in accordance with Section 6 hereof by certified check, cashier's check or money order payable to the order of
the Corporation, the Rights Agent shall thereupon promptly (A) (i) requisition from any transfer agent of the Preferred Stock certificates for the number of shares of Preferred Stock to be
purchased, and the Corporation hereby irrevocably authorizes its transfer agent to comply with all such requests, or (ii) if the Corporation, in its sole discretion, shall have elected to
deposit the Preferred Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts representing such number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as are to be purchased (in which case certificates for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Corporation will direct the depositary agent to comply with such requests, (B) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (C) after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such 

8

 

Right Certificate, registered in such name or names as may be designated by such holder, and (D) when appropriate, after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the event that the Corporation is obligated to issue other securities (including shares of Common Stock) of the Corporation pursuant to
Section 11.1 hereof, the Corporation will make all arrangements necessary so that such other securities are available for distribution by the Rights Agent, if and when necessary to comply with
this Agreement. 

    7.4. In
addition, in the case of an exercise of the Rights by a holder pursuant to Section 11.1.2, the Rights Agent shall return such Right Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented by such Right Certificate no longer include the rights provided by
Section 11.1.2 of the Rights Agreement and if less than all the Rights represented by such Right Certificate were so exercised, the Rights Agent shall indicate on the Right Certificate the
number of Rights represented thereby that continue to include the rights provided by Section 11.1.2. 

    7.5. 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 6 and
Section 14 hereof, or the Rights Agent shall place an appropriate notation on the Right Certificate with respect to those Rights exercised. 

    7.6. Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence of a Section 11.1.2 Event, any Rights beneficially owned by
(A) an Acquiring Person or an Affiliate or Associate of an Acquiring Person, (B) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee
after the Acquiring Person becomes such, or (C) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (i) a transfer (whether or not for consideration) from the Acquiring Person (or from any Affiliate or Associate
thereof) to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has a continuing agreement, arrangement or understanding regarding the transferred
Rights or (ii) a transfer that the Board of Directors of the Corporation has determined is part of a plan, arrangement or understanding that has as a primary purpose or effect the avoidance of
this Section 7.6, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Corporation shall notify the Rights Agent when this Section 7.6 applies and shall use all reasonable efforts to insure that the provisions of this
Section 7.6 and Section 4.2 hereof are complied with, but neither the Corporation nor the Rights Agent shall have any liability to any holder of Right Certificates or other Person as a
result of the Corporation's failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. 

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

9

 
    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 Corporation 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 the provisions of this Rights Agreement. The Corporation 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 Corporation otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Corporation, or
shall, at the written request of the Corporation, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Corporation. 

    9.  Reservation and Availability of Preferred Stock.  

    9.1. The
Corporation covenants and agrees that, at all times prior to the occurrence of a Section 11.1.2 Event, it will cause to be reserved and kept available
out of its authorized and unissued Preferred Stock, or any authorized and issued Preferred Stock held in its treasury, the number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of a Section 11.1.2 Event, shall, to the extent reasonably practicable, so reserve and keep available a sufficient number of
shares of Common Stock (and/or other securities) that may be required to permit the exercise in full of the Rights pursuant to this Agreement. 

    9.2. So
long as the shares of Preferred Stock (and, after the occurrence of a Section 11.1.2 Event, shares of Common Stock or any other securities) issuable upon
the exercise of the Rights may be listed on any stock exchange, the Corporation shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares or other
securities reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. 

    9.3. The
Corporation covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable shares or securities. 

    9.4. The
Corporation covenants and agrees that it will pay when due and payable any and all taxes and governmental charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) upon the exercise of Rights. The Corporation
shall not, however, be required to pay any tax or governmental charge that 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 or depositary receipts for the shares of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) 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 or depositary receipts for shares of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be) upon the exercise of any Rights, until any such tax or governmental charge shall have been paid (any such tax or governmental charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been established to the Corporation's reasonable satisfaction that no such tax or governmental charge is due. 

    9.5. The
Corporation shall use its best efforts to (A) file, as soon as practicable following the Shares Acquisition Date, a registration statement under the
Act, with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (B) cause such registration 

10

 

statement to become effective as soon as practicable after such filing, and (C) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of
the Act and the rules and regulations thereunder) until the date of the expiration of the period for exercise of the Rights provided by Section 11.1.2. The Corporation will also take such
action as may be appropriate under the blue sky laws of the various states. 

    10.  Preferred Stock Record Date.  

    Each
Person in whose name any certificate for shares of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the shares of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable taxes and governmental
charges) was made; provided, however, that, if the date of such surrender and payment is a date upon
which the shares of Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) transfer books of the Corporation 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 shares of Preferred Stock (or shares of Common Stock and/or other securities, as the
case may be) transfer books of the Corporation are open. 

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

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

    11.1.  Adjustment Events.  

    11.1.1. In
the event the Corporation shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of Preferred Stock or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving
corporation), except as otherwise provided in this Section 11.1 and Section 7.6 hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and kind of 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 that, if such Right had been exercised immediately prior to such date and at a time when
the Preferred Stock transfer books of the Corporation 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
exercise of one Right be less than the aggregate par value, if any, of the shares of capital stock of the Corporation issuable upon exercise of one Right. If an event occurs that would require an
adjustment under both Section 11.1.1 and Section 11.1.2, the adjustment provided for in this Section 11.1.1 shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11.1.2. 

    11.1.2. In
the event (a "Section 11.1.2 Event") that any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper provision shall be made so that each holder of a Right (except as provided below and in Section 7.6 hereof) shall, for a
period of sixty (60) days (or such longer period as the Corporation's Board of Directors may determine at any time prior to or during such period of sixty (60) days) after 

11

 

the later of the occurrence of any such event or the effective date of an appropriate registration statement under the Act pursuant to Section 9.5 hereof, have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price, in accordance with the terms of this Agreement, such number of shares of Common Stock (or, in the discretion of the Corporation's Board of
Directors, one one-thousandths (1/1000ths) of a share of Preferred Stock) as shall equal the result obtained by (A) multiplying the then current Purchase Price by the then number of
one one-thousandths (1/1000ths) of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11.1.2 Event, and
(B) dividing that product by 50% of the then current per share market price of the Common Stock (determined pursuant to Section 11.4 hereof) on the date of such first occurrence (such
number of shares being referred to as the "Adjustment Shares"); provided,  however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment shall be made pursuant to this Section 11.1.2. 

    11.1.3. In
the event that there shall not be sufficient treasury or authorized but unissued (and unreserved) Common Stock to permit the exercise in full
of the Rights in accordance with Section 11.1.2 and the Rights become so exercisable (and the Board of Directors of the Corporation has not determined to make the Rights exercisable solely into
fractions of a share of Preferred Stock), notwithstanding any other provision of this Agreement, to the extent necessary and permitted by applicable law, each Right (except as provided below and in
Section 7.6 hereof) shall thereafter represent the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, (A) a number
of (or fractions of) shares of Common Stock calculated by dividing the maximum number of shares of Common Stock that may permissibly be issued by the number of outstanding Rights and (B) a
number of one one-thousandths (1/1000ths) of shares of Preferred Stock or a number of, or fractions of, other equity securities of the Corporation (or, in the discretion of the Board of
Directors of the Corporation, debt) that the Board of Directors of the Corporation has determined to have an aggregate current market value (determined pursuant to Section 11.1.1 and
Section 11.1.2 hereof, to the extent applicable) equal to the difference between (i) the aggregate current market value of the Adjustment Shares (assuming such shares of Common Stock
could be issued pursuant to Section 11.1.2 hereof) and (ii) the aggregate current market value of the shares of Common Stock issued in respect of such Right pursuant to the preceding
clause (A) (such number of, or fractions of, shares of Preferred Stock, debt or other equity securities or debt of the Corporation being referred to as a "Capital Stock
Equivalent"); provided, however, if sufficient shares of Common Stock and/or
Capital Stock Equivalents are unavailable, then the Corporation shall, to the extent permitted by applicable law, take all such action as may be necessary to authorize additional shares of Common
Stock or Capital Stock Equivalents for issuance upon exercise of the Rights, including the calling of a meeting of shareholders; and provided,  further,
that if the Corporation is unable to cause sufficient shares of Common Stock and/or Capital Stock Equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter represent the right to receive the Adjusted Number of Shares upon exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "Adjusted Number of Shares" shall be equal to that number of (or fractions of) shares of Common Stock
(and/or Capital Stock Equivalents) equal to the product of (x) the number of Adjustment Shares and (y) a fraction, the numerator of which is the number of shares of Common Stock (and/or
Capital Stock Equivalents) available for issuance upon exercise of the Rights and the denominator of which is the aggregate number of Adjustment Shares otherwise issuable upon exercise in full of all
Rights (assuming there were a sufficient number of shares of Common Stock available) (such fraction being referred to as the "Proration Factor"). The 

