Document:

EXHIBIT 4.1

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

                                  U.S. BANCORP

                                       And

                               FIRSTAR BANK, N.A.

                                Rights Agreement

                          Dated as of February 27, 2001

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

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                      Page
                                                                     Number
                                                                     ------

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

Section 2.  Appointment of Rights Agent..........................      6

Section 3.  Issue of Right Certificates..........................      6

Section 4.  Form of Right Certificates...........................      9

Section 5.  Countersignature and Registration....................      9

Section 6.  Transfer, Split Up, Combination and Exchange of Right
            Certificates; Mutilated, Destroyed, Lost or Stolen
            Right Certificates...................................     10

Section 7.  Exercise of Rights; Purchase Price; Expiration Date
            of Rights............................................     11

Section 8.  Cancellation and Destruction of Right Certificates...     13

Section 9.  Availability of Preferred Shares.....................     13

Section 10. Preferred Shares Record Date.........................     14

Section 11. Adjustment of Purchase Price, Number of Shares or
            Number of Rights.....................................     15

Section 12. Certificate of Adjusted Purchase Price or Number of
            Shares...............................................     25

Section 13. Consolidation, Merger or Sale or Transfer of Assets
            or Earning Power.....................................     26

Section 14. Fractional Rights and Fractional Shares..............     27

Section 15. Rights of Action.....................................     29

Section 16. Agreement of Right Holders...........................     30

Section 17. Right Certificate Holder Not Deemed a Stockholder....     30

Section 18. Concerning the Rights Agent..........................     31

Section 19. Merger or Consolidation or Change of Name of Rights
            Agent................................................     32

                                      -i-

<PAGE>
                                                                      Page
                                                                     Number
                                                                     ------

Section 20. Duties of Rights Agent...............................     33

Section 21. Change of Rights Agent...............................     35

Section 22. Issuance of New Right Certificates...................     37

Section 23. Redemption...........................................     37

Section 24. Exchange.............................................     38

Section 25. Notice of Certain Events.............................     40

Section 26. Notices..............................................     42

Section 27. Supplements and Amendments...........................     42

Section 28. Successors...........................................     43

Section 29. Benefits of this Agreement...........................     43

Section 30. Severability.........................................     43

Section 31. Governing Law........................................     44

Section 32. Counterparts.........................................     44

Section 33. Descriptive Headings.................................     44

Signatures.......................................................     47

Exhibit A   -    Form of Certificate of Designations

Exhibit B   -    Form of Right Certificate

Exhibit C   -    Summary of Rights to Purchase Preferred Shares

                                      -ii-

<PAGE>

            Agreement, dated as of February 27, 2001, between U.S. Bancorp, a
Delaware corporation (the "Company"), and Firstar Bank, N.A., as rights agent
(the "Rights Agent").

            The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on March 9, 2001 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further 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).

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

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

            (a) "Acquiring Person" shall mean any Person who or which, together
                 ----------------
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 10% or more of the Common Shares of the Company then outstanding, but shall
not include the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares of the Company outstanding, increases the proportionate number of
Common Shares of

<PAGE>

the Company beneficially owned by such Person to 10% or more of the Common
Shares of the Company then outstanding; provided, however, that, if a Person
shall become the Beneficial Owner of 10% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person." Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.

            (b) "Affiliate" shall have the meaning ascribed to such term in Rule
                 ---------
12b-2 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement.

            (c) "Associate" shall have the meaning ascribed to such term in Rule
                 ---------
12b-2 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement.

            (d) 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;

                                      -2-

<PAGE>

            (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
      promulgated under the Exchange Act and (2) is not also then reportable on
      Schedule 13D under the Exchange Act (or any comparable or successor
      report); or

            (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 acquiring, holding, voting (except to the extent contemplated

                                      -3-

<PAGE>

      by the proviso to Section 1(d)(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.

            (e) "Business Day" shall mean any day other than a Saturday, a
                 ------------
Sunday, or a day on which banking institutions in Milwaukee, Wisconsin are
authorized or obligated by law or executive order to close.

            (f) "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.

            (g) "Common Shares" when used with reference to the Company shall
                 -------------
mean the shares of common stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.

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

                                      -4-

<PAGE>

            (i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
                 ------------
as amended.

(j)   "Exchange Ratio" shall have the meaning set forth in Section 24(a)
       --------------
hereof.

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

            (l) "NASDAQ" shall mean the National Association of Securities
                 ------
Dealers, Inc. Automated Quotation System.

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

            (n) "Preferred Shares" shall mean shares of Series A Junior
                 ----------------
Participating Preferred Stock, par value $1.00 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit A.

            (o) "Purchase Price" shall have the meaning set forth in Section 4
                 --------------
hereof.

            (p) "Record Date" shall have the meaning set forth in the second
                 -----------
paragraph hereof.

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

            (r) "Redemption Price" shall have the meaning set forth in Section
                 ----------------
23(a) hereof.

