Document:

Digicorp, Inc.

	 	 	 	 	 	 	 
	 	Cooperation Agreement
	 
	 	 	 	 	 	 	 
	 	This Cooperation Agreement (“Agreement”) is enter into by and among the following parties on this 29th day of May, 2008:	 
	 	 	 	 	 	 	 
	 	(1)	China Youth Net Technology (Beijing) Co., Ltd., a limited liability company duly established and existing under the laws of the People's Republic of China (“PRC” or “China”) with its domicile at 16th and 17th Floors, Changbao Plaza, 1 An Hua Bei Li, Guangqumennei Street, Chongwen District, Beijing, China (hereinafter, “CYN”);
	 
	 	 	 	 	 	 	 
	 	(2)	China Youth Interactive Cultural Media (Beijing) Co., Ltd., a limited liability company duly established and existing under the laws of the PRC with its domicile at 5th Floor, Huaxia Bank Building, 22 Jianguomennei Street, Dongcheng District, Beijing, China (hereinafter, “CYI”);
	 
	 	 	 	 	 	 	 
	 	(3)	China Youth Net Advertising Co. Ltd., a limited liability company duly established and existing under the laws of the PRC with its domicile at Room 705, 38, Chaowai Street, Chaoyang District, Beijing, China (hereinafter, “CYN Ads”); and
	 
	 	 	 	 	 	 	 
	 	(4)	Youth Media (Hong Kong) Limited, a company duly organized and existing under the laws of Hong Kong, with its registered address at Level 28, Three Pacific Place, 1 Queen's Road East, Hong Kong (“YMHK”).
	 
	 	 	 	 	 	 	 
	 	(Each a “Party”, and two or more collectively the “Parties”)	 
	 	 	 	 	 	 	 
	 	Whereas,	 
	 	 	 	 	 	 	 
	 	(A)	CYN is a business entity controlled by China Youth League and is entrusted by China Youth League to be responsible for, operate and hold investments in various businesses with respect to computer networks under China Youth League.  Related to that, the Movie and Television Network Center of China Youth League(the “Center”), which is a related entity of CYN and is also controlled by China Youth League, has been approved by the PRC State Administration of Radio, Film and Television (“SARFT”) and issued an Online Video-Audio License (as defined here below) by the same authority for dissemination of video and audio contents through information network.  CYN is one of the shareholders of CYI, presently owning and holding 51% of the total equity interest of CYI;
	 
	 	 	 	 	 	 	 
	 	(B)	CYI has obtained an exclusive authorization from the Center to set up comprehensive network platform with on-campus students as targeted users and to provide information and related value-added services through such network.  CYN is in total support to CYI in this respect and is willing to provide various resources to CYI;
	 
	 	 	 	 	 	 	 
	 	(C)	CYN Ads, in which CYN also owns and is holding 41% of the total equity interest, has been granted by CYN with certain advertising rights to place advertisements through networks under the auspices of CYN;
	 
	 	 	 	 	 	 	 
	 	(D)	YMHK owns or has access to technologies, media contents and other desired resources that are valuable to the network operated or to be operated by CYI; and
	 
	 	 	 	 	 	 	 
	 	(E)	CYN, CYI and YMHK are willing to cooperate with each other with respect to the aforesaid network and any other business opportunities in related areas, and CYN Ads is in total support of such cooperation;
	 
	 	 	 	 	 	 	 
	 	Now, Therefore, after friendly discussions and based on the principles of equality and mutual benefit, the Parties agree on the following terms and conditions:
	 
	 	 	 	 	 	 	 
	 	1.	Definition and Interpretation	 
	 	 	 	 	 	 	 
	 	1.1	Definition	 
	 	 	 	 	 	 	 
	 	Unless otherwise defined or interpreted in the contexts of this Agreement capitalized terms used herein shall have the following meanings:
	 
	 	 	 	 	 	 	 
	 	“Affiliate” means, in terms of any Party, any company, corporation, partnership, joint venture or other entity that directly or indirectly Controls, is Controlled by or is under common Control with that Party.
	 
	 	 	 	 	 	 	 
	 	“Control”, “Controls”, “Controlled” (or any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management of a Person, whether through the ownership of voting securities, by contract, credit arrangement or proxy, as trustee, executor, agent or otherwise.  For the purpose of this definition, a Person shall be deemed to Control another Person if such first Person, directly or indirectly, owns or holds more than 50% of the voting equity interests in such other Person.
	 
	 	 	 	 	 	 	 
	 	“Effective Date” means the execution date of this Agreement.	 
	 	 	 	 	 	 	 
	 	"Intellectual Property Rights” means patents, trade marks, service marks, trade names, design rights (whether registrable or not), any applications for the foregoing, copyright and other assignable intellectual property rights (whether registrable or not) in any country, including but not limited to the format, layout, and the look and feel of any of the Content.
	 
	 	 	 	 	 	 	 
	 	“Campus Network” means video and audio distribution network based on, including but not limited to, the China Education and Research Network (“CERN”), the broadband network infrastructure built in schools, universities and other education institutions.  After the Mobile Campus Network (as defined below in Clause 2.1.2) is launched, any reference of “Campus Network” under this Agreement shall also include the reference of the Mobile Campus Network as well, to the extent possible.
	 
	 	 	 	 	 	 	 
	 	“Person” means any natural person, corporation, company, association, partnership, organization, business, firm, joint venture, trust, unincorporated organization or any other entity or organization, and shall include any governmental authority.
	 
	 	 	 	 	 	 	 
	 	“Territory” means the People's Republic of China (which, for the purpose of this Agreement, shall not include Hong Kong, Macau and Taiwan).	 
	 	 	 	 	 	 	 
	 	1.2	Interpretation	 	 	 
	 	 	 	 	 	 	 
	 	References to an “Exhibit” or a “Schedule” are, unless otherwise specified, to an exhibit or a schedule attached to this Agreement and references to an “Article” or a “Clause” are, unless otherwise specified, to one of the articles or clauses of this Agreement.
	 
	 	 	 	 	 	 	 
	 	References to any word in the singular form, if applicable, include the references to such a word in the plural form, and vice versa.
	 
	 	 	 	 	 	 	 
	 	Words importing any particular gender shall include all other genders.
	 
	 	 	 	 	 	 	 
	 	The headings in this Agreement are for purposes of easy reference only and shall not be considered in construing this Agreement.
	 
	 	 	 	 	 	 	 
	 	2.	Cooperation and Grant of Rights	 
	 	 	 	 	 	 	 
	 	2.1	The Campus Network	 
	 	 	 	 	 	 	 
	 	2.1.1	CYN and CYI on the one side and YMHK on the other side agree to cooperate with each other to develop, build and operate a fully managed Campus Network under the auspices of CYN.  The Center is holding the Information Network Video-Audio Content Dissemination License  issued by SARFT with the series no.  0105108 (the “Online Video-Audio License”) and CYI is holding the Telecommunication and Information Service Business License  issued by the Telecommunication Administrative Bureau of Beijing, China with the series no.  070249 (the “ICP License”), both of which licenses are required for the setup, development and operation of the Campus Network.  The Center has granted an exclusive authorization to CYI (“the Center's Authorization”) to entrust CYI to setup, develop and operate the Campus Network.
	 
	 	 	 	 	 	 	 
	 	2.1.2	At the initial stage, the Campus Network is a network that is only accessible on the campuses of universities and colleges in the Territory.  CYN will, by itself or through CYI or any other Affiliate, launch a network (“Mobile Campus Network”) for distribution of student-targeted video-audio contents via mobile network as soon as practicable after the signing of this Agreement, and upon the launch of such Mobile Campus Network, CYN, CYI, and YMHK will expand their cooperation under this Agreement to such Mobile Campus Network.  It is the intention of CYN, CYI and YMHK that later on, upon their mutual agreement, they may expand the Campus Network in manner permitted and appropriate in law so that it is accessible by the public via Internet.
	 
	 	 	 	 	 	 	 
	 	2.1.3	The Campus Network will be deployed across a centrally controlled and protected system and will make use both of proprietary software systems and technologies controlled by YMHK and its Affiliates and software systems and technologies controlled by others (the “Technology”).  YMHK will license to CYI and will cause its relevant Affiliates to license to CYI for use by the Campus Network in the Territory any Technology YMHK or its relevant Affiliate might control and has the right to license.  Further, as soon as practicable after the Effective Date, YMHK is to establish a wholly-foreign-owned company 100% invested by and owned by YMHK in Beijing, China (“YMHK WFOE”) to provide to CYI with relevant business, commercial, operational and technical supports, assistances and services with respect to the setup, operation, maintenance and expansion of the Campus Network according to separate agreement to be entered into by CYI and YMHK WFOE (the “Commercial and Technical Services Agreement”).
	 
	 	 	 	 	 	 	 
	 	 	It is the Parties' agreement that the board of directors of YMHK WFOE shall be composed of five (5) directors, of which three (3) shall be nominated by YMHK (and one of them shall be the chairman and legal representative of YMHK WFOE) and the other two (2) nominated by CYN and CYI.  Further, the articles of association of YMHK WFOE shall contain appropriate provisions that certain significant business matters of YMHK WFOE shall require unanimous approval of all five directors or with substantially the same effect.
	 
	 	 	 	 	 	 	 
	 	2.1.4	The Campus Network will deliver a range of content (the “Content”) from premium international and domestic entertainment providers that is to be sourced by YMHK and/or its Affiliates or by CYI, CYN or their Affiliates independently or with the help of YMHK and/or its Affiliates, and it is also anticipated by the Parties that to the extent permitted by applicable law and beneficial to the Campus Network and the cooperation contemplated in this Agreements, the Campus Network may also deliver Content by the end users of the Campus Network, provided that the Content to be delivered via the Campus Network shall be subject to review and approval by the Center and relevant authorities of China that are required by applicable laws, rules and media control policies of China or are otherwise reasonably believed as necessary or beneficial to the smooth operation of the Campus Network.  All Intellectual Property Rights and other proprietary rights in any translated, amended, revised or updated Content independent created by YMHK or any of its Affiliates shall automatically vest in YMHK or its relevant Affiliate.
	 