12

 

"Adjusted Purchase Price" shall mean the product of the Purchase Price and the Proration Factor. The Board of Directors of the Corporation may, but
shall not be required to, establish procedures to allocate the right to receive shares of Common Stock and Capital Stock Equivalents upon exercise of the Rights among holders of Rights. 

    11.2. In
case the Corporation shall fix a record date for the issuance of rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase shares of Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock ("Equivalent Preferred Stock")) or securities convertible into Preferred Stock
or Equivalent Preferred Stock at a price per share of Preferred Stock or Equivalent Preferred Stock (or having a conversion price per share, if a security convertible into shares of Preferred Stock or
Equivalent Preferred Stock) less than the then current per share market price of the Preferred Stock (as determined pursuant to Section 11.4 hereof) on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of shares of Preferred Stock that the aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current per share market price, and
the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date plus the number of additional shares of Preferred Stock and/or Equivalent Preferred Stock to
be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); 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, if any, of the shares
of capital stock of the Corporation 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 determined in good faith by the Board of Directors of the Corporation, whose determination shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights. Preferred Stock owned by or held for the account of the Corporation 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 that would then be in effect if such record date had not been fixed. 

    11.3. In
case the Corporation shall fix a record date for the making of a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11.2 hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current per share
market price (as determined pursuant to Section 11.4 hereof) of the Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one share of Preferred Stock, and the denominator of which shall be such current per share
market price of the Preferred Stock; 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, if any, of the shares of capital stock of the Corporation 

13

 

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 that would then be in effect if such record date had not been fixed. 

    11.4.  Computation of "Current Per Share Market Price."  

    11.4.1. For
the purpose of any computation hereunder, the "current per share market price" of any security (a "Security" for the purpose of this
Section 11.4.1) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading Days immediately prior to and
not including such date; provided, however, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the issuer of such Security of (A) a dividend or distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision, combination or reclassification of such Security and prior to the expiration of thirty (30) Trading Days after (but not
including) 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 share equivalent of such Security. The closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is 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 Security is listed or admitted to trading or, if the
Security is 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 Security is 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 Security selected by the Board of Directors of the Corporation. If on any such date no such market maker is making a
market in the Security, the fair value of the Security on such date as determined in good faith by the Board of Directors of the Corporation shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national securities exchange, a Business Day. 

    11.4.2. For
the purpose of any computation hereunder, the "current per share market price" of the Preferred Stock shall be determined in accordance with
the method set forth in Section 11.4.1. If the shares of Preferred Stock are not publicly traded, the "current per share market price" of the Preferred Stock shall be conclusively deemed to be
the current per share market price of the Common Stock as determined pursuant to Section 11.4.1 (appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by 1,000. If neither the Common Stock nor the Preferred Stock are publicly held or so listed or traded, "current per share market price" shall mean, with
respect to the Preferred Stock, the fair value per share as determined in good faith by the Board of Directors of the Corporation, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. 

14

 

    11.5. Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments that
by reason of this Section 11.5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one one-thousandth (1/1000th) of a share of Preferred Stock or of any other share or security as the case may be. Notwithstanding the first
sentence of this Section 11.5, any adjustment required by this Section 11 shall be made no later than the earlier of (A) three (3) years from the date of the transaction
that mandates such adjustment or (B) the Final Expiration Date. 

    11.6. If
as a result of an adjustment made pursuant to Section 11.1.2 or Section 13.1 hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Corporation other than Preferred Stock, thereafter the number of other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 11.1 through
11.3, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to any such other shares. 

    11.7. All
Rights originally issued by the Corporation subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths (1/1000ths) of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein. 

    11.8. The
Corporation may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-thousandths (1/1000ths) of a share of Preferred Stock 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 one one-thousandths (1/1000ths) of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Corporation 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, and shall deliver a copy
of such public announcement to the Rights Agent. 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 ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11.8, the Corporation 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 Corporation, 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 Corporation, 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. 

15

 

    11.9. Irrespective of any adjustment or change in the Purchase Price or the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock that were expressed in the initial Right Certificates issued hereunder. 

    11.10. Before
taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock, share of Common Stock or other securities issuable upon exercise of the Rights, the Corporation shall take any corporate action
that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue such number of fully paid and non-assessable one
one-thousandths (1/1000ths) of a share of Preferred Stock, share of Common Stock or other securities at such adjusted Purchase Price. 

    11.11. 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 Corporation may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of the Preferred Stock, shares of Common
Stock or other securities of the Corporation, if any, issuable upon such exercise over and above the Preferred Stock, shares of Common Stock or other securities of the Corporation, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided,  however, that the Corporation 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 and shall deliver to the Rights Agent a notice describing the terms of such due bill or other appropriate instrument. 

    11.12. Anything
in this Section 11 to the contrary notwithstanding, the Corporation 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 the Corporation in its sole discretion shall determine to be advisable in order that any
(A) consolidation or subdivision of the Preferred Stock, (B) issuance wholly for cash of Preferred Stock at less than the current market price, (C) issuance wholly for cash of
Preferred Stock or securities that by their terms are convertible into or exchangeable for Preferred Stock, (D) stock dividends or (E) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Corporation to holders of its Preferred Stock shall not be taxable to such holders. 

    11.13. The
Corporation covenants and agrees that it shall not, at any time after the Distribution Date, (A) consolidate with any other Person
(other than a Subsidiary of the Corporation in a transaction that does not violate Section 11.14 hereof), (B) merge with or into any other Person (other than a Subsidiary of the
Corporation in a transaction that does not violate Section 11.14 hereof), or (C) 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 Corporation and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Corporation and/or any of its Subsidiaries in one or more transactions each of which does not violate Section 11.14 hereof), if (i) at the time of or immediately after such
consolidation, merger, sale or transfer, there are any charter or bylaw provisions or any rights, warrants or other instruments or securities outstanding or agreements in effect or other actions taken
that would materially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (ii) prior to, simultaneously with or immediately after such consolidation, merger,
sale or transfer, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13.1 hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates. The Corporation shall not consummate any such consolidation, merger, sale or transfer unless prior 

16

 

thereto the Corporation and such other Person shall have executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this Section 11.13. 

    11.14. The
Corporation covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or
Section 25.2 hereof, take (or permit any Subsidiary to take) any action the purpose of which is to, or if at the time such action is taken it is reasonably foreseeable that the effect of such
action is to, materially diminish or otherwise eliminate the benefits intended to be afforded by the Rights. 

    11.15. The
exercise of Rights under Section 11.1.2 shall only result in the loss of rights under Section 11.1.2 to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this Agreement, including the rights represented by Section 13. 