                                      -5-

<PAGE>

            (s) "Right" shall have the meaning set forth in the second paragraph
                 -----
hereof.

            (t) "Right Certificate" shall have the meaning set forth in Section
                 -----------------
3(a) hereof.

            (u) "Shares Acquisition Date" shall mean the first date of public
                 -----------------------
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.

            (v) "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.

            (w) "Summary of Rights" shall have the meaning set forth in Section
                 -----------------
3(b) hereof.

            (x) "Trading Day" shall have the meaning set forth in Section 11(d)
                 -----------
hereof.

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

            Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
                       ---------------------------
the tenth day after the Shares Acquisition Date or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the

                                      -6-

<PAGE>

Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares of the
Company for or pursuant to the terms of any such plan) of a tender or exchange
offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares of the Company aggregating 10% or more of the
then outstanding Common Shares of the Company (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares of the Company registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares of the Company. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

            (b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such

                                      -7-

<PAGE>

holder shown on the records of the Company. With respect to certificates for
Common Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares of the Company outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares of the
Company represented thereby.

            (c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) 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 the
following legend:

      This certificate also evidences and entitles the holder hereof to certain
      rights as set forth in an Agreement between U.S. Bancorp and Firstar Bank,
      N.A., dated as of February 27, 2001, as it may be amended from time to
      time (the "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 U.S. Bancorp. Under certain circumstances, as set forth in the
      Agreement, such Rights (as defined in the Agreement) will be evidenced by
      separate certificates and will no longer be evidenced by this certificate.
      U.S. Bancorp will mail to the holder of this certificate a copy of the
      Agreement without charge after receipt of a written request therefor. As
      set forth in the Agreement, Rights beneficially owned by any Person (as
      defined in the Agreement) who becomes an Acquiring Person (as defined in
      the Agreement) become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares of the Company
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 of the

                                      -8-

<PAGE>

Company represented thereby. In the event that the Company purchases or acquires
any Common Shares of the Company after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares of the Company which
are no longer outstanding.

            Section 4. Form of Right Certificates. The Right Certificates (and
                       --------------------------
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto, and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any applicable
rule or regulation made pursuant thereto or with any applicable rule or
regulation of any stock exchange or the National Association of Securities
Dealers, Inc., 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 one one-thousandths of a Preferred Share as shall be set forth
therein at the price per one one-thousandth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one one-thousandths of a
Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.

            Section 5. Countersignature and Registration. The Right Certificates
                       ---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature.

                                      -9-

<PAGE>

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 individual 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 individual 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 Agreement any such individual was not such an officer.

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

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

                                      -10-

<PAGE>

or Right Certificates entitling the registered holder to purchase a like number
of one one-thousandths of a Preferred Share 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.

            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) 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

                                      -11-

<PAGE>

with payment of the Purchase Price for each one one-thousandth of a Preferred
Share as to which the Rights are exercised, at or prior to the earliest of (i)
the Close of Business on February 27, 2011 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.

            (b) The Purchase Price for each one one-thousandth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be $100,
and shall be subject to adjustment from time to time as provided in Section 11
or 13 hereof, and shall be payable in lawful money of the United States of
America in accordance with paragraph (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 by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (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) promptly after

                                      -12-

<PAGE>

receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.

            (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 registered holder of such Right Certificate or to such
holder's duly authorized assigns, subject to the provisions of Section 14
hereof.

            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 Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and, in such case, shall
deliver a certificate of destruction thereof to the Company.

            Section 9. Availability of Preferred Shares. The Company covenants
                       --------------------------------
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued Pre-

                                      -13-

<PAGE>

ferred Shares or any Preferred Shares held in its treasury the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7 hereof. The Company covenants
and agrees that it will take all such action as may be necessary to ensure that
all Preferred Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.

            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 Preferred 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 or depositary receipts for the Preferred
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 or depositary receipts for Preferred 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. Preferred Shares Record Date. Each Person in whose name
                        ----------------------------
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
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

                                      -14-

<PAGE>

the Preferred Shares transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

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

            (a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), 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

                                      -15-

<PAGE>

immediately prior to such date and at a time when the Preferred 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.

            (ii) Subject to Section 24 hereof, in the event any Person becomes
an Acquiring Person, 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 one one-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable and dividing that product by (B) 50% of the
then current per share market price of the Common Shares of the Company
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.

            From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any 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
hereof that represents Rights beneficially owned by an Acquiring Person whose

                                      -16-

<PAGE>

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.

            (iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with subparagraph (ii) above, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exercise of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.