	 	 	 	 	 	 	 
	 	2.1.5	It is the intention of the Parties that at the initial stage of the Cooperation, the Content of the Campus Network (excluding Mobile Campus Network) shall be advertiser supported and provided free to end users, while the Parties may explore and discuss in the future to introduce a business model of the Campus Network under which the end users shall pay fees to view or download the Content from the Campus Network or access to other services provided by the Campus Network.  The Technology will permit the Campus Network to process the Content enabling the Content to be served with advertisements.  CYN, CYI and YMHK contemplate that a business based on the Campus Network will be established whereby advertisers will be procured who will pay advertising fees to have their advertisements placed in or around the Content on the Campus Network.  Whereever possible, advertising on all Content delivered through the Campus Network will be tracked.
	 
	 	 	 	 	 	 	 
	 	2.2	Cooperation	 	 	 
	 	 	 	 	 	 	 
	 	2.2.1	In addition to other responsibilities provided in this Agreement, CYN and CYI will and will cause all their Affiliates to:
	 
	 	 	 	 	 	 	 
	 	 	(a)	provide all reasonable assistance to assure the legal and smooth operation of the Campus Network, especially that the Center shall provide all reasonable assistance to ensure the legal distribution of video-audio contents which can be accessed via the Campus Network;
	 
	 	 	 	 	 	 	 
	 	 	(b)	make all efforts to expand the user base of the Campus Network by entering into cooperation agreements with universities and colleges for setting up servers in such universities or colleges;
	 
	 	 	 	 	 	 	 
	 	 	(c)	marketing the Campus Network on all current internet sites owned or controlled by CYN or its Affiliates and provide linked banners and/or menu access of the Campus Network from the home page for internet sites owned or controlled by CYN or its Affiliates;
	 
	 	 	 	 	 	 	 
	 	 	(d)	make the Campus Network available via CERN, and after the launch of the Mobile Campus Network, via China Mobile, every day and week of every year, subject, however, to system-wide downtime, and provide the Campus Network with access to and use of data centers, bandwidth rates, service code, and channel owned or controlled by CYI;
	 
	 	 	 	 	 	 	 
	 	 	(e)	fully assist YMHK and YMHK Affiliates in protecting its Intellectual Property Rights and other rights to the full extent permitted in law;
	 
	 	 	 	 	 	 	 
	 	 	(f)	be responsible and ensure that all information (including, but not limited to, the Content) to be disseminated through the Campus Network shall be in compliant with all applicable legal requirements; and
	 
	 	 	 	 	 	 	 
	 	 	(g)	source or create Content for the Campus Network.	 
	 	 	 	 	 	 	 
	 	2.2.2	In addition to other responsibilities provided in this Agreement, YMHK will and/or cause its relevant Affiliates to, to the extent permitted by applicable laws:
	 
	 	 	 	 	 	 	 
	 	 	(a)	license to CYI for use by the Campus Network in China any Technology they currently control and have the right to license, according to this Agreement and any other relevant agreement(s) relating to the cooperation contemplated in this Agreement;
	 
	 	 	 	 	 	 	 
	 	 	(b)	advise on the concept and design of the Campus Network;
	 
	 	 	 	 	 	 	 
	 	 	(c)	through YMHK WFOE, provide to CYI with relevant business, commercial, operational and technical supports, assistances and services with respect to the setup, operation, maintenance and expansion of the Campus Network, according to the Commercial and Technical Services Agreement; and
	 
	 	 	 	 	 	 	 
	 	 	(d)	source or cause the sourcing of international Content for the Campus Network.
	 
	 	 	 	 	 	 	 
	 	2.3	Granting of Rights to YMHK	 	 	 
	 	 	 	 	 	 	 
	 	 	In addition to any other right that is granted by CYN and CYI to YMHK under this Agreement, considering the cooperation contemplated in this Agreement and YMHK's support, assistances and services to CYN and CYI for the Campus Network, CYN and CYI hereby agree to exclusively grant YMHK or any third party/parties designated by YMHK with the following rights during the Term of this Agreement and any renewal period of the Term:
	 
	 	 	 	 	 	 	 
	 	 	(a)	exclusive right to advertise on the Campus Network and to source advertising business for this purpose;
	 
	 	 	 	 	 	 	 
	 	 	(b)	exclusive right to sell and operate the commercial campus marketing events;
	 
	 	 	 	 	 	 	 
	 	 	(c)	right to provide foreign commercial content to the Campus Network (excluding non-profit, educational content exchange and those contents that are not permitted to be disseminated through the Campus Network under applicable Chinese laws); and
	 
	 	 	 	 	 	 	 
	 	 	(d)	enjoy the rights with respect to the setup, operation, maintenance and expansion of the Campus Network according to the Commercial and Technical Services Agreement.
	 
	 	 	 	 	 	 	 
	 	 	Further, it is agreed by the Parties that in case any third party makes any payment or gives any economic benefit to CYN and/or CYI for the placing of any commercial content made or sourced by that third party on the Campus Network, such payment or economic benefit shall belong to YMHK WFOE, and CYN and/or CYI (as the case may be) shall direct such third party to make such payment or give such economic benefit to YMHK WFOE directly.
	 
	 	 	 	 	 	 	 
	 	2.4	Mobile Campus Network	 	 
	 	 	 	 	 	 	 
	 	 	The cooperation among YMHK, CYN and CYI (or Affiliates of CYN or CYI) on Mobile Campus Network shall be limited to campus related contents, including video-audio contents on the Campus Network and other contents and advertising rights related to such contents.  YMHK, CYN and CYI (or Affiliates of CYN or CYI) may further enter into separate agreement regarding their cooperation on Mobile Campus Network, if needed.
	 
	 	 	 	 	 	 	 
	 	2.5	Confirmation of CYN Ads	 	 
	 	 	 	 	 	 	 
	 	 	CYN Ads hereby expressly agrees to the cooperation and granting of rights to YMHK under this Agreement and surrenders whatever rights it has or may have obtained from CYN, CYI, or any other party regarding the Campus Network, especially those which are or may be in conflict or compete with, or may interfere with the exercise of, the rights granted to YMHK under this Agreement.
	 
	 	 	 	 	 	 	 
	 	3.	Other Aspects of the Cooperation	 	 
	 	 	 	 	 	 	 
	 	3.1	Required Licenses and Approvals	 	 
	 	 	 	 	 	 	 
	 	 	CYN and CYI undertake that they will cause and ensure the Center will maintain the validity and effect of the Online Video-Audio License, and continuously authorize and cooperate with CYI on an exclusive basis for the operation of Campus Network which allows dissemination of video-audio contents via the Campus Network during the Term of this Agreement and any renewal period of the Term.
	 
	 	 	 	 
	 	 	CYI undertakes that it will maintain the validity and effect of the ICP License as well as any other license, permit and consent required for its setup, operation, maintenance and expansion of the Campus Network during the Term of this Agreement and any renewal period of the Term, and CYN undertakes that it will provide to and will cause all its Affiliates to provide to CYI all necessary support and assistance in this regard.
	 
	 	 	 	 
	 	 	Each of CYN and CYI undertakes that it will cause and ensure that the Center successfully obtains approval for expansion of the scope of its Online Video-Audio License to cover video-audio distribution rights via the Mobile Campus Network.  CYN and CYI undertake to further expand the scope of CYI's ICP License to allow CYI to provide information services via the Mobile Campus Network.
	 
	 	 	 	 
	 	 	Each of CYN and CYI undertakes that it will launch the Mobile Campus Network or cause the Mobile Campus Network to be launched as soon as practically possible to start the cooperation with YMHK according to this Agreement.  In case the Mobile Campus Network is operated by any Affiliate of CYN and/or CYI, CYN and/or CYI shall ensure such Affiliate acknowledges, accepts and honors all provisions under this Agreement to the extent it is relevant to the Mobile Campus Network, and upon the request of YMHK, CYN and/or CYI shall procure such Affiliate to enter into agreement with YMHK for this purpose,
	 
	 	 	 	 
	 	 	CYI undertakes that it will abide by all applicable laws and regulations relevant to the operation of the Campus Network and the cooperation under this Agreement to ensure the legal operation of the Campus Network during the Term of this Agreement and CYN undertakes that it will provide to and will cause all its Affiliates to provide to CYI all necessary support and assistance in this regard.CYN and CYI undertake that, with seven (7) days after the Effective Date, they will procure (a) a written confirmation from the Center on its consent and support of the cooperation contemplated in this Agreement and provide a copy of that to YMHK; and (b) a written confirmation from Wo Er Shi Tong Technology (Beijing) Co., Ltd., which is the other shareholder of CYN Ads, on its consent to the granting to YMHK all rights related to advertising businesses and CYN Ads's waiver of such rights under this Agreement and provide a copy to YMHK.
	 
	 	 	 	 
	 	 	CYN and CYI further undertake that they will be responsible to apply to and try their best effort to obtain all other required approvals, license, permits and registrations of Chinese governmental or regulatory authorities for the Campus Network and other businesses that are contemplated in this Agreement or to be developed and operated by the cooperation of CYN, CYI and YMHK.
	 
	 	 	 	 
	 	3.2	Expansion of the Coverage of the Campus Network	 
	 	 	 	 	 	 	 
	 	 	CYN and CYI undertake that, during the Term and any renewal period of the Term, they will use their best efforts to expand the coverage of the Campus Network in the Territory by entering into necessary or desirable agreements with schools, colleges and universities in the Territory, and that, for such purpose, to the extent necessary, they will cause and ensure any of their Affiliates will provide necessary assistance to such expansion.
	 