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

    Whenever
an adjustment is made as provided in Section 11 or Section 13 hereof, the Corporation shall promptly (A) prepare a certificate setting forth such
adjustment and a brief, reasonably detailed statement of the facts, computations and methodology accounting for such adjustment, (B) file with the Rights Agent and with each transfer agent for
the Common Stock and the Preferred Stock a copy of such certificate and (C) mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25.1 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall have no duty with respect to, and shall not be deemed to have knowledge of,
such adjustment unless and until it shall have received such certificate. 

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

    13.1. In
the event that, on or following the Shares Acquisition Date, directly or indirectly, (A) the Corporation shall consolidate with, or
merge with and into, any Interested Shareholder or, if in such merger or consolidation all holders of shares of Common Stock are not treated alike, any other Person, (B) the Corporation shall
consolidate with, or merge with, any Interested Shareholder or, if in such merger or consolidation all holders of shares of Common Stock are not treated alike, any other Person, and the Corporation
shall be the continuing or surviving corporation of such consolidation or merger (other than, in a case of any transaction described in (A) or (B), a merger or consolation that would result in
all of the securities generally entitled to vote in the election of directors of the Corporation ("voting securities") outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving entity) all of the voting securities of the Corporation or such voting surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as a result of such merger or consolidation), or (C) the Corporation 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 Corporation and its Subsidiaries (taken as a whole) to any Interested Shareholder or Shareholders or, if in such transaction all holders of Common Stock are not treated alike, any other Person
(other than the Corporation or any Subsidiary of the Corporation in one or more transactions each of which does not violate Section 11.14 hereof), then, and in each such case (except as
provided in Section 13.4 hereof), proper provision shall be made so that (i) each holder of a Right, except as provided in Section 7.6 hereof, shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase Price, in accordance with the terms of this Agreement and in lieu of Preferred Stock, such number of freely tradeable
shares of Common Stock of the Principal Party, not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall equal the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths (1/1000ths) of a share of Preferred Stock for which a Right is then exercisable 

17

 

(without taking into account any adjustment previously made pursuant to Section 11.1.2) and dividing that product by (2) 50% of the then current per share market price of the Common
Stock of such Principal Party (determined pursuant to Section 11.4 hereof) 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 Corporation pursuant to this Agreement; (iii) the term "Corporation" shall
thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of its shares of Common
Stock) 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 the shares of Common Stock thereafter deliverable upon the exercise of the Rights. 

    13.2. "Principal Party" shall mean: 

    13.2.1. in
the case of any transaction described in clause (A) or (B) of the first sentence of Section 13.1, the Person that is the
issuer of any securities into which shares of Common Stock of the Corporation are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to
such merger or consolidation (including, if applicable, the Corporation if it is the surviving corporation); and 

    13.2.2. in
the case of any transaction described in clause (C) of the first sentence of Section 13.1, 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 of
the foregoing cases, (A) if the Common Stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the shares of Common Stock of
which are and have been so registered, "Principal Party" shall refer to such other Person; (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the shares
of Common Stock of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate
market value; and (C) in case such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (A) and (B) above shall apply to each of the chains of ownership having an interest in such joint venture as if such party were a "Subsidiary" of both or all of such
joint venturers and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests. 

    13.3. The
Corporation shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of
its authorized shares of Common Stock that 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 Corporation and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Sections 13.1 and 13.2 and further
providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer mentioned in Section 13.1, the Principal Party at its own expense shall (A) prepare
and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (i) become effective as soon as practicable after such filing and (ii) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Final Expiration Date; (B) use its best efforts to 

18

 

qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate; and (C) deliver to
holders of the Rights historical financial statements for the Principal Party that comply in all respects with the requirements for registration on Form 10 under the Exchange Act. 

    The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. The rights under this Section 13 shall be in
addition to the rights to exercise Rights and adjustments under Section 11.1.2 and shall survive any exercise thereof. 

    13.4. Notwithstanding
anything in this Agreement to the contrary, the foregoing provisions of this Section 13 shall not be applicable to a
transaction described in clauses (A) and (B) of Section 13.1 if: (A) such transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant
to a Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons); (B) the price per share of Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares were purchased pursuant to such Permitted Offer; and (C) the form of consideration offered in such transaction is the
same as the form of consideration paid pursuant to such Permitted Offer. Upon consummation of any such transaction contemplated by this Section 13.4, all Rights hereunder shall expire. 

    14.  Fractional Rights and Fractional Shares.  

    14.1. The
Corporation shall not be required to issue fractions of Rights or to distribute Right Certificates that 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 14.1, 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 Corporation. 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 Corporation shall be used. 

    14.2. The
Corporation shall not be required to issue fractions of shares of Preferred Stock (other than fractions that are one
one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Preferred Stock (other than fractions that are one one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-thousandth (1/1000th) of a share of Preferred Stock may, at the election of the Corporation, be
evidenced by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by it; provided that such agreement shall provide that the 

19

 

holders of such depositary receipts shall have the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not one one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of Preferred Stock,
the Corporation 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 share of Preferred Stock. For the purposes of this Section 14.2, the current market value of a share of Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant to Section 11.4.2 hereof) for the Trading Day immediately prior to the date of such exercise. 

    14.3. Following
the occurrence of one of the transactions or events specified in Section 11 giving rise to the right to receive shares of Common
Stock, Capital Stock Equivalents (other than Preferred Stock) or other securities upon the exercise of a Right, the Corporation shall not be required to issue fractions of shares or units of such
shares of Common Stock, Capital Stock Equivalents or other securities upon exercise of the Rights or to distribute certificates that evidence fractions of such shares of Common Stock, Capital Stock
Equivalents or other securities. In lieu of fractional shares or units of such shares of Common Stock, Capital Stock Equivalents or other securities, the Corporation may pay to the registered holders
of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share or unit of such shares of Common
Stock, Capital Stock Equivalents or other securities. For purposes of this Section 14.3, the current market value shall be determined in the manner set forth in Section 11.4 hereof for
the Trading Day immediately prior to the date of such exercise and, if such Capital Stock Equivalent is not traded, each such Capital Stock Equivalent shall have the value of one
one-thousandth (1/1000th) of a share of Preferred Stock. 

    14.4. The
holder of a Right by the acceptance of the Right expressly waives such holder's right to receive any fractional Rights or any fractional share
upon exercise of a Right (except as provided above). The Rights Agent shall not be deemed to have knowledge of, and shall have no duty in respect of, the issuance of fractional Rights or fractional
shares unless and until it shall have received instructions from the Corporation concerning the issuance of such fractional Rights or fractional shares. 

    15.  Rights of Action.  

    All
rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under this Agreement, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered holders of shares of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution
Date, of shares of the Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of shares of the Common Stock), may, in such registered holder's own behalf and for such registered holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Corporation to enforce, or otherwise act in respect of, such registered holder's 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. Nothing in this Section 15 is intended to modify or limit the authority of the Board of Directors under
Section 25.3. 

20

 
    16.  Agreement of Right Holders.  

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

    16.1. Prior
to the Distribution Date, the Rights will be transferable only in connection with the transfer of the associated shares of Common Stock; 

    16.2. After
the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office
of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate form fully executed; 

    16.3. Subject
to Section 6 and Section 7.7 hereof, the Corporation 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 Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the associated Common Stock certificate made by anyone other than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent, subject to the last sentence of Section 7.6 hereof, shall be required to be affected by any notice to the contrary; and 

    16.4. Notwithstanding
anything in this Agreement to the contrary, neither the Corporation nor the Rights Agent shall have any liability to any holder of
a Right or a beneficial interest in 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, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation;  provided, however, that the Corporation must use its best efforts to have any such order, decree,
judgment or ruling lifted or otherwise overturned as soon as practicable. 

    17.  Right Certificate Holder Not Deemed a Shareholder.  

    No
holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of shares of the Preferred Stock or any other
securities of the Corporation that 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 Corporation or any right to vote for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 24
hereof), or to receive dividends or other distributions or to exercise any preemptive 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. 