            (b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current

                                      -17-

<PAGE>

per share market price of the Preferred 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 Preferred Shares outstanding on such record date plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); 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 and shall be binding on the Rights Agent and holders
of the Rights. Preferred Shares owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and,
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

(c) In case the Company shall fix a record date for the making of a distribution
to all holders of the Preferred Shares (including any such distribution made in
connection

                                      -18-

<PAGE>

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 Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then-current per
share market price of the Preferred Shares 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 and shall be binding on the Rights Agent and holders of the Rights)
of the portion of the assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such then-current per share market price of
the Preferred Shares on such record date; 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) (i) 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)(i)) 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
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 (A) a dividend or
distribution on such Security

                                      -19-

<PAGE>

payable in shares of such Security or Securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security and
prior to the expiration of 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 day shall be the
last sale price, regular way, reported at or prior to 4:00 P.M. Eastern time or,
in case no such sale takes place on such day, the average of the bid and asked
prices, regular way, reported as of 4:00 P.M. Eastern time, in either case, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price reported at or prior to 4:00 P.M. Eastern time or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported as of 4:00 P.M. Eastern time by 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.

                                      -20-

<PAGE>

(ii) For the purpose of any computation hereunder, the "current per share market
price" of the Preferred Shares shall be determined in accordance with the method
set forth in Section 11(d)(i). If the Preferred Shares are not publicly traded,
the "current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof (appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand. If neither the Common Shares
nor the Preferred Shares are 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.

            (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 one ten-millionth of a
Preferred Share or one ten-thousandth of any other share or security 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)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred 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 man-

                                      -21-

<PAGE>

ner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c) hereof,
inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with respect to
the Preferred Shares shall apply on like terms to any such other shares.

            (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share 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) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
ten-millionth of a Preferred Share) obtained by (A) multiplying (x) the number
of one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) 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 one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immedi-

                                      -22-

<PAGE>

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

            (j) Irrespective of any adjustment or change in the Purchase Price
or in the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price

                                      -23-

<PAGE>

and the number of one one-thousandths of a Preferred Share 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 one one-thousandth of the then-par value, if any, of
the Preferred 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 Preferred 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 Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.

            (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or ex-

                                      -24-

<PAGE>

changeable for Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants referred to in
Section 11(b) hereof, hereafter made by the Company to holders of the Preferred
Shares shall not be taxable to such stockholders.

            (n) In the event that, at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares, or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then, in any such case, (A)
the number of one one-thousandths of a Preferred Share purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of one one-thousandths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
Common Shares outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately after such event,
and (B) each Common Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

            Section 12. Certificate of Adjusted Purchase Price or Number of
                        ---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Section 11 or 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 or the Preferred Shares and the Securities and Exchange Commission a copy

                                      -25-

<PAGE>

of such certificate and (c) if such adjustment occurs at any time after the
Distribution Date, mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.

            Section 13. Consolidation, Merger or Sale or Transfer of Assets or
                        ------------------------------------------------------
Earning Power. In the event, directly or indirectly, at any time after a Person
-------------
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the 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 (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such

                                      -26-

<PAGE>

other Person (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the issuer of
such Common Shares shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares of the Company thereafter deliverable upon the exercise of the
Rights. The Company shall not consummate any such consolidation, merger, sale or
transfer unless, prior thereto, the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

            Section 14. Fractional Rights and Fractional Shares. (a) The Company
                        ---------------------------------------
shall not be required to issue fractions of Rights 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

                                      -27-

<PAGE>

price of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case, as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.

            (b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided that such

                                      -28-

<PAGE>

agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-thousandth of a Preferred Share, 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 Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred 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 such holder's 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 such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically

                                      -29-

<PAGE>

acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement, and will be entitled to specific performance
of the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.

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

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

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

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

            Section 17. Right Certificate Holder Not Deemed a Stockholder. No
                        -------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any

                                      -30-

<PAGE>

purpose the holder of the Preferred 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 stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.

            Section 18. Concerning the Rights Agent. 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.

            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 Preferred Shares or 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

                                      -31-

<PAGE>

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. 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 powers 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.

            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 counter-

                                      -32-

<PAGE>

signed, 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 any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
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.

                                      -33-

<PAGE>

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

            (e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 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 hereof, 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 Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.

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

                                      -34-

<PAGE>

            (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the 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 stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

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

                                      -35-

<PAGE>

Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares or Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holder's
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 corporation organized and doing
business under the laws of the United States (or of any state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of Wisconsin or Minnesota), in good standing, having
an office in the States of Wisconsin or Minnesota, 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. 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

                                      -36-

<PAGE>

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 or Preferred Shares, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.

            Section 22. Issuance of New Right Certificates. Notwithstanding any
                        ----------------------------------
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors of the Company 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 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 of the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors of the Company, in its sole discretion, may establish.

                                      -37-

<PAGE>

            (b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors of the
Company ordering the redemption of the Rights, 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 at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as
the "Ex-

                                      -38-

<PAGE>

change Ratio"). Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 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 paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected,
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.

(c) In the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in

                                      -39-

<PAGE>

accordance with this Section 24, the Company shall take all such action as may
be necessary to authorize additional Common Shares for issuance upon exchange of
the Rights. In the event the Company shall, after good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common
Shares, the Company shall substitute, for each Common Share that would otherwise
be issuable upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof.