	 	 	 	 	 	 	 
	 	3.3	Exclusive Rights Granted to YMHK	 
	 	 	 	 	 	 	 
	 	 	CYN, CYI and CY Ads hereby undertake that during the Term of this Agreement and any renewal period of the Term:
	 
	 	 	 	 	 	 	 
	 	 	(a)	none of them will appoint any other licensee or otherwise delegate any right to any third person (including any CYN Affiliate) which will in any way influence or impact the cooperation contemplated by this Agreement or any right that has been granted to YMHK under this Agreement;
	 
	 	 	 	 	 	 	 
	 	 	(b)	none of them will undertake or become involved in any business or activity which, in the reasonable opinion of YMHK, competes or may compete with the Campus Network or will in any way influence or impact the cooperation contemplated by this Agreement or any right that has been granted to YMHK under this Agreement;
	 
	 	 	 	 	 	 	 
	 	 	(c)	they will cause and make sure all their Affiliates, directors, officers and employees also to be bound by the same obligations set out in Clauses 3.2(a) and (b) above.
	 
	 	 	 	 	 	 	 
	 	3.4	Equity Transfer of CYI	 
	 	 	 	 	 	 	 
	 	 	It is agreed by CYN, CYI and YMHK that a person acceptable to them shall purchase from Guangzhou Zongzhi Digital Science and Technology Co., Ltd., who is the other shareholder of CYI holding 50% of CYI's total equity interest, 49% of CYI's total equity interest and replace Guangzhou Zongzhi Digital Science and Technology Co., Ltd. as a shareholder of CYI.  For such purpose, CYN and CYI agree that they will provide that person will all reasonable assistance in this regard and enter into relevant legal documents required for the completion of such equity interest transfer.
	 
	 	 	 	 	 	 	 
	 	4.	Term and Termination	 
	 	 	 	 	 	 	 
	 	4.1	Term	 
	 	 	 	 	 	 	 
	 	 	This Agreement shall take effect from the Effective Date and continue in full force and effect for twenty (20) years thereafter (the “Term”), unless otherwise terminated in accordance with Clause 4.2.
	 
	 	 	 	 	 	 	 
	 	 	This Agreement may be renewed for an additional term of ten (10) years by notice in writing given by YMHK to the other Parities at least sixty (60) days prior to the expiry of the Term, and accordingly the Term will be extended by the said ten (10) years.
      
      
      
	 
	 	 	 	 	 	 	 
	 	4.2	Termination	 
	 	 	 	 	 	 	 
	 	4.2.1	Either CYN and CYI on the one side or YMHK on the other side may terminate this Agreement:
	 
	 	 	 	 	 	 	 
	 	 	(a)	if the Commercial and Technical Services Agreement is terminated according to its terms;
	 
	 	 	 	 	 	 	 
	 	 	(b)	if the other side commits a material breach of this Agreement which is not capable of being remedied;
	 
	 	 	 	 	 	 	 
	 	 	(c)	if the other side commits a material breach of this Agreement which is capable of being remedied but not remedied within thirty (30) days upon receiving written notice from the non-breaching side requiring remedy; and
	 
	 	 	 	 	 	 	 
	 	 	(d)	if the other side becomes insolvent or bankrupt.
	 
	 	 	 	 	 	 	 
	 	4.2.2	Upon termination of the Agreement, CYN and CYI shall terminate the transmission of the Content with immediate effect, and any and all agreements between two or more of the Parties shall also be terminated immediately.
	 
	 	 	 	 	 	 	 
	 	5.	Further Assurance	 
	 	 	 	 	 	 	 
	 	CYN, CYI and CYN Ads collectively on the one part and YMHK on the other part agree, at its own expense, to take any further action and to execute any further documents or instruments as the other side may reasonably request to give effect to the transactions contemplated by, and to the terms of, this Agreement and any other agreement referred to in this Agreement.  In particular, and without limiting the foregoing, the Parties agree to amend this Agreement as may be necessary to comply with applicable laws, including without limitation the laws of the PRC.
	 
	 	 	 	 	 	 	 
	 	6.	Representations and Warranties	 
	 	 	 	 	 	 	 
	 	6.1	Each Party's Representations and Warranties	 
	 	 	 	 	 	 	 
	 	 	Each of the Parties represents and warrants to the others that:
	 
	 	 	 	 	 	 	 
	 	 	(a)	It is duly organized and validly existing under the laws of the jurisdiction where it is incorporated or established and has full legal capacity and power to enter into and perform this Agreement and any other agreement related to the cooperation contemplated by this Agreement to which it is a party;
	 
	 	 	 	 	 	 	 
	 	 	(b)	 its execution, delivery and performance of this Agreement and any other agreement related to the cooperation contemplated by this Agreement to which it is a party have been duly authorized by all necessary corporate action required to be taken by it.  This Agreement has been, and each other agreement related to the cooperation contemplated by this Agreement to which it is a party upon execution and delivery thereof will have been, duly executed and delivered by it, and has constituted or will constitute the legal, valid and binding obligation of it, enforceable against it in accordance with their terms.
	 
	 	 	 	 	 	 	 
	 	 	(c)	its execution, delivery and performance of this Agreement and any other agreement related to the cooperation contemplated by this Agreement to which it is a party does not and will not:
	 
	 	 	 	 	 	 	 
	 	 	 	(x)	require any authorization, consent, filing, registration or notice of or with any government agency in the PRC; or
	 
	 	 	 	 	 	 	 	 
	 	 	 	(y)	result in any violation or breach of any agreement, obligation or order to which it is a party or to which it is subject.
	 
	 	 	 	 	 	 	 	 
	 	6.2	Further Representations and Warranties of CYN, CYI and CYN Ads	 
	 	 	 	 	 	 	 	 
	 	 	CYN, CYI and CYN Ads hereby further represent and warrant to YMHK that during the Term and any renewal period of the Term:	 
	 	 	 	 	 	 	 
	 	 	(a)	they are and shall remain entitled to grant to YMHK all rights granted under this Agreement, free of all third-party liens, claims and encumbrances; and
	 
	 	 	 	 	 	 	 
	 	 	(b)	with respect to the granting of the rights to YMHK under this Agreement, they have acquired all requisite licenses, permissions and clearances from any and all third parties for YMHK to exercise the rights granted herein.
	 
	 	 	 	 	 	 	 
	 	7.	Indemnity	 
	 	 	 	 	 	 	 
	 	7.1	CYN and CYI jointly and severally on the one part and YMHK on the other part (each a “Indemnifying Party”) shall be responsible and liable to fully indemnify the other side, the other side's Affiliates, and directors, officers and employees of the other side and its Affiliates (collectively, the “Indemnitees” and each an “Indemnitee”) and hold each such Indemnitee harmless from and against any and all costs, expenses, loss, damages, liabilities, claims and proceedings which may be incurred or suffered by or taken against each such Indemnitee in relation to:
	 
	 	 	 	 	 	 	 
	 	 	(a)	the exercise of the rights granted herein to CYN and/or CYI on the one part or YMHK on the other part (as the case may be); and
	 
	 	 	 	 	 	 	 
	 	 	(b)	any breach by the Indemnifying Party of any provision of this Agreement or any act, default, omission or negligence of any nature on the part of the Indemnifying Party and any of their officers, employees or agents and otherwise howsoever in connection with the rights hereby granted.
	 
	 	 	 	 	 	 	 
	 	8.	Non-disclosure	 
	 	 	 	 	 	 	 
	 	8.1	The Parties agree that all information, materials or documents that any Party has accessed due to the execution and performance of this Agreement or because of its connection with this Agreement, and which are indicated by the other Party/Parties to be confidential shall be kept secret and shall not be disclosed to any third party without the written consent of the relevant other Party.
	 
	 	 	 	 	 	 	 
	 	8.2	The Parties agree that no Party shall use the documents, materials or information obtained from the other Party/Parties for purposes other than those provided in this Agreement or those necessary or beneficial to the cooperation contemplated in this Agreement, or provide such documents, materials or information to any third party, either directly or indirectly.
	 
	 	 	 	 	 	 	 
	 	8.3	The above Clauses 8.1 and 8.2 are not applicable to a Party's disclosure (a) to its advisors, agents, shareholders, directors or officers, (b) to financial institutions and banks whose consent or financing will be obtained for the transaction contemplated hereby, (c) as may be compelled in a judicial or administrative proceeding or as otherwise required by law (in which case the disclosing Party shall notify the other Parties in writing promptly thereof), and (d) as may be required by government or regulatory authorities or stock exchanges or agencies that have jurisdiction over a Party (or its Affiliate) or the transaction contemplated hereby (in which case the disclosing Party shall notify the other Parties in writing promptly thereof).
	 
	 	 	 	 	 	 	 
	 	9.	Governing Law and Dispute Resolution	 
	 	 	 	 	 	 	 
	 	9.1	Governing Law	 
	 	 	 	 	 	 	 
	 	 	The execution, validity, interpretation, performance and dispute resolution of this Agreement shall be governed by and construed in accordance with the laws of Hong Kong (including its conflict of law rules).
	 
	 	 	 	 	 	 	 
	 	9.2	Dispute Resolution	 
	 	 	 	 	 	 	 
	 	 	Any controversies and disputes arising out of or relating to this Agreement, including, without limitation, any question regarding its existence, validity (including the validity or scope of this arbitration provision) or termination (collectively, the “Disputes” and each, a “Dispute”), which cannot be settled amicably by the Parties within a period of sixty (60) days after a Party's written notice to the other Parties on the occurrence of a Dispute, shall be subject to arbitration by Hong Kong International Arbitration Center (the “Arbitration Center”) upon application of any Party.  The Parties hereby agree that any and all such Disputes shall be referred to and finally resolved by arbitration by the Arbitration Center in Hong Kong applying the arbitration rules of the Arbitration Center in force as of the date of the arbitration.  If for any reason any provision of this Agreement is found to be unenforceable, that provision will be enforced to the maximum extent possible to effect the intent of the Parties, and the remainder of this Agreement will continue in full force and effect.  The arbitration tribunal shall consist of three (3) arbitrators to be appointed in accordance with arbitration rules of the Arbitration Center.  The place of arbitration shall be Hong Kong, and the language used in such arbitration, including the language of the decision and the reasons supporting such decision shall be Chinese and English.  The decision of the arbitration tribunal shall be final and binding upon the Parties concerned.  During the process of the arbitration, the Parties shall continue their performance of this Agreement, except for the matter(s) under arbitration.
	 