    18.  Concerning the Rights Agent.  

    18.1. The
Corporation 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, preparation, delivery, amendment and execution of this Agreement and the
exercise and performance of its duties hereunder. The Corporation also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, 

21

 

demand, settlement, cost or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, as finally determined by a court of competent jurisdiction, for
any action taken, suffered or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including without limitation the costs and expenses of defending
against any claim of liability in respect of any such action. The costs and expenses of enforcing this right of indemnification shall also be paid by the Corporation. The indemnity, exculpation and
compensation provisions provided for in this Agreement, including, but not limited to, Sections 18 and 20, shall survive the expiration of the Rights, the termination of this Agreement, and the
resignation or removal of the Rights Agent hereunder. 

    18.2. The
Rights Agent may conclusively rely upon and shall be authorized and protected and shall incur no liability for, or in respect of, any action
taken, suffered or omitted by it in connection with the acceptance and administration of this Agreement in reliance upon any Right Certificate or certificate for shares of Common Stock or for other
securities of the Corporation, 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. The Rights Agent shall not be deemed to have knowledge of, and
shall have no duty in respect of, any fact contained in such Right Certificate or certificate for shares of Common Stock or for other securities of the Corporation, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document unless and until it shall have received the same. 

    18.3. Anything
in this Agreement to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, indirect, punitive,
incidental or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of the action. Any liability of the Rights Agent hereunder will be limited to the amount of fees paid by the Corporation to the Rights Agent hereunder. 

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

    19.1. Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stock transfer or all or substantially all of the shareholder
services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. 

    19.2. 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. 

    20.  Duties of Rights Agent.  

    20.1. The
Rights Agent undertakes those duties and obligations, and only the duties and obligations, expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, and no implied duties or obligations shall be read into this 

22

 

Agreement against the Rights Agent, by all of which the Corporation and the holders of Right Certificates, by their acceptance thereof, shall be bound. 

    20.2. Before
the Rights Agent acts or refrains from acting, the Rights Agent may consult with legal counsel (who may be legal counsel for the
Corporation), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith and in accordance with such advice or opinion. 

    20.3. Whenever
in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the determination of the current market price of any security) be proved or established by the Corporation prior to taking,
suffering or omitting 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 any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer or the Secretary of the Corporation and delivered to the
Rights Agent; and such certificate shall be full authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance upon such certificate. 

    20.4. The
Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct, as finally determined by a court of
competent jurisdiction. 

    20.5. 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 on such Right Certificates) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the
Corporation only. 

    20.6. The
Rights Agent shall not have any liability for, nor be under any liability or responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void pursuant to Section 7.6 hereof) or any adjustment required under the provisions of Section 11, Section 13
or Section 26 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after receipt of the certificate described in Section 12 hereof); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares of Preferred Stock or shares of Common Stock to be issued pursuant to this Agreement or any Right Certificate or as to
whether any Preferred Stock or shares of Common Stock will, when issued, be validly authorized and issued, fully paid and non-assessable. 

    20.7. The
Corporation 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. 

    20.8. 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 or the Secretary of the Corporation, and to apply to such officers for advice or instructions in connection
with its duties, and such instructions 

23

 

shall be full authorization and protection of the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in good faith or lack of
action in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. The Rights Agent shall incur no liability for or in respect of its reliance
upon the most recent instructions received by any such officer. Any application by the Rights Agent for written instructions from the Corporation may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on or after which such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken or suffered by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the date any officer of the Corporation actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instruction in
response to such application specifying the action to be taken, suffered or omitted. 

    20.9. The
Rights Agent and any shareholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Corporation or become pecuniarily interested in any transaction in which the Corporation may be interested, or contract with or lend money to the Corporation 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 Corporation or for any other
Person or legal entity. 

    20.10. 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, negligence or misconduct of any such attorneys or agents or for any loss to the
Corporation or any other Person resulting from any such act, default, negligence or misconduct, absent gross negligence, bad faith or willful misconduct, as finally determined by a court of competent
jurisdiction, in the selection and continued employment thereof. 

    20.11. No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the
exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. 

    20.12. If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been completed, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without
first consulting with the Corporation. 

    20.13. The
Rights Agent shall not be required to take notice or be deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designee of a Person as an Acquiring Person, Affiliate or Associate), under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Corporation of such fact, event or determination. 

    21.  Change of Rights Agent.  

    The
Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the
Corporation and to each transfer agent of the Common Stock or Preferred Stock by registered or certified mail, and, at the expense of the Corporation, to the holders of the Right Certificates by
first-class mail. The Corporation may remove the Rights Agent or any successor Rights Agent upon sixty (60) days' notice in writing, 

24

 

mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock or Preferred Stock by registered or certified mail, and to 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 Corporation shall appoint a successor to the Rights Agent. 

    If
the Corporation shall fail to make such appointment within a period of sixty (60) 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
Corporation), 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 Corporation or by such a court, shall be (A) a Person organized and doing business under the laws of the United States or of any of the States of New York, New Jersey or
California (or of any other state of the United States so long as such Person is authorized to do business in any of the States of New York, New Jersey or California), in good standing, having an
office in any of such States, which is subject to supervision or examination by federal or state authority and which (or the parent corporation of which) has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (B) an affiliate of such Person. 

    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, at the
Corporation's sole expense, any further assurance, conveyance, act or deed necessary for the purpose. In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either
in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this
Agreement. Not later than the effective date of any such appointment, the Corporation shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock
or Preferred Stock, 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. 

    22.  Issuance of New Right Certificates.  

    22.1. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the Corporation 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. 

    22.2. In
connection with the issuance or sale of Common Stock following the Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date, the Corporation (A) shall with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities, notes or debentures issued by the Corporation, and (B) may in any other case, if deemed necessary or appropriate by the Board of
Directors of the Corporation, issue Right Certificates representing the appropriate number of Rights in connection 

25

 

with such issuance or sale; provided, however, that (i) the Corporation shall not be obligated to
issue any such Right Certificates if, and to the extent that, the Corporation shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Right Certificate would be issued, and (ii) no Right Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 

    23.  Redemption and Termination.  

    23.1. Redemption

    23.1.1. The
Board of Directors of the Corporation may, at its option, redeem all but not less than all of the then outstanding Rights at a redemption
price of $.0001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), at any time prior to the earlier of the occurrence of a Section 11.1.2 Event or the Final
Expiration Date. The Corporation may, at its option, pay the Redemption Price either in shares of Common Stock (based on the current per share market price of the Common Stock at the time of
redemption) or cash; provided that if the Corporation elects to pay the Redemption Price in shares of Common Stock, the Corporation shall not be
required to issue any fractional shares of Common Stock and the number of shares of Common Stock issuable to each holder of Rights shall be rounded down to the next whole share. 

    23.1.2. In
addition, the Board of Directors of the Corporation may, at its option, at any time following the occurrence of a Section 11.1.2 Event
and the expiration of any period during which the holder of Rights may exercise the Rights under Section 11.1.2 but prior to any Section 13 Event redeem all but not less than all of the
then outstanding Rights at the Redemption Price (A) in connection with any merger, consolidation or sale or other transfer (in one transaction or in a series of related transactions) of assets
or earning power aggregating 50% or more of the earning power of the Corporation and its Subsidiaries (taken as a whole) in which all holders of shares of Common Stock are treated alike and not
involving (other than as a holder of shares of Common Stock being treated like all other such holders) an Interested Shareholder or (B) (i) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 15% or more of the Common Stock, and (ii) at the time of redemption no other Persons are Acquiring Persons. 