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

            Section 25. Notice of Certain Events. (a) In case the Company shall,
                        ------------------------
at any time after the Distribution Date, propose (i) to pay any dividend payable
in stock of any class to the holders of the Preferred Shares or to make any
other distribution to the holders of the Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of the Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassifi-

                                      -40-

<PAGE>

cation of the Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or 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, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
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, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action,
and, in the case of any such other action, at least 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 and/or Preferred Shares, whichever shall be the
earlier.

            (b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then 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

                                      -41-

<PAGE>

describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.

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

            U.S. Bancorp
            U.S. Bank Place
            601 Second Avenue South
            Minneapolis, Minnesota 55402-4302
            Attention:  Corporate Secretary

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

            Firstar Bank, N.A.
            777 East Wisconsin Avenue
            Milwaukee, Wisconsin 53202
            Attention:  Corporate Trust Department

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

            Section 27. Supplements and Amendments. The Company may from time to
                        --------------------------
time supplement or amend this Agreement without the approval of any holders of
Right Certifi-

                                      -42-

<PAGE>

cates in order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that, from and after such time as any Person becomes
an Acquiring Person, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights.

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

            Section 29. Benefits of this Agreement. Nothing in this Agreement
                        --------------------------
shall be construed to give to any Person 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 30. Severability. If any term, provision, covenant or
                        ------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

                                      -43-

<PAGE>

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

            Section 32. Counterparts. This Agreement may be executed in any
                        ------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

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

                                      -44-

<PAGE>

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

Attest:                                   U.S. BANCORP

By: /s/ Jennie Carlson                      By:  /s/ David Moffett
   ------------------------------               ------------------------------
  Name:  Jennie Carlson                        Name:  David Moffett
  Title: Secretary                             Title: Vice Chairman and
                                                      Chief Financial Officer

Attest:                                   FIRSTAR BANK, N.A.

By:  /s/ Dale R. Smith                       By: /s/ Nancy Kelly
   ------------------------------               ------------------------------
  Name:  Dale R. Smith                         Name:  Nancy Kelly
  Title: Senior Vice President                 Title: Senior Vice President

                                      -45-

<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                      FORM

                                       of

                           CERTIFICATE OF DESIGNATIONS

                                       of

                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                                  U.S. BANCORP

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

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

            U.S. Bancorp, a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on February 27, 2001:

            RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $1.00 per share, of the Corporation (the "Preferred Stock"),
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:

            Series A Junior Participating Preferred Stock:

            Section 1. Designation and Amount. The shares of such series shall
                       ----------------------
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 4,000,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

            Section 2. Dividends and Distributions.
                       ---------------------------

            (A) Subject to the rights of the holders of any shares of any series
      of Preferred Stock (or any similar stock) ranking prior and superior to
      the Series A Preferred Stock

                                      A-1

<PAGE>

      with respect to dividends, the holders of shares of Series A Preferred
      Stock, in preference to the holders of Common Stock, par value $.01 per
      share (the "Common Stock"), of the Corporation, and of any other junior
      stock, shall be entitled to receive, when, as and if declared by the Board
      of Directors out of funds legally available for the purpose, quarterly
      dividends payable in cash on the first day of March, June, September and
      December in each year (each such date being referred to herein as a
      "Quarterly Dividend Payment Date"), commencing on the first Quarterly
      Dividend Payment Date after the first issuance of a share or fraction of a
      share of Series A Preferred Stock, in an amount per share (rounded to the
      nearest cent) equal to the greater of (a) $1 or (b) subject to the
      provision for adjustment hereinafter set forth, 1000 times the aggregate
      per share amount of all cash dividends, and 1000 times the aggregate per
      share amount (payable in kind) of all non-cash dividends or other
      distributions, other than a dividend payable in shares of Common Stock or
      a subdivision of the outstanding shares of Common Stock (by
      reclassification or otherwise), declared on the Common Stock since the
      immediately preceding Quarterly Dividend Payment Date or, with respect to
      the first Quarterly Dividend Payment Date, since the first issuance of any
      share or fraction of a share of Series A Preferred Stock. In the event the
      Corporation shall at any time declare or pay any dividend on the Common
      Stock payable in shares of Common Stock, or effect a subdivision or
      combination or consolidation of the outstanding shares of Common Stock (by
      reclassification or otherwise than by payment of a dividend in shares of
      Common Stock) into a greater or lesser number of shares of Common Stock,
      then in each such case the amount to which holders of shares of Series A
      Preferred Stock were entitled immediately prior to such event under clause
      (b) of the preceding sentence shall be adjusted by multiplying such amount
      by a fraction, the numerator of which is the number of shares of Common
      Stock outstanding immediately after such event and the denominator of
      which is the number of shares of Common Stock that were outstanding
      immediately prior to such event.