	 	 	 	 	 	 	 
	 	10.	Other Provisions	 
	 	 	 	 	 	 	 
	 	10.1	Entire Agreement	 
	 	 	 	 	 	 	 
	 	 	This Agreement contains the entire understanding of the Parties with respect to its subject matter and replaces all previous warranties, understandings, contracts, or other written or oral covenants among the Parties.
	 
	 	 	 	 	 	 	 
	 	10.2	Amendments	 
	 	 	 	 	 	 	 
	 	 	Any amendments to this Agreement shall be made through written agreements executed by duly authorized representatives of the Parties.
	 
	 	 	 	 	 	 	 
	 	10.3	Severability	 
	 	 	 	 	 	 	 
	 	 	Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
	 
	 	 	 	 	 	 	 
	 	10.4	No Waiver	 
	 	 	 	 	 	 	 
	 	 	Unless waived by writing, failure by a Party to enforce any term of this Agreement upon another Party's default under this Agreement shall not be deemed as a waiver of future enforcement of that or any other term in this Agreement.  Failure or delay of a Party to enforce any of its rights under this Agreement shall not be deemed as a waiver of such right.
	 
	 	 	 	 	 	 	 
	 	10.5	Notices	 
	 	 	 	 	 	 	 
	 	 	All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing in both Chinese and English and shall be deemed to have been duly given and made upon being delivered to the recipient party by recognized courier service, fax transmission (with confirmation of receipt) for those parties having a fax number listed below or by registered or certified mail (postage prepaid, return receipt requested), and addressed to the applicable address set forth below or such other address as may be designated in writing hereafter by the recipient party:
	 
	 	 	 	 	 	 	 	 	 

	 	 	If to CYN:	16th and 17th Floor, Changbao Plaza,
1 An Hua Bei Li, Guangqumennei Street,
Chongwen District, Beijing, China

	 	 	 	 	 	Attn: Ouyang Xiangqun
	 	 	 	 	 	Fax no: (86 10) 5133 6877
	 	 	 	 	 	 	 	 
	 	 	If to CYI:	16th and 17th Floor, Changbao Plaza,

      1 An Hua Bei Li, Guangqumennei Street,

    Chongwen District, Beijing, China

	 	 	 	 	 	Attn: Ouyang Xiangqun
	 	 	 	 	 	Fax no: (86 10) 5133 6877
	 	 	 	 	 	 	 	 
	 	 	If to CYN Ads:	Room 705,
38, Chaowai Street,
Chaoyang District, Beijing, China

	 	 	 	 	 	Attn: Ouyang Xiangqun
	 	 	 	 	 	Fax no: (86 10) 5133 6877
	 	 	 	 	 	 	 	 
	 	 	If to YMHK:	4143 Glencoe Avenue,
Marina Del Rey, California 90292 U.S.A.

	 	 	 	 	 	Attn: Jay Rifkin
	 	 	 	 	 	Fax no: (1 310) 651 9629
	 	 	 	 	 	 	 	 
	 	10.6	Successors and Assigns	 
	 	 	 	 	 	 	 	 
	 	 	This Agreement shall bind and inure to the benefit of each Party's respective successors and permitted assigns.  Unless otherwise expressly permitted in this Agreement, no Party shall have the right to assign any of its rights hereunder or any interest herein without obtaining the prior written consent of the other Parties, and any purported assignment made without obtaining such written consent shall be null and void, provided, however, that YMHK may transfer its rights and obligations hereunder to its Affiliates without the need for consent from the other Parties.
	 
	 	 	 	 	 	 	 	 
	 	10.7	Language	 
	 	 	 	 	 	 	 	 
	 	 	This Agreement is made in both Chinese and English, and both language versions are equally valid.  All exhibits and schedules attached hereto, if any, shall constitute an inseparable part of this Agreement and have the same force as the text of this Agreement.
	 
	 	 	 	 	 	 	 	 
	 	10.8	Counterparts	 
	 	 	 	 	 	 	 	 
	 	 	This Agreement shall be made in four (4) originals for each language version, with each Party holding one of them.
	 
	 	 	 	 	 	 	 	 
	 	[Signatures on the Following Page]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	In Witness Whereof, the Parties have caused this Agreement to be duly executed and delivered as of the date first above written.
	 
	 	 	 	 	 	 	 	 

	 	China Youth Net Technology (Beijing) Co., Ltd.	 
	 	 	 	 	 	 	 
	 	By:     /s/                              	 
	 	Name:	 
	 	Title:	 
	 	 	 	 	 	 	 
	 	China Youth Interactive Cultural Media (Beijing) Co., Ltd.	 
	 	 	 	 	 	 	 
	 	By:     /s/                              	 
	 	Name:	 
	 	Title:	 
	 	 	 	 	 	 	 
	 	China Youth Net Advertising Co. Ltd.	 
	 	 	 	 	 	 	 
	 	By:     /s/                              	 
	 	Name:	 
	 	Title:	 
	 	 	 	 	 	 	 
	 	Youth Media (Hong Kong) Limited	 
	 	 	 	 	 	 	 
	 	By:     /s/                              	 
	 	Name:	 
	 	Title:Execution Copy 

BADGER METER, INC. 

and 

AMERICAN STOCK
TRANSFER & TRUST COMPANY 

Rights Agent 

     _________________ 

RIGHTS AGREEMENT 

Dated as of February
15, 2008 

TABLE OF CONTENTS 

Page 

	Section 1.	Certain Definitions	1 
	
Section 2.	Appointment of Rights Agent	4 
	
Section 3.	Issue of Right Certificates	4 
	
Section 4.	Form of Right Certificates	6 
	
Section 5.	Countersignature and Registration	6 
	
Section 6.	Transfer, Split Up, Combination and Exchange of Right Certificates;
		Mutilated, Destroyed, Lost or Stolen Right Certificates	6 
	
Section 7.	Exercise of Rights; Purchase Price; Expiration Date of Rights	7 
	
Section 8.	Cancellation and Destruction of Right Certificates	8 
	
Section 9.	Reservation and Availability of Common Shares	9 
	
Section 10.	Record Holders of Common Shares Issued Upon Exercise of Rights	9 
	
Section 11.	Adjustment of Purchase Price, Number of Shares or Number of Rights	9 
	
Section 12.	Certificate of Adjusted Purchase Price or Number of Shares	16 
	
Section 13.	Consolidation, Merger, Share Exchange or Sale or Transfer of Assets or Earning Power	16 
	
Section 14.	Fractional Rights and Fractional Shares	19 
	
Section 15.	Rights of Action	20 
	
Section 16.	Agreement of Right Holders	20 
	
Section 17.	Right Certificate Holder Not Deemed a Shareholder	21 
	
Section 18.	Concerning the Rights Agent	21 
	
Section 19.	Merger or Consolidation or Change of Name of Rights Agent	21 
	
Section 20.	Duties of Rights Agent	22 
	
Section 21.	Change of Rights Agent	24 
	
Section 22.	Issuance of New Right Certificates	25 

(i) 

			
	
Section 23.	Redemption	25 
	
Section 24.	Exchange	25 
	
Section 25.	Notice of Certain Events	27 
	
Section 26.	Notices	27 
	
Section 27.	Supplements and Amendments	28 
	
Section 28.	Successors	29 
	
Section 29.	Determinations by the Board of Directors	29 
	
Section 30.	Benefits of this Agreement	29 
	
Section 31.	Severability	29 
	
Section 32.	Governing Law	29 
	
Section 33.	Counterparts	30 
	
Section 34.	Descriptive Headings	30 

Exhibit A — Form of
Right Certificate 

Exhibit B — Summary of
Rights to Purchase Common Shares 

(ii) 

RIGHTS AGREEMENT 

        THIS
AGREEMENT, dated as of February 15, 2008 (this “Agreement”), is entered into
by and between BADGER METER, INC., a Wisconsin corporation (the
“Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
corporation (the “Rights Agent”). 

        WHEREAS,
the Board of Directors of the Company has authorized and declared a dividend of one common
share purchase right (a “Right”) for each Common Share (as hereinafter defined)
of the Company outstanding on May 26, 2008 (the “Record Date”) payable on May
27, 2008 (the “Payment Date”), and has authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined), each Right representing the right
to purchase one Common Share (as hereinafter defined) of the Company upon the terms and
subject to the conditions hereinafter set forth; 

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

        Section
1.    Certain Definitions. The defined terms herein, whether defined in this Section 1
or elsewhere in this Agreement, shall apply equally to both singular and plural forms of
the terms defined. For purposes of this Agreement, the following terms have the meanings
indicated:  

        (a)              “Acquiring
Person” shall mean any Person (as such term is hereinafter           defined) who or
which, together with all Affiliates and Associates (as such           terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as           such
term is hereinafter defined) of 15% or more of the Common Shares of the           Company
then outstanding, but shall not include any Exempt Person (as           hereinafter
defined). Notwithstanding the foregoing, no Person shall become an           “Acquiring
Person” as a result of an acquisition of Common Shares by           the Company
which, by reducing the number of shares outstanding, increases the
          proportionate number of shares beneficially owned by such Person to 15% or more
          of the Common Shares of the Company then outstanding; provided, however,          that
if a Person would, but for the foregoing, become an Acquiring Person by           reason
of share purchases by the Company and shall, after such share purchases           by the
Company, become the Beneficial Owner of any additional Common Shares of           the
Company at any time that the Person is or thereby becomes the Beneficial           Owner
of 15% or more of the Common Shares of the Company then outstanding (other           than
Common Shares acquired solely as a result of corporate action of the           Company
not caused, directly or indirectly, by such Person), then such Person           shall be
deemed to be an “Acquiring Person”.  

        Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an “Acquiring Person”, as defined pursuant to the
foregoing provisions of this Section 1(a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of Common Shares of the
Company so that such Person would no longer be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this Section 1(a), then such Person shall not be
deemed to be an “Acquiring Person” for any purposes of this Agreement. 