    23.2. In
the case of a redemption permitted under Section 23.1.1, immediately upon the date for redemption set forth in (or determined in the
manner specified in) a resolution of the Board of Directors of the Corporation ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. In the case of a redemption permitted only under
Section 23.1.2, the right to exercise the Rights will terminate and represent only the right to receive the Redemption Price upon the later of ten (10) Business Days following the giving
of such notice or the expiration of any period during which the Rights may be exercised under Section 11.1.2. The Corporation 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 ten (10) days after such date for redemption set forth in a resolution of the Board of Directors of the Corporation ordering the redemption of the Rights,
the Corporation shall mail a notice of redemption to the Rights Agent and all the holders of the then
outstanding Rights at (in the case of notice to holders) their addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any 

26

 

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 Corporation nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than as
specifically set forth in this Section 23 and other than in connection with the purchase of shares of Common Stock prior to the Distribution Date. 

    23.3. The
Corporation may, at its option, discharge all of its obligations with respect to the Rights by (A) issuing a press release announcing
the manner of redemption of the Rights in accordance with this Agreement and (B) mailing payment of the Redemption Price to the registered holders of the Rights at their addresses as they
appear on the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent of the Common Stock, and upon such action, all outstanding Rights and
Right Certificates shall be null and void without any further action by the Corporation. 

    24.  Notice of Certain Events.  

    24.1. In
case the Corporation shall propose (A) to pay any dividend payable in stock of any class to the holders of its Preferred Stock or to
make any other distribution to the holders of its Preferred Stock (other than a regular quarterly cash dividend), (B) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional Preferred Stock or shares of stock of any class or any other securities, rights or options, (C) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding Preferred Stock), (D) to effect any consolidation or merger into or with any other Person (other than a Subsidiary
of the Corporation in a transaction which does not violate Section 11.14 hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer) in one or more transactions, of 50% or more of the assets or earning power of the Corporation and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Corporation and/or any of its Subsidiaries in one or more transactions each of which does not violate Section 11.14 hereof), or (E) to effect the liquidation, dissolution or winding up
of the Corporation, then, in each such case, the Corporation shall give the Rights Agent and to each holder of a Right Certificate, in accordance with Section 25 hereof, a notice of such
proposed action which shall specify the record date for the purposes of such stock dividend or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (A) or (B) above at least twenty (20) days prior to the record date for determining holders of the Preferred Stock
for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of the Preferred Stock, whichever shall be the earlier. 

    24.2. In
case of a Section 11.1.2 Event, then (A) the Corporation shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25.1.3 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights
under Section 11.1.2 hereof, and (B) all references in the preceding Section 24.1 to Preferred Stock shall be deemed thereafter to refer also to shares of Common Stock and/or, if
appropriate, other securities of the Corporation. 

    25.  Miscellaneous.  

    25.1. Notices.

27

 

    25.1.1. 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
Corporation shall be sufficiently given or made if sent by registered or certified mail and shall be deemed given upon receipt, addressed (until another address is filed in writing with the Rights
Agent) as follows: 

REMEC, Inc.

9404 Chesapeake Drive

San Diego, CA 92123

Attention: Secretary 

    25.1.2. Subject
to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Corporation
or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent registered or certified mail and shall be deemed given upon receipt, addressed (until
another address is filed in writing with the Corporation) as follows: 

Mellon
Investor Services LLC

400 South Hope, 4th Floor

Los Angeles, CA 90071

Attention: Relationship Manager 

    25.1.3. Notices
or demands authorized by this Agreement to be given or made by the Corporation or the Rights Agent to the holder of any Right
Certificate or, if prior to the Distribution Date, to the holder of certificates representing shares of Common Stock 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 Corporation. 

    25.2.  Supplements and Amendments.  The Corporation may from time to time supplement or amend any
provision of this Agreement without the approval of any holders of Rights in order to cure any ambiguity, to correct, supplement or amend any provision herein, or to make any other provision with
respect to the Rights which the Corporation may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Corporation and the Rights Agent;  provided,
however, that from and after any Shares Acquisition Date this Agreement shall not be amended
in any manner which will adversely affect the interests of the holders of Rights. Upon the delivery of a certificate from an appropriate officer of the Corporation which states that the proposed
supplement or amendment is in compliance with the terms of this Section 25.2, and, if requested by the Rights Agent, an opinion of counsel, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of shares of Common Stock. This Agreement shall not be
amended, without the prior written consent of the Rights Agent, in any manner that changes or increases the duties, liabilities or obligations of the Rights Agent. 

    25.3.  Determination and Actions by the Board of Directors, etc.  The Board of Directors of the
Corporation shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board, or the Corporation, 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, without limitation, a determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of Right Certificates). For all purposes of this Agreement, any calculation of the number of shares of Common Stock or
other securities outstanding at any particular time, including for purposes of 

28

 

determining the particular percentage of such outstanding shares of Common Stock or any other securities 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 as in effect on the date of this Agreement. 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 in good faith, shall (i) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the Right Certificates and all other Persons, and (ii) not subject the Board to any liability to the holders of the
Right Certificates. The Rights Agent shall be fully protected and shall incur no liability for or in respect of its reliance on the good faith of the Corporation's Board of
Directors with respect to actions done or made in connection with such calculation. Nothing in Section 15 hereof is intended to modify or limit this Section 25.3. 

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

    25.5.  Benefits of this Agreement.  Nothing in this Agreement shall be construed to give to any Person or
corporation other than the Corporation, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the shares of Common Stock) any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Corporation, the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the shares of Common Stock). 

    25.6.  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. 

    25.7.  Governing Law.  This Agreement, each Right and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California 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; except that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed entirely within such state. 

    25.8.  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. 

    25.9.  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. 

    26.  Exchange.  

    26.1. Notwithstanding
any other provision hereof, the Board of Directors of the Corporation 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 null and void pursuant to the provisions of Section 7.6 hereof) for shares of Common Stock of the Corporation
at an exchange ratio determined by dividing the then-applicable exercise price of the Rights determined under Section 7.2 by the "current per share market price" as defined in
Section 11.4.1 (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Corporation's
Board of Directors shall not be empowered to 

29

 

effect such exchange at any time after any Person (other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or any such Subsidiary, or any Person
organized, appointed or established by the Corporation 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 Stock then outstanding. 

    26.2. Immediately
upon the action of the Board of Directors of the Corporation ordering the exchange of any Rights pursuant to Section 26.1 and
without any further action and without any notice, the right to exercise such rights shall terminate and the only right thereafter of the holder of such Rights (other than a holder of Rights that have
become null and void pursuant to the provisions of Section 7.6 hereof) shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Corporation shall promptly give public notice, and shall promptly give notice to the Rights Agent, 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 Corporation promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange shall state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7.6) held by each holder of Rights. 

    26.3. In
the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 26, the Corporation shall take all such action as may be necessary to issue additional shares of Common Stock, Preferred Stock
and/or Capital Stock Equivalents with an aggregate current market value (as determined by the Board of Directors of the Corporation) equal to the aggregate current market value of a number of shares
of Common Stock equal to the Exchange Ratio. 

[REST
OF PAGE INTENTIONALLY LEFT BLANK] 

30

 

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

	 	 	REMEC, INC.
	

 	
 	

By:	
 	

/s/ Donald J. Wilkins

	 	 	 	 	Name: Donald J. Wilkins

	 	 	 	 	Title: Secretary

	

 	
 	

MELLON INVESTOR SERVICES LLC,

as Rights Agent
	

 	
 	

By:	
 	

/s/ Rosa M. Bautista

	 	 	 	 	Name: Rosa M. Bautista

	 	 	 	 	Title: Relationship Manager

31

 
 

Exhibit A    
  

Certificate
of Determination, Preferences and

Rights of Series RP Preferred Stock 

of 

REMEC, Inc. 