            (B) The Corporation shall declare a dividend or distribution on the
      Series A Preferred Stock as provided in paragraph (A) of this Section
      immediately after it declares a dividend or distribution on the Common
      Stock (other than a dividend payable in shares of Common Stock); provided
      that, in the event no dividend or distribution shall have been declared on
      the Common Stock during the period between any Quarterly Dividend Payment
      Date and the next subsequent Quarterly Dividend Payment Date, a dividend
      of $1 per share on the Series A Preferred Stock shall nevertheless be
      payable on such subsequent Quarterly Dividend Payment Date.

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

                                      A-2

<PAGE>

      the shares of Series A Preferred Stock in an amount less than the total
      amount of such dividends at the time accrued and payable on such shares
      shall be allocated pro rata on a share-by-share basis among all such
      shares at the time outstanding. The Board of Directors may fix a record
      date for the determination of holders of shares of Series A Preferred
      Stock entitled to receive payment of a dividend or distribution declared
      thereon, which record date shall be not more than 60 days prior to the
      date fixed for the payment thereof.

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

            (A) Subject to the provision for adjustment hereinafter set forth,
      each share of Series A Preferred Stock shall entitle the holder thereof to
      1000 votes on all matters submitted to a vote of the stockholders of the
      Corporation. In the event the Corporation shall at any time declare or pay
      any dividend on the Common Stock payable in shares of Common Stock, or
      effect a subdivision or combination or consolidation of the outstanding
      shares of Common Stock (by reclassification or otherwise than by payment
      of a dividend in shares of Common Stock) into a greater or lesser number
      of shares of Common Stock, then in each such case the number of votes per
      share to which holders of shares of Series A Preferred Stock were entitled
      immediately prior to such event shall be adjusted by multiplying such
      number by a fraction, the numerator of which is the number of shares of
      Common Stock outstanding immediately after such event and the denominator
      of which is the number of shares of Common Stock that were outstanding
      immediately prior to such event.

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

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

            Section 4. Certain Restrictions.
                       --------------------

            (A) Whenever quarterly dividends or other dividends or distributions
      payable on the Series A Preferred Stock as provided in Section 2 are in
      arrears, thereafter and until all accrued and unpaid dividends and
      distributions, whether or not declared, on shares of Series A Preferred
      Stock outstanding shall have been paid in full, the Corporation shall not:

                  (i) declare or pay dividends, or make any other distributions,
            on any shares of stock ranking junior (either as to dividends or
            upon liquidation, dissolution or winding up) to the Series A
            Preferred Stock;

                                      A-3

<PAGE>

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

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

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

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

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

            Section 6. Liquidation, Dissolution or Winding Up. Upon any
                       --------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon

                                      A-4

<PAGE>

liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

            Section 7. Consolidation, Merger, etc. In case the Corporation shall
                       ---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

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

            Section 9. Rank. The Series A Preferred Stock shall rank, with
                       ----
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.

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

                                      A-5

<PAGE>

            IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Vice Chairman and Chief Financial Officer and
attested by its Secretary this 27th day of February, 2001.

                                           /s/ David Moffett
                                          -------------------------------
                                          Name:  David Moffett
                                          Title: Vice Chairman and
                                                 Chief Financial Officer

Attest:

/s/ Jennie Carlson
---------------------
Secretary

                                      A-6

<PAGE>

                                                                       Exhibit B
                                                                       ---------

                            Form of Right Certificate

Certificate No. R-                                               Rights
                                                            -----

              NOT EXERCISABLE AFTER FEBRUARY 27, 2011 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 AGREEMENT.

                                Right Certificate

                                  U.S. BANCORP

            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 Agreement, dated
as of February 27, 2001 (the "Agreement"), between U.S. Bancorp, a Delaware
corporation (the "Company"), and Firstar Bank, N.A. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Agreement) and prior to 5:00 P.M., Milwaukee time, on February
27, 2011 at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $1.00 per
share, of the Company (the "Preferred Shares"), at a purchase price of $100 per
one one-thousandth of a Preferred 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 one one-thousandths of a Preferred Share 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 February 27, 2001,
based on the Preferred Shares as constituted at such date. As provided in the
Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share 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 Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
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 Agreement are on file at the principal executive offices of the Company and
the 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 aggre-

                                      B-1

<PAGE>

gate number of Preferred Shares as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.

            Subject to the provisions of the Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at a redemption price
of $.01 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value $.01 per share.

            No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but, in lieu thereof, a
cash payment will be made, as provided in the 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 Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Agreement.

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

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

ATTEST:                                   U.S. BANCORP

                                          By
------------------------------              ------------------------------
Name:                                        Name:
Title:                                       Title:
Countersigned:

FIRSTAR BANK, N.A.