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

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

	 	        (i)              which
such Person or any of such Person’s Affiliates or Associates           beneficially
owns, directly or indirectly;  

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

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

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

2 

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

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

        (f)              “Common
Shares” when used with reference to the Company shall mean the           shares of
common stock, $1 par value, of the Company, or shares having           equivalent rights,
privileges and preferences to common stock. “Common           Shares” when used
with reference to any Person other than the Company shall           mean the capital
stock (or equivalent equity interest) with the greatest voting           power of such
other Person or, if such other Person is a Subsidiary of another           Person, the
Person or Persons that ultimately control such first-mentioned           Person.  

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

        (h)              “Exchange
Act” means the Securities Exchange Act of 1934, as amended.  

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

        (j)              “Exempt
Person” shall mean (i) the Company; (ii) any Subsidiary (as           such term is
hereinafter defined) of the Company; (iii) any employee benefit           plan of the
Company or any Subsidiary of the Company (collectively,           “Employee Benefit
Plans”); (iv) any entity holding Common Shares of           the Company for or
pursuant to the terms of any Employee Benefit Plans; (v) any           trustee,
administrator or fiduciary of any Employee Benefit Plans in their           capacities as
such; and (vi) any Person who has reported or is required to           report their
ownership on Schedule 13G under the Exchange Act (or any comparable           or
successor report) or on Schedule 13D under the Exchange Act (or any           comparable
or successor report), which Schedule 13D does not disclose pursuant           to Item 4
thereto (or any comparable successor item or section) an intent, or           reserve the
right, to engage in a control transaction, any contested           solicitation for the
election of directors or any of the other actions specified           in Item 4 thereto
(or any comparable successor item or section), who           inadvertently becomes the
Beneficial Owner of 15% or more of the Common Shares           of the Company then
outstanding and, within 10 Business Days of being requested           by the Company to
advise it regarding the same, certifies to the Company that           such Person
acquired 15% or more of the Common Shares of the Company           inadvertently or
without knowledge of the terms of the Rights and who or which,           together with
all Affiliates and Associates, thereafter does not acquire           additional Common
Shares of the Company while the Beneficial Owner of 15% or           more of the Common
Shares of the Company then outstanding; provided, however,           that if the Person
requested to so certify fails to do so within 10 Business           Days or breaches or
violates such certification, then such Person shall become           an Acquiring Person
immediately after such 10 Business Day period or such breach           or violation (the
Persons in this clause (vi), collectively, “Passive           Investors”).  

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

3 

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

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

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

        (o)              “Shares
Acquisition Date” shall mean the first date of public           announcement (which,
for purposes of this definition, shall include, without           limitation, a report
filed or amended pursuant to Section 13(d) under the           Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has           become such; provided, that
if such Person is determined not to have           become an Acquiring Person pursuant to
Section 1(a) hereof, then no Shares           Acquisition Date shall be deemed to
have occurred.  

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

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

        Section
3.    Issue of Right Certificates.  

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

4 

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

        (c)              Certificates
for Common Shares which become outstanding (including, without           limitation,
certificates for reacquired Common Shares referred to in the last           sentence of
this Section  3(c) and certificates issued on the transfer of           Common
Shares) after the Record Date but prior to the earliest of the           Distribution
Date, the Redemption Date or the Final Expiration Date shall have           impressed on,
printed on, written on or otherwise affixed to them a legend in           substantially
the form below (provided, however, that certificates of           Common Shares in
existence on the Record Date may bear the legend required by           that certain
Rights Agreement, dated as of May 26, 1998 (the “1998 Rights           Agreement”),
between the Company and the Rights Agent (as successor to           Firstar Trust
Company), and all references to the 1998 Rights Agreement shall be           deemed to be
references to this Agreement).  

	 	        “This
certificate also evidences and entitles the holder hereof to certain rights as set forth
in a Rights Agreement between Badger Meter, Inc. and American Stock Transfer & Trust
Company, dated as of February 15, 2008, and as such agreement may be amended (the
“Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of Badger
Meter, 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. Badger Meter, 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, an
Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether held by such Person or any subsequent holder, shall become null
and void.” 

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

5 

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

        Section
5.    Countersignature and Registration.  

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

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

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

        (a)              Subject
to the provisions of Section 14 hereof, at any time after the close           of
business on the Distribution Date, and at or prior to the close of business           on
the earlier of the Redemption Date or the Final Expiration Date, any Right
          Certificate or Right Certificates (other than Right Certificates representing
          Rights that have become void pursuant to Section 11(a)(ii) hereof or that
          have been exchanged pursuant to Section 24 hereof) may be transferred,
          split up, combined or exchanged for another Right Certificate or Right
          Certificates, entitling the registered holder to purchase a like number of
          Common Shares as the Right Certificate or Right Certificates surrendered then
          entitled such holder to purchase. Any registered holder desiring to transfer,
          split up, combine or exchange any Right Certificate or Right Certificates shall
          make such request in writing delivered to the Rights Agent, and shall surrender
          the Right Certificate or Right Certificates to be transferred, split up,
          combined or exchanged at the principal office of the Rights Agent. Thereupon
the           Rights Agent shall countersign and deliver to the Person entitled thereto a
          Right Certificate or Right Certificates, as the case may be, as so requested.
          The Company may require payment of a sum sufficient to cover any tax or
          governmental charge that may be imposed in connection with any transfer, split
          up, combination or exchange of Right Certificates.  

6 

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

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

        (a)              As
provided herein, each Right shall be exercisable to purchase one Common           Share,
subject to adjustment. The registered holder of any Right Certificate may
          exercise the Rights evidenced thereby (except as otherwise provided herein) in
          whole or in part at any time after the Distribution Date upon surrender of the
          Right Certificate, with the form of election to purchase on the reverse side
          thereof duly executed, to the Rights Agent at the principal office of the
Rights           Agent, together with payment of the Purchase Price for each Common Share
as to           which the Rights are exercised, at or prior to the earliest of (i) the
          close of business on May 26, 2018, subject to extension (the “Final
          Expiration Date”), (ii) the time at which the Rights are redeemed as
          provided in Section 23 hereof (the “Redemption Date”), and
          (iii) the time at which such Rights are exchanged as provided in
          Section 24 hereof.  

        (b)              The
Purchase Price for each Common Share pursuant to the exercise of a Right           shall
initially be $200, shall be subject to adjustment from time to time as           provided
in Sections 11 and 13 hereof and shall be payable in lawful money           of the
United States of America or in Common Shares in accordance with Section            7(c)
below.  

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

7 

        (d)              In
case the registered holder of any Right Certificate shall exercise less than
          all the Rights evidenced thereby, a new Right Certificate evidencing Rights
          equivalent to the Rights remaining unexercised shall be issued by the Rights
          Agent to the registered holder of such Right Certificate or to his duly
          authorized assigns, subject to the provisions of Sections 6 and 14 hereof.  

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

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

8 

        Section
9.    Reservation and Availability of Common Shares.  

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

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

        (c)              The
Company covenants and agrees that it will take all such action as may be
          necessary to ensure that all Common Shares delivered upon exercise of Rights
          shall, at the time of delivery of the certificates for such shares (subject to
          payment of the Purchase Price), be duly and validly authorized and issued and
          fully paid and nonassessable shares (except as otherwise provided by any
          corporation law applicable to the Company).  

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

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

        Section
11.    Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Common Shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as provided
in this Section 11.  

9 

	 	        (a)    (i)    In
the event the Company shall at any time after the date of this Agreement           (A) declare
a dividend on the Common Shares payable in Common Shares,           (B) subdivide
the outstanding Common Shares, (C) combine the           outstanding Common Shares
into a smaller number of Common Shares or           (D) issue any shares of its
capital stock in a reclassification of the           Common Shares (including any such
reclassification in connection with a           consolidation or merger in which the
Company is the continuing or surviving           corporation, provided, that if
any such reclassification is effected           prior to the earlier of the Distribution
Date or the Shares Acquisition Date,           the Board of Directors, in its sole
discretion, may elect not to adjust the           Purchase Price in effect at the time of
the record date for such           reclassification and the number and kind of shares of
capital stock issuable on           such date), except as otherwise provided in this
Section 11(a), the           Purchase Price in effect at the time of the record date
for such dividend or of           the effective date of such subdivision, combination or
reclassification, and the           number and kind of shares of capital stock issuable
on such date, shall be           proportionately adjusted so that the holder of any Right
exercised after such           time shall be entitled to receive the aggregate number and
kind of shares of           capital stock which, if such Right had been exercised
immediately prior to such           date and at a time when the Common Shares transfer
books of the Company were           open, such holder would have owned upon such exercise
and been entitled to           receive by virtue of such dividend, subdivision,
combination or           reclassification; provided, however, that in no event
shall the           consideration to be paid upon the exercise of one Right be less than
the           aggregate par value of the shares of capital stock of the Company issuable
upon           exercise of one Right. If an event occurs which would require an
adjustment           under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment           provided for in this Section 11(a)(i) shall be in addition to,
and shall be           made prior to, any adjustment required pursuant to Section 11(a)(ii).  