(Pursuant
to § 401 of the California Corporations Code) 

    I,
Donald J. Wilkins, Vice President, General Counsel and Secretary of REMEC, Inc. (the "Corporation"), a corporation organized
and existing under the Corporations Code of the State of California, in accordance with the provisions of §401 thereof, DO HEREBY CERTIFY: 

    That
pursuant to the authority conferred upon the Board of Directors of the Corporation by the Amended and Restated Articles of Incorporation of the Corporation, the said Board of
Directors on June 11, 2001, adopted the following resolutions creating a series of 140,000 shares of Preferred Stock designated as Series RP Preferred Stock. 

    RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of the Amended and Restated Articles of
Incorporation of the Corporation, the Board of Directors hereby creates a series of Series RP Preferred Stock, with a par value of $0.01 per share, of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences and limitations thereof as follows (the following
provisions being intended to operate in addition to any other provisions of said Amended and Restated Certificate of Incorporation applicable to any series of Preferred Stock): 

Series
RP Preferred Stock 

    Section 1.  Designation, Par Value and Amount.  The shares of such series shall be designated as
"Series RP Preferred Stock" (hereinafter referred to as "Series RP Preferred Stock"), the shares of such series shall be with par value of $0.01 per
share, and the number of shares constituting such series shall be 140,000; provided, however, that, if more than a total of 140,000 shares of Series RP
Preferred Stock shall be issuable upon the exercise of Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of on or about
June 15, 2001 between the Corporation and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (as amended from time to time, the
"Rights Agreement"), the Board of Directors of the Corporation shall direct by resolution or resolutions that a certificate be properly executed,
acknowledged and filed providing for the total number of shares of Series RP Preferred Stock authorized to be issued to be increased (to the extent that the Restated Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of the Rights. 

    Section 2.  Dividends and Distributions.  

    2.1 Subject
to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series RP
Preferred Stock with respect to dividends, the holders of shares of Series RP Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally
available for the purpose, quarterly dividends payable in cash on the first business day of March, June, September and August in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share
of Series RP Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (A) $1.00 or (B) subject to the provision for adjustment set forth in
Section 6.1, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, par value $0.01 per share, of the Corporation (the "Common Stock") or a
subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately 

 

preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series RP Preferred Stock. 

    2.2 The
Corporation shall declare a dividend or distribution on the Series RP Preferred Stock as provided in Section 2.1 above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series RP Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. 

    2.3 Dividends
shall begin to accrue and be cumulative on outstanding shares of Series RP Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series RP Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of
holders of shares of Series RP Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series RP Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series RP Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 30 days prior to the date fixed for the payment thereof. 

    Section 3.  Voting Rights.  The holders of shares of Series RP Preferred Stock shall have the
following voting rights: 

    3.1 Except
as provided in Section 3.3 and subject to the provision for adjustment hereinafter set forth, each share of Series RP Preferred Stock shall entitle
the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Corporation. 

    3.2 Except
as otherwise provided herein or by law, the holders of shares of Series RP Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of shareholders of the Corporation. 

    3.3 The
following additional provisions shall apply with respect to the voting of shares of Series RP Preferred Stock: (A) If, on the date used to determine
shareholders of record for any meeting of shareholders for the election of directors, a default in preference dividends (as defined in Section 3.3(E) below) on the Series RP Preferred Stock
shall exist, the holders of the Series RP Preferred Stock shall have the right, voting as a class as described in Section 3.3(B) below, to elect two directors (in addition to the directors
elected by holders of Common Stock of the Corporation). Such right may be exercised (i) at any meeting of shareholders for the election of directors or (ii) at a meeting of the holders
of shares of Voting Preferred Stock (as hereinafter defined), called for the purpose in accordance with the Bylaws of the Corporation, until all such cumulative dividends (referred to above) shall
have been paid
in full or until non-cumulative dividends have been paid regularly for at least one year; (B) The right of the holders of Series RP Preferred Stock to elect two directors, as
described above, shall be exercised as a class concurrently with the rights of holders of any other series of Preferred Stock upon which voting rights to elect such directors have been conferred and
are then exercisable. The Series RP Preferred Stock and 

2

 

any additional series of Preferred Stock that the Corporation may issue and that may provide for the right to vote with the foregoing series of Preferred Stock are collectively referred to herein as
"Voting Preferred Stock;" (C) Each director elected by the holders of shares of Voting Preferred Stock shall be referred to herein as a
"Preferred Director." A Preferred Director shall continue to serve as such for a term of one year, except that upon any termination of the right of all
holders of Voting Preferred Stock to vote as a class for Preferred Directors, the term of office of Preferred Directors then serving shall terminate. Any Preferred Director may be removed by, and
shall not be removed except by, the vote of the holders of record of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in
person or by proxy) and voting together as a single class (i) at a meeting of the shareholders, or (ii) at a meeting of the holders of shares of such Voting Preferred Stock, called for
the purpose in accordance with the Bylaws of the Corporation; (D) So long as a default in any preference dividends of the Series RP Preferred Stock shall exist or the holders of any other
series of Voting Preferred Stock shall be entitled to elect Preferred Directors, (i) any vacancy in the office of a Preferred Director may be filled (except as provided in the following
clause (ii)) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (ii) in the case of the removal of any Preferred Director, the
vacancy may be filled by the vote or written consent of the holders of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in
person or by proxy) and voting together as a single class, at such time as the removal shall be effected. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for
all purposes hereof, to be a Preferred Director. Whenever (1) no default in preference dividends on the Series RP Preferred Stock shall exist and (2) the holders of other series of
Voting Preferred Stock shall no longer be entitled to elect such Preferred Directors, then the number of directors constituting the Board of Directors of the Corporation shall be reduced by two;
(E) For purposes hereof, a "default in preference dividends" on the Series RP Preferred Stock shall be deemed to have occurred whenever the amount of cumulative and unpaid dividends on the
Series RP Preferred Stock shall be equivalent to six full quarterly dividends or more (whether or not consecutive), and, having so occurred, such default shall be deemed to exist thereafter until, but
only until, all cumulative dividends on all shares of the Series RP Preferred Stock then outstanding shall have been paid through the last Quarterly Dividend Payment Date or until, but only until,
non-cumulative dividends have been paid regularly for at least one year. 

    3.4 Except
as set forth herein (or as otherwise required by applicable law), holders of Series RP Preferred Stock shall have no general or special voting rights and
their consent shall not be required for taking any corporate action. 

    Section 4.  Certain Restrictions.  

    4.1 Whenever
quarterly dividends or other dividends or distributions payable on the Series RP Preferred Stock as provided in Section 2 are in arrears, thereafter
and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series RP Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(A) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series RP
Preferred Stock; (B) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series RP Preferred Stock, except dividends paid ratably on the Series RP Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled; (C) redeem or purchase or otherwise acquire for consideration (except as provided in Section 4.1.4 below) shares of any
stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series RP Preferred Stock, 

3

 

provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series RP Preferred Stock; (D) redeem or purchase or otherwise acquire for consideration any shares of Series RP Preferred
Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series RP Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or
classes. 

    4.2 The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless
the Corporation could, under Section 4.1, purchase or otherwise acquire such shares at such time and in such manner. 

    Section 5.  Reacquired Shares.  Any shares of Series RP Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation,
in any other Certificate of Amendment creating a series of Preferred Stock or as otherwise required by law. 

    Section 6.  Liquidation, Dissolution or Winding Up.  

    6.1 Subject
to the prior and superior rights of holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series RP Preferred
Stock with respect to rights upon liquidation, dissolution or winding up (voluntary or otherwise), no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series RP Preferred Stock unless, prior thereto, the holders of shares of
Series RP Preferred Stock shall have received per share an amount equal to the greater of 1,000 times $60.00 or 1,000 times the payment made per share of Common Stock, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series RP Liquidation Preference"). Following
the payment of the full amount of the Series RP Liquidation Preference, no additional distributions shall be made to the holders of shares of Series RP Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the "Capital Adjustment") equal to the quotient obtained by dividing
(A) the Series RP Liquidation Preference by (B) 1,000 (as appropriately adjusted as set forth in Section 6.3 to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii) being hereafter referred to as the "Adjustment Number").
Following the payment of the full amount of the Series RP Liquidation Preference and the Capital Adjustment in respect of all outstanding shares of Series RP Preferred Stock and Common Stock,
respectively, holders of Series RP Preferred Stock and holders of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. 