By
  ----------------------------
   Name:
   Title:

                                      B-2

<PAGE>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT
                               ------------------

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

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

Dated: ___________________

                                          ____________________________________
                                          Signature

Signature Guaranteed:

            All Guarantees must be made by a financial institution (such as a
bank or broker) which is a participant in the Securities Transfer Agents
Medallion Program ("STAMP"), the New York Stock Exchange, Inc. Medallion
Signature Program ("MSP"), or the Stock Exchanges Medallion Program ("SEMP") and
must not be dated. Guarantees by a notary public are not acceptable.

            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 Agreement).

                                          ____________________________________
                                          Signature

                                      B-3

<PAGE>

              Form of Reverse Side of Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE
                          ----------------------------

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

To:  U.S. BANCORP

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

Please insert social security
or other identifying number

________________________________________________________________________________
                       (Please print name and address)

________________________________________________________________________________

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

Please insert social security
or other identifying number

 _______________________________________________________________________________
                       (Please print name and address)

________________________________________________________________________________

Dated: ___________________

                                                ______________________
                                                Signature

                                      B-4

<PAGE>

Signature Guaranteed:

            All Guarantees must be made by a financial institution (such as a
bank or broker) which is a participant in the Securities Transfer Agents
Medallion Program ("STAMP"), the New York Stock Exchange, Inc. Medallion
Signature Program ("MSP"), or the Stock Exchanges Medallion Program ("SEMP") and
must not be dated. Guarantees by a notary public are not acceptable.

            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 Agreement).

                                    _______________________________
                                    Signature

                                     NOTICE
                                     ------

            The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, 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 Agreement) and such Assignment
or Election to Purchase will not be honored.

                                      B-5

<PAGE>

                                                                       Exhibit C
                                                                       ---------

                          SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES

Introduction
------------

            On February 27, 2001, the Board of Directors of our Company, U.S.
Bancorp, a Delaware corporation, declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share. The dividend is payable on March 9, 2001 to the stockholders of
record on March 9, 2001. For former shareholders of Firstar Corporation, a
Wisconsin corporation, these rights will replace rights to purchase common stock
under the shareholder rights plan Firstar Corporation had in place prior to the
completion of the merger with U.S. Bancorp on February 27, 2001.

            Our Board has adopted this Rights Agreement to protect stockholders
from coercive or otherwise unfair takeover tactics. In general terms, it works
by imposing a significant penalty upon any person or group which acquires 10% or
more of our outstanding common stock without the approval of our Board. The
Rights Agreement should not interfere with any merger or other business
combination approved by our Board.

            For those interested in the specific terms of the Rights Agreement
as made between our Company and Firstar Bank, N.A., as the Rights Agent, on
February 27, 2001, we provide the following summary description. Please note,
however, that this description is only a summary, and is not complete, and
should be read together with the entire Rights Agreement, which has been filed
with the Securities and Exchange Commission as an exhibit to a Registration
Statement on Form 8-A dated February 28, 2001. A copy of the agreement is
available free of charge from our Company.

THE RIGHTS. Our Board authorized the issuance of a Right with respect to each
outstanding share of common stock on March 9, 2001. The Rights will initially
trade with, and will be inseparable from, the common stock. The Rights are
evidenced only by certificates that represent shares of U.S. Bancorp common
stock. New Rights will accompany any new shares of common stock we issue after
March 9, 2001 until the Distribution Date, which is described below.

EXERCISE PRICE. Each Right will allow its holder to purchase from our Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock
("Preferred Share") for $100, once the Rights become exercisable. This portion
of a Preferred Share will give the stockholder approximately the same dividend,
voting, and liquidation rights as would one share of common stock. Prior to
exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.

EXERCISABILITY.  The Rights will not be exercisable until

-  10 days after the public announcement that a person or group has become an
   "Acquiring Person" by obtaining beneficial ownership of 10% or more of our
   outstanding common stock, or, if earlier,

                                      C-1

<PAGE>

-  10 business days (or a later date determined by our Board, but before any
   person or group becomes an Acquiring Person) after a person or group begins a
   tender or exchange offer which, if completed, would result in that person or
   group becoming an Acquiring Person.

            We refer to the date when the Rights become exercisable as the
"Distribution Date." Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of Rights. After that date, the Rights will separate from the common
stock and be evidenced by book-entry credits or by Rights certificates that we
will mail to all eligible holders of common stock. Any Rights held by an
Acquiring Person are void and may not be exercised.

CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON.

-  FLIP IN. If a person or group becomes an Acquiring Person, all holders of
   Rights except the Acquiring Person may, for $100, purchase shares of our
   common stock with a market value of $200, based on the market price of the
   common stock prior to such acquisition.

-  FLIP OVER. If our Company is later acquired in a merger or similar
   transaction after the Rights Distribution Date, all holders of Rights except
   the Acquiring Person may, for $100, purchase shares of the acquiring
   corporation with a market value of $200 based on the market price of the
   acquiring corporation's stock, prior to such merger.

PREFERRED SHARE PROVISIONS.