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

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

10 

	 	        (iii)              In
the event that there shall not be sufficient Common Shares of the Company
          issued but not outstanding or authorized but unissued (and not reserved for
          issuance for purposes other than upon exercise of the Rights) to permit the
          exercise in full of the Rights in accordance with the foregoing
          subparagraph (ii), the Company shall: (A) determine the excess of
          (1) the value of the Adjustment Shares issuable upon the exercise of a
          Right (the “Current Value”) over (2) the Purchase Price (such
          excess, the “Spread”), and (B) with respect to each Right, make
          adequate provision to substitute for the Adjustment Shares, upon payment of the
          applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
          Price payable with respect to such Right, (3) equity securities of the
          Company (including, without limitation, shares, or units of shares, of
preferred           stock which the Board of Directors of the Company has deemed to have
the same           value as Common Shares (such shares of preferred stock, hereinafter
referred to           as “common stock equivalents”)), (4) debt securities
of the           Company, (5) other assets or (6) any combination of the
foregoing,           having an aggregate value equal to the Current Value, where such
aggregate value           has been determined by the Board of Directors of the Company
based upon the           advice of a nationally recognized investment banking firm
selected by the Board           of Directors of the Company; provided, however, if
the Company shall not           have made adequate provision to substitute for the
Adjustment Shares pursuant to           clause (B) above within thirty (30)
days following the occurrence of a           Section 11(a)(ii) Event (the “Section 11(a)(ii)
Trigger           Date”), then the Company shall be obligated to deliver, upon the
surrender           for exercise of a Right and without requiring payment of any portion
of the           Purchase Price, Common Shares (to the extent available) and then, if
necessary,           cash, which shares and/or cash have an aggregate value equal to the
Spread. If           the Board of Directors of the Company shall determine in good faith
that it is           likely that sufficient additional Common Shares might be authorized
for issuance           for exercise in full of the Rights, the thirty (30) day
period set forth           above may be extended to the extent necessary, but not more
than           ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order           that the Company may seek shareholder approval for the authorization of
such           additional shares (such period, as it may be extended, the “Substitution
          Period”). To the extent that the Company determines that some action need
          be taken pursuant to the first and/or second sentences of this           Section 11(a)(iii),
the Company (x) shall provide, subject to the last           paragraph of Section 11(a)(ii)
hereof, that such action shall apply           uniformly to all outstanding Rights, and
(y) may suspend the exercisability           of the Rights until the expiration of
the Substitution Period to seek any           authorization of additional shares and/or
to decide the appropriate form of           distribution to be made pursuant to such
first sentence and to determine the           value thereof. In the event of any such
suspension, the Company shall issue a           public announcement stating that the
exercisability of the Rights has been           temporarily suspended, as well as a
public announcement at such time as the           suspension is no longer in effect. For
purposes of this Section 11(a)(iii),           the value of the Common Shares shall
be the current per share market price (as           determined pursuant to Section 11(d)
hereof) of the Common Shares on the           Section 11(a)(ii) Trigger Date and the
value of any “common stock           equivalent” shall be deemed to have the
same value as the Common Shares on           such date.  

11 

        (b)              In
case the Company shall fix a record date for the issuance of rights, options           or
warrants to all holders of Common Shares entitling them (for a period           expiring
within 45 calendar days after such record date) to subscribe for or           purchase
Common Shares (or preferred shares having substantially the same           rights,
privileges and preferences as the Common Shares (“equivalent           preferred
shares”)) or securities convertible into Common Shares at a price           per
Common Share or equivalent preferred share (or having a conversion price per
          share, if a security convertible into Common Shares or equivalent preferred
          shares) less than the then current per share market price of the Common Shares
          (as defined in Section 11(d)) on such record date, the Purchase Price to
be           in effect after such record date shall be determined by multiplying the
Purchase           Price in effect immediately prior to such record date by a fraction,
the           numerator of which shall be the number of Common Shares outstanding on such
          record date plus the number of Common Shares which the aggregate offering price
          of the total number of Common Shares and/or equivalent preferred shares so to
be           offered (and/or the aggregate initial conversion price of the convertible
          securities so to be offered) would purchase at such current market price and
the           denominator of which shall be the number of Common Shares outstanding on
such           record date plus the number of additional Common Shares and/or equivalent
          preferred shares to be offered for subscription or purchase (or into which the
          convertible securities so to be offered are initially convertible); provided,
          however, that in no event shall the consideration to be paid upon the
          exercise of one Right be less than the aggregate par value of the shares of
          capital stock of the Company issuable upon exercise of one Right. In case such
          subscription price may be paid in a consideration part or all of which shall be
          in a form other than cash, the value of such consideration shall be as
          determined in good faith by the Board of Directors of the Company, whose
          determination shall be described in a statement filed with the Rights Agent.
          Common Shares owned by or held for the account of the Company shall not be
          deemed outstanding for the purpose of any such computation. Such adjustment
          shall be made successively whenever such a record date is fixed; and in the
          event that such rights, options or warrants are not so issued, the Purchase
          Price shall be adjusted to be the Purchase Price which would then be in effect
          if such record date had not been fixed.  

12 

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

        (d)              For
the purpose of any computation hereunder, the “current per share market
          price” of any security (a “Security” for the purpose of this
          Section 11(d)) on any date shall be deemed to be the average of the daily
          closing prices per share of such Security for the 30 consecutive Trading Days
          (as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market           price of the
Security is determined during a period following the announcement           by the issuer
of such Security of (i) a dividend or distribution on such           Security
payable in shares of such Security or securities convertible into such           shares,
or (ii) any subdivision, combination or reclassification of such           Security
and prior to the expiration of 30 Trading Days after the           ex-dividend date
for such dividend or distribution, or the record date for such           subdivision,
combination or reclassification, then, and in each such case, the           current per
share market price shall be appropriately adjusted to reflect the           current
market price per share equivalent of such Security. The closing price           for each
Trading Day shall be the last sale price, regular way, or, in case no           such sale
takes place on such day, the average of the closing bid and asked           prices,
regular way, in either case as reported in the principal consolidated
          transaction reporting system with respect to securities listed or admitted to
          trading on the New York Stock Exchange or the American Stock Exchange or, if
the           Securities are not listed or admitted to trading on the New York Stock
Exchange           or the American 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 Company. 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. If the           Common Shares are not publicly held or so
listed or traded, “current per           share market price” shall mean the
fair value per share as determined in           good faith by the Board of Directors of
the Company, whose determination shall           be described in a statement filed with
the Rights Agent.  

13 

        (e)              No
adjustment in the Purchase Price shall be required unless such adjustment           would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this           Section 11(e)
are not required to be made shall be carried forward and           taken into account in
any subsequent adjustment. All calculations under this           Section 11 shall be
made to the nearest cent or to the nearest           ten-thousandth of a share as the
case may be. Notwithstanding the first sentence           of this Section 11(e), any
adjustment required by this Section 11           shall be made no later than the
earlier of (i) three years from the date of           the transaction which requires
such adjustment or (ii) the date of the           expiration of the right to
exercise any Rights.  

        (f)              If,
as a result of an adjustment made pursuant to Section 11(a), the holder           of
any Right thereafter exercised shall become entitled to receive any shares of
          capital stock of the Company other than Common Shares, thereafter the number of
          such other shares so receivable upon exercise of any Right shall be subject to
          adjustment from time to time in a manner and on terms as nearly equivalent as
          practicable to the provisions with respect to the Common Shares contained in
          Section 11(a) through (c), inclusive, and the provisions of
          Sections 7, 9, 10, 13 and 14 with respect to the Common Shares shall apply
          on like terms to any such other shares.  

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

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

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

14 

        (j)              Irrespective
of any adjustment or change in the Purchase Price or the number of           Common
Shares issuable upon the exercise of the Rights, the Right Certificates
          theretofore and thereafter issued may continue to express the Purchase Price
and           the number of Common Shares which were expressed in the initial Right
          Certificates issued hereunder.  

        (k)              Before
taking any action that would cause an adjustment reducing the Purchase           Price
below the par value, if any, of the Common Shares issuable upon exercise           of the
Rights, the Company shall take any corporate action which may, in the           opinion
of its counsel, be necessary in order that the Company may validly and           legally
issue fully paid and nonassessable (except as otherwise provided by any
          corporation law applicable to the Company) Common Shares at such adjusted
          Purchase Price.  

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

        (m)              Anything
in this Section 11 to the contrary notwithstanding, the Board of           Directors
shall also have the authority to make such reductions in the Purchase           Price, in
addition to those adjustments expressly required by this           Section 11, as
and to the extent that it in its sole discretion shall           determine to be
advisable in order that any consolidation or subdivision of the           Common Shares,
issuance wholly for cash or any Common Shares at less than the           current market
price, issuance wholly for cash or Common Shares or securities           which by their
terms are convertible into or exchangeable for Common Shares,           dividends on
Common Shares payable in Common Shares or issuance of rights,           options or
warrants referred to hereinabove in Section 11(b), hereafter           made by the
Company to holders of its Common Shares shall not be taxable to such
          shareholders.  

15 

        (n)              The
Company covenants and agrees that it shall not, at any time after the           earlier
of the Distribution Date or the Shares Acquisition Date,           (i) consolidate
with any other Person (other than a Subsidiary of the           Company in a transaction
which complies with Section 11(o) hereof),           (ii) merge with or into
any other Person (other than a Subsidiary of the           Company in a transaction which
complies with Section 11(o) hereof),           (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in           one transaction, or a series of
related transactions, assets or earning power           aggregating more than 50% of the
assets or earning power of the Company and its           Subsidiaries (taken as a whole)
to any other Person or Persons (other than the           Company and/or any of its
Subsidiaries in one or more transactions each of which           complies with Section 11(o)
hereof) or (iv) consummate a share           exchange with any other Person, if at
the time of or immediately after any such           consolidation, merger, sale or share
exchange (A) there are any rights,           warrants or other instruments or
securities outstanding or agreements in effect           which would substantially
diminish or otherwise eliminate the benefits intended           to be afforded by the
Rights, (B) prior to, simultaneously with or           immediately after such
consolidation, merger, sale or share exchange the           shareholders of the Person
who constitute, or would constitute, the           “Principal Party” for
purposes of Section 13(a) hereof shall have           received a distribution of
Rights previously owned by such Person or any of its           Affiliates and Associates
or (C) the form or nature of organization of the           Principal Party would
preclude or limit the exercisability of the Rights.  

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

        Section
12.    Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Common Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof.  