    6.2 In
the event, however, that there are not sufficient assets available to permit payment in full of the Series RP Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a parity with the Series RP Preferred Stock, then such remaining assets shall be distributed ratably to the holders of Series
RP Preferred Stock and the holders of such parity shares in proportion to their respective liquidation preferences. In the event, 

4

 

however, that there are not sufficient assets available to permit payment in full of the Capital Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. 

    6.3 In
the event the Corporation shall (A) declare any dividend on Common Stock payable in shares of Common Stock, (B) subdivide the outstanding Common
Stock, or (C) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event. 

    Section 7.  Consolidation, Merger, etc.  In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any
such case the shares of Series RP Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to the Adjustment Number (as appropriately adjusted as set forth
in Section 6.3 to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. 

    Section 8.  No Redemption.  The shares of Series RP Preferred Stock shall not be redeemable. 

    Section 9.  Ranking.  The Series RP Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such other series shall provide otherwise. 

    Section 10.  Amendment.  The Amended and Restated Articles of Incorporation of the Corporation
shall not be further amended in any manner that would materially alter or change the powers, preferences or special rights of the Series RP Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares of Series RP Preferred Stock, voting separately as a class. 

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

    RESOLVED,
that the proper officers of the Corporation be, and each of them hereby is, authorized to execute a Certificate of Determination with respect to the Series RP Preferred
Stock pursuant to § 401 of the Corporations Code of the State of California and to take all appropriate action to cause such Certificate to become effective, including, but not limited to,
the filing and recording of such Certificate with and/or by the Secretary of State of the State of California. 

[REST
OF PAGE INTENTIONALLY LEFT BLANK] 

5

 

    IN WITNESS WHEREOF, I have executed and subscribed to this Certificate and do affirm the foregoing as true under penalty of perjury this 15th day of June, 2001. 

	

 	
 	

By:	
 	

	 	 	 	 	Name:	Donald J. Wilkins
	 	 	 	 	Title:	Vice President, General Counsel

and Secretary

6

 
 

Exhibit B
  
    Form of Right Certificate    
  

	Certificate No. RP-	 	       Rights

NOT
EXERCISABLE AFTER JUNE 15, 2011 OR EARLIER IF REDEEMED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 

Right Certificate

REMEC, INC. 

    This
certifies that
                                         
       , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of June 15, 2001 (the "Rights Agreement"),
between REMEC, Inc., a California corporation (the "Corporation"), and Mellon Investor Services LLC, a New Jersey limited liability company, (the
"Rights Agent") to purchase from the Corporation at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., California time, on June 15, 2011, unless the Rights evidenced hereby shall have been previously redeemed by the Corporation, at the principal office or offices of the Rights
Agent designated for such purpose, or at the office of its successor as Rights Agent, one one-thousandth (1/1000th) of a fully paid non-assessable share of Series RP Preferred
Stock (the "Preferred Stock") of the Corporation, at a purchase price of $60.00 per one one-thousandth (1/1000th) of a share of Preferred
Stock (the "Purchase Price"), 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 one one-thousandths (1/1000ths) of a share of Preferred Stock that may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of June 15, 2001 based on the Preferred Stock as constituted at such date. 

    Upon
the occurrence of a Section 11.1.2 Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by
(A) an Acquiring Person or an Affiliate or Associate of an Acquiring Person, (B) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee
after the Acquiring Person becomes such, or (C) a transferee of an Acquiring Person (or of an Affiliate or Associate thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (i) a transfer (whether or not for consideration) from the Acquiring Person (or from any Affiliate or Associate
thereof) to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has a continuing agreement, arrangement or understanding regarding the transferred
Rights or (ii) a transfer that the Board of Directors of the Corporation has determined is part of a plan, arrangement or understanding that has as a primary purpose or effect the avoidance of
Section 7.6 of the Rights Agreement, shall become null and void without any further action and no holder hereof shall have any rights whatsoever with respect to such Rights, whether under any
provision of the Rights Agreement or otherwise. 

    As
provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths (1/1000ths) of a share of Preferred Stock or other securities that 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, including Triggering Events (as such term
is defined in the Rights Agreement). 

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

 

Corporation and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive offices of the Corporation and the office of the Rights Agent. 

    This
Right Certificate, with or without other Right Certificates, upon surrender at the designated 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 shares of Preferred Stock or other securities 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 may be redeemed by the Corporation at a redemption price of $.0001 per Right (subject to
adjustment as provided in the Rights Agreement) payable in cash. 

    No
fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions that are one one-thousandth
(1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of Preferred Stock, which may, at the election of the Corporation, be evidenced by depository receipts), but in
lieu thereof a cash payment will be made, 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 shares of the Preferred Stock or of any other securities
of the Corporation that 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 Corporation or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or other distributions or to
exercise any preemptive 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. 

2

 

    WITNESS the facsimile signature of the proper officers of the Corporation and its corporate seal. Dated as of
                                         
       , 2001.
 

[SEAL]

	

ATTEST:	

 	

REMEC, INC.
	

By	
 	

	
 	

By	
 	

	

Name	
 	

	
 	

Name	
 	

	

Title	
 	

	
 	

Title	
 	

	

Countersigned:	

 	

 	

 	

 
	

MELLON INVESTOR SERVICES LLC,

as Rights Agent	
 	

 	
 	

 
	

By	
 	

	
 	

 	
 	

 
	

Name	
 	

	
 	

 	
 	

 
	

Title	
 	

	
 	

 	
 	

 

3

 
 

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-in-Fact, to transfer the within Right Certificate on the books of the
within-named Corporation, with full power of substitution. 

	Dated:             ,       	 	

	 	 	Signature
	

Signature Guaranteed:	
 	

 
	

	
 	

 

    Signatures
must be guaranteed by an "Eligible Guarantor Institution" as defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated pursuant to the
Securities Exchange Act of 1934, as amended (this term means, in general, banks, stock brokers, savings and loan associations, and credit unions, in each case with membership in an approved signature
guarantee medallion program). 

    The
undersigned hereby certifies that (A) the Rights evidenced by this Right Certificate are not being sold, assigned or transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), (B) this Right Certificate is not being sold, assigned or transferred to or on
behalf of any such Acquiring Person, Affiliate or Associate, and (C) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement). 

	 	 	

	 	 	Signature

Form of Reverse Side of Right Certificate—continued 

FORM OF ELECTION TO PURCHASE 

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

To
the Rights Agent: 

    The
undersigned hereby irrevocably elects to
exercise                                        
          Rights represented by this Right Certificate to
purchase the shares of Preferred Stock, shares of Common Stock or other securities issuable upon the exercise of such Rights and requests that certificates for such shares of Preferred Stock, shares
of Common Stock or other securities be issued in the name of: 

Please
insert social security number

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 number

or other identifying
number                                        
                                 

(Please
print name and address) 

Dated:             ,
       

	 	 	

	 	 	Signature

Signature
Guaranteed: 

    Signatures
must be guaranteed by an "Eligible Guarantor Institution" as defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated pursuant to the
Securities Exchange Act of 1934, as amended (this term means, in general, banks, stock brokers, savings and loan associations, and credit unions, in each case with membership in an approved signature
guarantee medallion program). 

Form of Reverse Side of Right Certificate—continued 

    The
undersigned hereby certifies that (A) the Rights evidenced by this Right Certificate are not being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), (B) this Right Certificate is not being sold, assigned or transferred by or on behalf of any such
Acquiring Person, Affiliate or Associate, and (C) after due inquiry and to the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement). 