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

16 

        (a)              In
the event that, on or following the Shares Acquisition Date, directly or
          indirectly, (i) the Company shall consolidate with, or merge with and
into,           any other Person (other than a Subsidiary of the Company in a transaction
which           complies with Section 11(o) hereof), and the Company shall not be
the           continuing or surviving corporation of such consolidation or merger,
          (ii) any Person (other than a Subsidiary of the Company in a transaction
          which complies with Section 11(o) hereof) shall consolidate with, or merge
          with or into, the Company, and the Company shall be the continuing or surviving
          corporation of such consolidation or merger, or any Person or Persons (other
          than a Subsidiary of the Company in a transaction that complies with
          Section 11(o) hereof) shall consummate a share exchange with the Company,
          and, in connection with such consolidation, merger or share exchange, all or
          part of the outstanding Common Shares shall be changed into or exchanged for
          stock or other securities of any other Person (or the Company) or cash or any
          other property, or (iii) the Company shall sell or otherwise transfer (or
          one or more of its Subsidiaries shall sell or otherwise transfer), in one
          transaction or a series of related transactions, assets or earning power
          aggregating more than 50% of the assets or earning power of the Company and its
          Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company           or any Subsidiary of the Company in one or more transactions each of
which           complies with Section 11(o) hereof), then, and in each such case,
proper           provision shall be made so that: (A) each holder of a Right (except
as           otherwise provided herein) shall thereafter have the right to receive, upon
the           exercise thereof at a price equal to the then current Purchase Price
multiplied           by the number of Common Shares for which a Right is then exercisable
(or, if a           Section 11(a)(ii) Event has occurred prior to the first
occurrence of any           of the events described in clauses (i), (ii) or (iii)
above (a           “Section 13 Event”), the Purchase Price in effect
immediately           prior to the first occurrence of a Section 11(a)(ii) Event
multiplied by           the number of Common Shares for which a Right was exercisable
immediately prior           to such first occurrence), in accordance with the terms of
this Agreement, such           number of validly authorized and issued, fully paid,
nonassessable (except as           otherwise required by any corporation law applicable
to the Principal Party (as           such term is hereinafter defined)) and freely
tradeable Common Shares of the           Principal Party, not subject to any liens,
encumbrances, rights of first refusal           or other adverse claims, as shall be
equal to the result obtained by           (1) multiplying the then current Purchase
Price by the number of Common           Shares for which a Right is exercisable
immediately prior to the first           occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has           occurred prior to the first occurrence of a
Section 13 Event, multiplying           the number of such shares for which a Right
was exercisable immediately prior to           the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in           effect immediately prior to such first
occurrence), and dividing that product           (which, following the first occurrence
of a Section 13 Event, shall be           referred to as the “Purchase Price” for
each Right and for all           purposes of this Agreement) by (2) 50% of the
current market price           (determined pursuant to Section 11(d) hereof) per
Common Share of such           Principal Party on the date of consummation of such Section 13
Event;           (B) such Principal Party shall thereafter be liable for, and shall
assume,           by virtue of such Section 13 Event, all the obligations and duties
of the           Company pursuant to this Agreement; (C) the term “Company” shall
          thereafter be deemed to refer to such Principal Party, it being specifically
          intended that the provisions of Section 11 hereof shall apply only to such
          Principal Party following the first occurrence of a Section 13 Event;
          (D) such Principal Party shall take such steps (including, but not limited
          to, the reservation of a sufficient number of its Common Shares) in connection
          with the consummation of any such transaction as may be necessary to assure
that           the provisions hereof shall thereafter be applicable, as nearly as
reasonably           may be, in relation to its Common Shares thereafter deliverable upon
the           exercise of the Rights; and (E) the provisions of Section 11(a)(ii)
          hereof shall be of no effect following the first occurrence of any
          Section 13 Event.  

        (b)              “Principal
Party” shall mean  

17 

	 	        (i)              in
the case of any transaction described in clause (i) or (ii) of the first
          sentence of Section 13(a), the Person that is the issuer of any securities
          into which Common Shares of the Company are converted in such merger,
          consolidation or share exchange, and if no securities are so issued,
          (A) the Person that is the other party to the merger, consolidation or
          share exchange and that survives such merger or consolidation, or, if there is
          more than one such Person, the Person the Common Shares of which have the
          greatest aggregate market value of shares outstanding or (B) if the Person
          that is the other party to the merger or consolidation does not survive the
          merger or consolidation, the Person that does survive the merger or
          consolidation (including the Company if it survives); and  

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

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

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

	 	        (i)              prepare
and file a registration statement under the Securities Act of 1933, as           amended
(the “Act”), with respect to the Rights and the securities
          purchasable upon exercise of the Rights on an appropriate form, and will use
its           best efforts to cause such registration statement to (A) become
effective           as soon as practicable after such filing and (B) remain
effective (with a           prospectus at all times meeting the requirements of the Act)
until the Final           Expiration Date; and  

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

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

18 

        Section
14.    Fractional Rights and Fractional Shares.  

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

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

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

        Section
15.    Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date, of the
Common Shares), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Shares), may, in his
own behalf and for his own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of any
Person subject to, this Agreement.  

19 

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

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

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

        (c)              the
Company and the Rights Agent may deem and treat the Person in whose name the
          Right Certificate (or, prior to the Distribution Date, the associated Common
          Share certificate) is registered as the absolute owner thereof and of the
Rights           evidenced thereby (notwithstanding any notations of ownership or writing
on the           Right Certificates or the associated Common Share certificate made by
anyone           other than the Company or the Rights Agent) for all purposes whatsoever,
and           neither the Company nor the Rights Agent shall be affected by any notice to
the           contrary; and  

        (d)              notwithstanding
anything in this Agreement to the contrary, neither the Company           nor the Rights
Agent shall have any liability to any holder of a Right or other           Person as a
result of its inability to perform any of its obligations under this           Agreement
by reason of any preliminary or permanent injunction or other order,           decree,
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,
the Company           must use its best efforts to have any such order, decree, judgment
or ruling           lifted or otherwise overturned as soon as possible.  

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

20 

        Section
18.    Concerning the Rights Agent.  

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

        (b)              The
Rights Agent shall be protected and shall incur no liability for, or in           respect
of any action taken, suffered or omitted by it in connection with, its
          administration of this Agreement in reliance upon any Right Certificate or
          certificate for the Common Shares or for other securities of the Company,
          instrument of assignment or transfer, power of attorney, endorsement,
affidavit,           letter, notice, direction, consent, certificate, statement, or other
paper or           document believed by it to be genuine and to be signed, executed and,
where           necessary, verified or acknowledged, by the proper Person or Persons, or
          otherwise upon the advice of counsel as set forth in Section 20 hereof.  

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

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

21 

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

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

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

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

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

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

	 	        (e)              The
Rights Agent shall not be under any responsibility in respect of the           validity
of this Agreement or the execution and delivery hereof (except the due
          authorization, execution and delivery hereof by the Rights Agent) or in respect
          of the validity or execution of any Right Certificate (except its
          countersignature thereof); nor shall it be responsible for any breach by the
          Company of any covenant or condition contained in this Agreement or in any
Right           Certificate; nor shall it be responsible for any change in the
exercisability of           the Rights (including the Rights becoming void pursuant to
          Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
          (including the manner, method or amount thereof) provided for in Section 3,
          11, 13, 23 or 24, or the ascertaining of the existence of facts that would
          require any such change or adjustment (except with respect to the exercise of
          Rights evidenced by Right Certificates after actual notice that such change or
          adjustment is required); nor shall it by any act hereunder be deemed to make
any           representation or warranty as to the authorization or reservation of any
Common           Shares or other securities to be issued pursuant to this Agreement or
any Right           Certificate or as to whether any Common Shares or other securities
will, when           issued, be validly authorized and issued, fully paid and
nonassessable.  

22 

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

	 	        (g)              The
Rights Agent is hereby authorized and directed to accept instructions with
          respect to the performance of its duties hereunder from any one of the Chairman
          of the Board, the Chief Executive Officer, the President, the Secretary, any
          Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
          and to apply to such officers for advice or instructions in connection with its
          duties, and it shall not be liable for any action taken or suffered by it in
          good faith in accordance with instructions of any such officer or for any delay
          in acting while waiting for those instructions.  

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

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

        Section
21.    Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days’ notice in writing mailed to the Company and to each transfer agent of
the Common Shares by registered or certified mail, and, if separate Right Certificates
have been issued as of the date of such notice as contemplated by Section 3, to the
holders of the Right Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of
the Common Shares by registered or certified mail, and, if separate Right Certificates
have been issued as of the date of such notice as contemplated by Section 3, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the laws of the
United States or of the State of New York or the State of Wisconsin (or of any other
state of the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of Wisconsin), in good
standing, having an office or agency in the State of Wisconsin or the State of New York,
which is authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and surplus of at least
$50 million, or (b) an Affiliate of a corporation described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares, and, if separate Right Certificates have been issued as of the date of
such notice as contemplated by Section 3, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.  

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

        Section
23.    Redemption.  

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

24 

        (b)              The
Board of Directors of the Company may, at its option, at any time prior to           such
time as any Person becomes an Acquiring Person, redeem all but not less           than
all the then outstanding Rights at a redemption price of $.01 per Right,
          appropriately adjusted to reflect any stock split, stock dividend or similar
          transaction occurring after the date hereof (such redemption price being
          hereinafter referred to as the “Redemption Price”). The redemption of
          the Rights by the Board of Directors may be made effective at such time on such
          basis and with such conditions as the Board of Directors in its sole discretion
          may establish. Notwithstanding anything contained in this Agreement to the
          contrary, the Rights shall not be exercisable after the first occurrence of a
          Section 11(a)(ii) Event until such time as the Company’s right of
          redemption hereunder has expired.  

        (c)              Immediately
upon the effectiveness of the action of the Board of Directors of           the Company
ordering the redemption of the Rights pursuant to           Section 23(b), and
without any further action and without any notice, the           right to exercise the
Rights will terminate and the only right thereafter of the           holders of Rights
shall be to receive the Redemption Price. The Company shall           promptly give
public notice of any such redemption; provided, however,          that the failure
to give, or any defect in, any such notice shall not affect the           validity of
such redemption. Within 10 days after the effectiveness of the           action of the
Board of Directors ordering the redemption of the Rights pursuant           to Section
23(b), the Company shall mail a notice of redemption to all the           holders of the
then outstanding Rights at their last addresses as they appear           upon the
registry books of the Rights Agent or, prior to the Distribution Date,           on the
registry books of the transfer agent for the Common Shares. Any notice           which is
mailed in the manner herein provided shall be deemed given, whether or           not the
holder receives the notice. Each such notice of redemption will state           the
method by which the payment of the Redemption Price will be made. Neither           the
Company nor any of its Affiliates or Associates may redeem, acquire or           purchase
for value any Rights at any time in any manner other than that           specifically set
forth in this Section 23 or in Section 24 hereof, and           other than in
connection with the purchase of Common Shares prior to the           Distribution Date.  

        Section
24.    Exchange.  

        (a)              The
Board of Directors of the Company may, at its option, at any time after any
          Person becomes an Acquiring Person, exchange all or part of the then
outstanding           and exercisable Rights (which shall not include Rights that have
become void           pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares           of the Company at an exchange ratio of one Common Share per
Right, appropriately           adjusted to reflect any stock split, stock dividend or
similar transaction           occurring after the date hereof (such exchange ratio being
hereinafter referred           to as the “Exchange Ratio”). Notwithstanding the
foregoing, the Board           of Directors shall not be empowered to effect such
exchange at any time after           any Person (other than any Exempt Person, but
excluding Passive Investors),           together with all Affiliates and Associates of
such Person, becomes the           Beneficial Owner of 50% or more of the Common Shares
then outstanding.  

        (b)              Immediately
upon the action of the Board of Directors of the Company ordering           the exchange
of any Rights pursuant to this Section 24(a) and without any           further action and
without any notice, the right to exercise such Rights shall           terminate and the
only right thereafter of a holder of such Rights shall be to           receive that
number of Common Shares equal to the number of such Rights held by           such holder
multiplied by the Exchange Ratio. The Company shall promptly give           public notice
of any such exchange; provided, however, that the failure           to give, or
any defect in, such notice shall not affect the validity of such           exchange. The
Company promptly shall mail a notice of any such exchange to all           of the holders
of such Rights at their last addresses as they appear upon the           registry books
of the Rights Agent. Any notice which is mailed in the manner           herein provided
shall be deemed given, whether or not the holder receives the           notice. Each such
notice of exchange will state the method by which the exchange           of the Common
Shares for Rights will be effected and, in the event of any           partial exchange,
the number of Rights which will be exchanged. Any partial           exchange shall be
effected pro rata based on the number of Rights (other than           Rights which have
become void pursuant to the provisions of           Section 11(a)(ii) hereof) held
by each holder of Rights.  

25 

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

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

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

        Section
25.    Notice of Certain Events.  

        (a)              In
case the Company shall propose, after the Distribution Date, (i) to pay
          any dividend payable in stock of any class to the holders of Common Shares or
to           make any other distribution to the holders of Common Shares (other than a
          regular quarterly cash dividend), (ii) to offer to the holders of Common
          Shares rights or warrants to subscribe for or to purchase any additional Common
          Shares or shares of stock of any class or any other securities, rights or
          options, (iii) to effect any reclassification of Common Shares (other than
          a reclassification involving only the subdivision of outstanding Common
Shares),           (iv) to effect any consolidation or merger into or with (other
than a           merger of a Subsidiary into or with the Company), to effect any share
exchange           with or to effect any sale or other transfer (or to permit one or more
of its           Subsidiaries to effect any sale or other transfer), in one or more
transactions,           of 50% or more of the assets or earning power of the Company and
its           Subsidiaries (taken as a whole) to, any other Person, or (v) to effect
the           liquidation, dissolution or winding up of the Company, then, in each such
case,           the Company shall give to each holder of a Right Certificate, in
accordance with           Section 26 hereof, a notice of such proposed action, which
shall specify           the record date for the purposes of such stock dividend, or
distribution of           rights or warrants, or the date on which such reclassification,
consolidation,           merger, share exchange, sale, transfer, liquidation,
dissolution, or winding up           is to take place and the date of participation
therein by the holders of the           Common Shares if any such date is to be fixed,
and such notice shall be so given           in the case of any action covered by clause (i)
or (ii) above at least           10 days prior to the record date for determining
holders of Common Shares           for purposes of such action, and in the case of any
such other action, at least           10 days prior to the date of the taking of
such proposed action or the date           of participation therein by the holders of the
Common Shares, whichever shall be           the earlier.  

26 

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

        Section
26.    Notices. 

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

	 	
Badger
Meter, Inc.
4545 W. Brown Deer Road
P.O. Box 23099
Milwaukee, Wisconsin 53223-0099

Attention: Chief Executive Officer  

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

	 	
American
Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Attention:
Executive Vice President  

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

27 

        Section
27.    Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 27, the
Company may and the Rights Agent shall, if the Company so directs, supplement or amend
any provision of this Agreement without the approval of any holders of certificates
representing Common Shares. Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person amend this Agreement to
lower the thresholds set forth in Sections 1(a) and 3(a) hereof from 15% to not less
than 10%, with appropriate exceptions for Persons then beneficially owning Common Shares
of the Company constituting a percentage of the number of Common Shares then outstanding
equal to or in excess of the new threshold. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates in order to (a) cure any ambiguity, (b)  correct
or supplement any provision contained herein which may be defective or inconsistent with
any other provision herein, (c)  shorten or lengthen any time period hereunder, or
(d)  change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, that from and after the Distribution
Date this Agreement may not be supplemented or amended to lengthen, pursuant to clause (c)
of this sentence, (i) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (ii) any other time period
unless such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of the Rights Agent under
Section 18 or Section 20 of this Rights Agreement. Notwithstanding anything contained in
this Agreement to the contrary, no supplement or amendment shall be made which reduces
the then effective Redemption Price or moves to an earlier date the then effective Final
Expiration Date. Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Common Shares.  

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

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

28 

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

        Section
31.    Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.  

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

        Section
33.    Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and the same
instrument.  

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

* * * * * 

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

		BADGER METER, INC.
	
Attest:
	
By  /s/ William A. Bergum	By  /s/ Richard E. Johnson
	
       Title: Vice President - General Counsel & Secretary	       Title: Senior V.P. - Finance, CFO & Treasurer

29 

		AMERICAN STOCK TRANSFER & TRUST COMPANY
	
Attest:
	
By  /s/ Susan Silber	By  /s/ Herbert J. Lemmer
	
       Title: Assistant Secretary	       Title: Vice President

 

30 

		

		EXHIBIT A
		

[Form of Right
Certificate] 

	Certificate No. R-	_______ Rights 

	 	
NOT
EXERCISABLE AFTER MAY 26, 2018 (SUBJECT TO EXTENSION) OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS  ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. 

Right Certificate 

BADGER METER, 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 February 15, 2008,
and as such agreement may be amended (the “Rights Agreement”), between Badger
Meter, Inc., a Wisconsin corporation (the “Company”), and American Stock
Transfer & Trust Company, a Wisconsin banking corporation (the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M., Milwaukee,
Wisconsin time, on May 26, 2018, subject to extension, at the principal office of the
Rights Agent, or at the office of its successor as Rights Agent, one fully paid
nonassessable (except as otherwise provided by any corporation law applicable to the
Company) share of Common Stock, $1 par value (“Common Shares”), of the Company,
at a purchase price of $200 per Common Share (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
Common Shares which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of May 26, 2008,
based on the Common Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of Common Shares which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events. 

        This
Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the Rights Agent. 

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

Exhibit A - Page 1 

        Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be
(i) redeemed by the Company at a redemption price of $.01 per Right or (ii) exchanged in
whole or in part for Common Shares. The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, but prior to such
Person’s acquisition of 50% or more of the outstanding Common Shares, exchange the
Rights evidenced by the Certificate for Common Shares, at an exchange ratio of one Common
Share per Right, subject to adjustment, as provided in the Rights Agreement. 

        No
fractional Common Shares will be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement. 

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

Exhibit A - Page 2 

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

	ATTEST:	BADGER METER, INC.
	

________________________________________	By:  ________________________________________
	 	        Title:  ________________________________________
	

Countersigned:
	
AMERICAN STOCK TRANSFER & TRUST COMPANY
	

By  ________________________________________
	       Authorized Signature

Exhibit A - Page 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, to transfer the within Right
Certificate on the books of the within-named Company, with full power of substitution.  

        Dated:
____________, 20__ 

		_____________________________________
		Signature

Signature Guaranteed: 

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

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

		_____________________________________
		Signature

Exhibit A - Page 4 

[Form of Reverse Side
of Right Certificate — continued] 

FORM OF ELECTION TO
PURCHASE 

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

To BADGER METER, INC.: 

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

Please insert social security 
or
other identifying number: ______________________________________________ 

	 

	(Please print name and address)
	
 

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

Please insert social security 
or
other identifying number: ______________________________________________ 

	 

	(Please print name and address)
	
 

Dated: ____________, 20__  

		_____________________________________
		Signature

Signature Guaranteed: 

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

Exhibit A - Page 5 

[Form of Reverse Side
of Right Certificate — continued]  

     

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

		_____________________________________
		Signature

     

NOTICE 

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

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

Exhibit A - Page 6 

		

		EXHIBIT B
		

BADGER METER, INC. 

SUMMARY OF RIGHTS TO
PURCHASE
COMMON SHARES  

        On
February 15, 2008, the Board of Directors of Badger Meter, Inc. (the “Company”)
declared a dividend of one common share purchase right (a “Right”) for each
outstanding share of common stock, $1 par value (the “Common Shares”), of the
Company. The dividend is payable on May 27, 2008 to the shareholders of record on May 26,
2008 (the “Record Date”). Each Right entitles the registered holder to purchase
from the Company one Common Share at a price of $200 per Common Share, subject to
adjustment (the “Purchase Price”). The description and terms of the Rights are
set forth in a Rights Agreement (the “Rights Agreement”) between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the “Rights
Agent”). 

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

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

        The
Rights are not exercisable until the Distribution Date. The Rights will expire on May 26,
2018 (the “Final Expiration Date”), subject to extension unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below. 

Exhibit B - Page 1 

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

        The
number of outstanding Rights and the number of Common Shares issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of the Common
Shares or a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case, prior to
the Distribution Date. 

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

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

        With
certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional
shares will be issued. In lieu thereof, an adjustment in cash will be made based on the
market price of the Common Shares on the last trading day prior to the date of exercise. 

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

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

Exhibit B - Page 2 

        At
any time prior to a Person becoming an Acquiring Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
“Redemption Price”). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. 

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

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

        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 filed with respect to the Rights. A
copy of the Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein by reference. 

Exhibit B - Page 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]