	 	 	

	 	 	Signature

Notice  

    The signature on the foregoing Forms of Assignment and Election and certificates 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 Corporation 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 such terms are defined in the Right Agreement)
and such Assignment or Election to Purchase will not be honored. 

 
 

Exhibit C    
  

REMEC, INC.

9404 Chesapeake Drive

San Diego, CA 92123 

SUMMARY
OF RIGHTS TO PURCHASE

SERIES RP PREFERRED SHARES 

    On
June 11, 2001, the Board of Directors (the "Board") of REMEC, Inc. (the
"Corporation") declared a dividend distribution of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock (the "Common Stock") of the Corporation. The dividend is payable to the shareholders of record on June 26,
2001 (the "Record Date"), and with respect to shares of Common Stock issued thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to shares of Common Stock issued after the Distribution Date. Except as set forth below, each Right, when it becomes exercisable, entitles the registered holder to purchase
from the Corporation one one-thousandth (1/1000th) of a share of Series RP Preferred Stock, $0.01 par value per share (the "Preferred
Stock"), of the Corporation at a price of $60.00 per one one-thousandth (1/1000th) of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (the "Rights
Agent"), dated as of June 15, 2001. 

    Initially,
the Rights will be attached to all certificates representing shares of Common Stock then outstanding, and no separate certificates representing the Rights
("Right Certificates") will be distributed. The Rights will separate from the Common Stock upon the earliest to occur of (A) a person or group of
affiliated or associated persons having acquired, without the prior approval of the Corporation's Board of Directors, beneficial ownership of 15% or more of the outstanding shares of Common Stock
(except pursuant to a Permitted Offer, as hereinafter defined) or (B) 10 days (or such later date as the Board may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which would result in a person or group of affiliated or associated persons becoming an Acquiring Person (as hereinafter
defined) (the "Distribution Date"). A person or group whose acquisitions of shares of Common Stock
cause a Distribution Date pursuant to clause (A) above is an "Acquiring Person," with certain exceptions as set forth in the Rights Agreement. The date that a person or group is first publicly
announced to have become such by the Corporation or such Acquiring Person is the "Shares Acquisition Date." 

    The
Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the associated shares of Common Stock. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of shares of Common Stock 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 shares of Common
Stock outstanding as of the Record Date, even without such notation or a copy of this Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable following the Distribution Date, Right Certificates will be mailed to the holders of record of the shares of Common Stock
as of the Close of Business (as defined in the Rights Agreement) on the Distribution Date (and to each initial record holder of certain shares of Common Stock issued after the Distribution Date), and
such separate Right Certificates alone will evidence the Rights. 

    The
Rights are not exercisable until the Distribution Date and will expire at the close of business on June 15, 2011, unless earlier redeemed by the Corporation as described
below. 

    In
the event that any person becomes an Acquiring Person (except pursuant to a tender or exchange offer which is for all outstanding shares of Common Stock at a price and on terms
which a 

 

majority of certain members of the Board determines to be adequate and in the best interests of the Corporation, its shareholders and other relevant constituencies, other than such Acquiring Person,
its affiliates and associates (a "Permitted Offer")), each holder of a Right will thereafter have the right (the
"Flip-In Right") to receive, upon exercise, the number of shares of Common Stock (or, in certain circumstances, of one
one-thousandths (1/1000ths) of a share of Preferred Stock or other securities of the Corporation) having a value (immediately prior to such triggering event) equal to two times the
exercise price of the Right. Notwithstanding the foregoing, following the occurrence of the event described above, all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person or any affiliate or associate thereof will be null and void. The Board has the option, at any time after any person becomes an Acquiring
Person, to exchange all or part of the then-exercisable Rights (excluding those that have become void, as described in the immediately preceding sentence) for shares of Common Stock, at an
exchange ratio determined by dividing the then-applicable Purchase Price by the then-current market price per share of Common Stock as determined in accordance with the Rights
Agreement. However, this option generally terminates if any person becomes the beneficial owner of 50% or more of the Common Stock. 

    In
the event that, at any time following the Shares Acquisition Date, (A) the Corporation is acquired in a merger or other business combination transaction in which the holders
of all of the outstanding shares of Common Stock immediately prior to the consummation of the transaction are not the holders of all of the surviving corporation's voting power, or (B) more
than 50% of the Corporation's assets or earning power is sold or transferred, in either case with or to (i) an Acquiring Person or any affiliate or associate thereof or (ii) any other
person in which such Acquiring Person, affiliate or associate has an interest or any person acting on behalf of or in concert with such Acquiring Person, affiliate or associate, or (iii) if, in
such transaction, all holders of shares of Common Stock are not treated alike, any other person, then each holder of a Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise, common shares of the acquiring company (or, in certain
circumstances, its parent), having a value equal to two times the exercise price of the Right. The holder of a Right will continue to have the Flip-Over Right whether or not such holder
exercises or surrenders the Flip-In Right. 

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

    The
number of outstanding Rights and the number of one one-thousandths (1/1000ths) of a share of Preferred Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend on the Common Stock payable in Common Stock or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date. 

    Preferred
Stock purchasable upon exercise of the Rights will not be redeemable. Each share of Preferred Stock will be entitled to a minimum preferential quarterly dividend payment of
$1.00 per share but, if greater, will be entitled to an aggregate dividend per share of 1,000 times the dividend declared per share of Common Stock. In the event of liquidation, the holders of shares
of the Preferred Stock will be entitled to a minimum preferential liquidation payment per share in an amount equal to the greater of $60.00 or 1,000 times the payment made per share of Common Stock
plus an 

3

 

amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series RP Liquidation
Preference"); thereafter, and after the holders of shares of the Common Stock receive a liquidation payment of an amount equal to the quotient obtained by dividing the Series
RP Liquidation Preference by 1,000 (subject to certain adjustments for stock splits, stock dividends and recapitalizations with respect to the Common Stock), the holders of
shares of the Preferred Stock and the holders of the Common Stock will share the remaining assets in the ratio of 1,000 to 1 (as adjusted) for each share of Preferred Stock and Common Stock so held,
respectively. Finally, in the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock. These rights are protected by customary antidilution provisions. In the event that the amount of accrued and unpaid dividends on the Preferred
Stock is equivalent to six full quarterly dividends or more, the holders of shares of the Preferred Stock shall have the right, voting as a class, to elect two directors in addition to the directors
elected by the holders of shares of the Common Stock until all cumulative dividends on the Preferred Stock have been paid or set apart for payment through the last quarterly dividend payment date. No
fractional shares of Preferred Stock will be issued (other than fractions which are one one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th) of a
share of Preferred Stock, which may, at the election of the Corporation, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading day prior to the date of exercise. 

    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. 

    At
any time prior to the earlier to occur of (A) a person becoming an Acquiring Person or (B) the expiration of the Rights, and under certain other circumstances, the
Corporation may redeem the Rights in whole, but not in part, at a price (payable in cash or, at the Corporation's election, in Common Stock) of $0.0001 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the Board. Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but not in part, at the Redemption Price, provided that such redemption is in connection with a merger or other business combination
transaction or series of transactions involving the Corporation in which all holders of shares of Common Stock are treated alike but not involving an Acquiring Person or its affiliates or associates. 

    Other
than those provisions relating to the rights, duties and obligations of the Rights Agent and certain principal economic terms of the Rights, all of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Corporation prior to the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be amended by the Board of
Directors of the Corporation in order to cure any ambiguity, defect or inconsistency, to make changes that do not adversely affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or lengthen any time period under the Rights Agreement. 

    Until
a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Corporation, including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be taxable to shareholders of the Corporation, shareholders may, depending upon the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events thereafter. 

    A
copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Corporation. 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. 

4

QuickLinks

RIGHTS AGREEMENT

Exhibit A

Exhibit B Form of Right Certificate

Form of Reverse Side of Right Certificate

Exhibit C

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