Each one one-thousandth of a Preferred Share, if issued:

-  will not be redeemable.

-  will entitle holders to quarterly dividend payments of $.001, or an amount
   equal to the dividend paid on one share of common stock, whichever is
   greater.

-  will entitle holders upon liquidation either to receive $1 or an amount equal
   to the payment made on one share of common stock, whichever is greater.

-  will have the same voting power as one share of common stock.

-  if shares of our common stock are exchanged via merger, consolidation, or a
   similar transaction, will entitle holders to a per share payment equal to the
   payment made on one share of common stock.

The value of one one-thousandth interest in a Preferred Share should approximate
the value of one share of common stock.

EXPIRATION.  The Rights will expire on February 27, 2011.

REDEMPTION. Our Board may redeem the Rights for $.01 per Right at any time
before any person or group becomes an Acquiring Person. If our Board redeems any
Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only
right of the holders of Rights will be to re-

                                      C-2

<PAGE>

ceive the redemption price of $.01 per Right. The redemption price will be
adjusted if we have a stock split or stock dividends of our common stock.

EXCHANGE. After a person or group becomes an Acquiring Person, but before an
Acquiring Person owns 50% or more of our outstanding common stock, our Board may
extinguish the Rights by exchanging one share of common stock or an equivalent
security for each Right, other than Rights held by the Acquiring Person.

ANTI-DILUTION PROVISIONS. Our Board may adjust the purchase price of the
Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, a reclassification of the Preferred Shares or common stock. No
adjustments to the Exercise Price of less than 1% will be made.

AMENDMENTS. The terms of the Rights Agreement may be amended by our Board
without the consent of the holders of the Rights. After a person or group
becomes an Acquiring Person, our Board may not amend the agreement in a way that
adversely affects holders of the Rights.

                                      C-3Exhibit 4.2

                                                       As Amended 12/13/2000

                                  BY-LAWS
                                     OF
                            W.W. GRAINGER, INC.

                                 ARTICLE I

                                  OFFICES

   The principal office of the corporation shall be located in the State of
Illinois. The corporation may have such other offices, either within or
without the State of Illinois, as the business of the corporation may
require from time to time.

   The registered office of the corporation required by the Illinois
Business Corporation Act to be maintained in the State of Illinois may be,
but need not be, identical with the principal office in the State of
Illinois, and the address of the registered office may be changed from time
to time by the board of directors.

                                 ARTICLE II

                                SHAREHOLDERS

   SECTION 1. ANNUAL MEETING. (a) The annual meeting of the shareholders
shall be held on the last Wednesday of April, in each year, or at such time
as may be determined by the board of directors, for the purpose of electing
directors and for the transaction of such other business as may properly
come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday, such meeting shall be held on the next succeeding business
day. If the election of the directors shall not be held on the day
designated herein for any annual meeting or adjournment thereof, the board
of directors shall cause the election to be held at a meeting of the
shareholders as soon thereafter as conveniently may be.

   (b) At any annual meeting or adjournment thereof only such business
shall be conducted as shall have been brought before the meeting (i) by or
at the direction of the board of directors or (ii) by any shareholder (x)
who is entitled to vote at the time of giving notice provided for in this
Section 1(b) and remains such until the meeting and (y) who complies with
the procedures set forth in this Section 1(b). For business to be properly
brought before an annual meeting or adjournment thereof by a shareholder,
the shareholder must have given timely notice thereof in proper written
form to the secretary. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal office of the
corporation not later than the close of business on the 90th day and not
earlier than the close of business on the 120th day prior to the first
anniversary of the prior year's annual meeting; provided, however, that in
the event that the date of the annual meeting is more than 30 days before
or after such anniversary date, notice by the shareholder to be timely
shall be delivered not earlier than the close of business on the 120th day
prior to such annual meeting and not later than the close of business on
the later of (i) the 90th day prior to such annual meeting and (ii) the
10th day following the date of the first public announcement of the date of
the meeting; further provided that in the case of such a shareholder's
nomination of one or more persons for election or reelection to the board
of directors at the next annual meeting of shareholders and notwithstanding
anything to the contrary in this Section 1(b), the aforementioned
shareholder's notice shall be delivered to or mailed and received at the
principal office of the corporation not later than the date with respect to
submission of shareholders' proposals for such next annual meeting as set
forth in the corporation's proxy statement for the preceding annual meeting
of shareholders. In no event shall the public announcement of an
adjournment of an annual meeting, or such adjournment, commence a new time
period for the giving of a shareholder notice as described above. To be in

                                      9

<PAGE>

proper written form, a shareholder's notice to the secretary shall set
forth in writing (x) as to each person whom the shareholder proposes to
nominate for election or reelection as a director all information ("Nominee
Information") concerning the shareholder's relationship to and transactions
with such person and information relating to such person that is required
to be disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected),
provided that the corporation may require any proposed nominee to furnish
such other information as may be reasonably required by the corporation, to
determine the qualifications of such nominee to serve as a director of the
corporation; (y) as to any other business the shareholder proposes to bring
before the meeting a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting, and any material interest in such business of such shareholder and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made ("Other Business Information"); and (z) as to the shareholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination
or proposal is made (i) the name and address of such shareholder, as they
appear on the corporation's books, and of such beneficial owner, and (ii)
the class and number of shares of the corporation which are owned
beneficially and of record by such shareholder and such beneficial owner
and, in the case of such shareholder, his commitment to remain a
shareholder through the date of the shareholders' meeting with respect to
which his shareholder's notice was given (information described in
subclauses (i) and (ii) of clause (z) is "Shareholder/Beneficial Owner
Information").

   SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by (i) the chairman of the board, (ii) the board of directors, or
(iii) by timely notice thereof in proper written form to the secretary, by
the holders (a "One Fifth Holder") of not less than one-fifth of all the
outstanding shares of the corporation entitled at the time of such call and
continuously thereafter until the date of the meeting so called to vote on
the matter for which the meeting is called. The purpose or purposes for
which a special meeting is called shall be specified in the notice of
meeting given with respect thereto pursuant to Section 5 of this Article
II, and no other business may be transacted at any such meeting.

   To be timely, a call by a One Fifth Holder must be delivered or mailed
and received at the principal office of the corporation not later than the
close of business on the 90th day, and not earlier than the close of
business on the 120th day, before the date of the special meeting being
called.

   To be in proper written form, a One Fifth Holder's notice to the
secretary shall set forth in writing (x) Nominee Information as to each
person whom the One Fifth Holder proposes to nominate for election or
reelection as a director, provided that the corporation may require any
proposed nominee to furnish such other information as may be reasonably
required by the corporation, to determine the qualifications of such
nominee to serve as a director of the corporation; (y) Other Business
Information as to any other business the One Fifth Holder proposes to bring
before the meeting; and (z) Shareholder/Beneficial Owner Information as to
the One Fifth Holder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made.

   SECTION 3. MEETINGS - GENERAL. (a) Only such persons who are nominated
in accordance with the procedures set forth in this Article II (or in
Article III, Section 8) shall be eligible to serve as directors and only
such business shall be conducted at a meeting of shareholders as shall have
been brought before the meeting in accordance with the applicable
procedures set forth in this Article II. The presiding officer of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made, or
proposed, as the case may be, in accordance with the procedures set forth
in this Article II and, if such presiding officer determines that any
proposed nomination or business is not in compliance with this Article II,
to declare that such defective nomination or proposal shall be disregarded.

                                   10

<PAGE>

   (b) For purposes of this Article II, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press, Reuters or comparable national news service or in a
document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

   (c) Notwithstanding the foregoing provisions of this Article II, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Article II. Nothing in this Article II shall be
deemed to affect any rights of (x) shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act, or (y) the holders of any series of Preferred Stock to
elect directors under specified circumstances.

   SECTION 4. PLACE OF MEETING. The board of directors may designate any
place, either within or without the State of Illinois, as the place of
meeting for any annual meeting or for any special meeting called by the
board of directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal office of the
corporation in the State of Illinois.

   SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten nor more than sixty days before the date of the meeting, or in the case
of a merger, consolidation, share exchange, dissolution or sale, lease or
exchange of assets, not less than twenty days nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the chairman of the board or the secretary, or in the event
that a special meeting has been properly called by a One Fifth Holder in
accordance with Section 2 of this Article II, and notice of such meeting
has not been given by the secretary within 65 days after the call of such
meeting, notice thereof shall be given between the 66th and the 75th day
after such call by the persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed
to the shareholder at his address as it appears on the records of the
corporation, with postage thereon prepaid.

   SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders, or shareholders entitled to receive payment of any dividend,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such
date in any case to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days, or in the case of a merger,
consolidation, share exchange, dissolution or sale, lease or exchange of
assets, not less than twenty days, prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed for the determination of shareholders
entitled to notice of or entitled to vote at a meeting of shareholders, or
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided above, such determination shall
apply to any adjournment thereof.

   SECTION 7. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make within twenty days
after the record date for a meeting of shareholders, or ten days before
such meeting of shareholders, whichever is earlier, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical
order, with the address of and the number of shares held by each, which
list, for a period of ten days prior to such meeting, shall be kept on file
at the principal office of the corporation in the State of Illinois and
shall be subject to inspection by any shareholder at any time during usual
business hours and to copying at the shareholder's expense. Such list shall
also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original share ledger or transfer book, or a duplicate
thereof kept in the State, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger, or transfer
book or to vote at any meeting of shareholders.

                                    11

<PAGE>

   SECTION 8.  QUORUM.  A majority of the outstanding shares of the
corporation, entitled to vote on a matter, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders.

   When any meeting is convened, the presiding officer, if directed by the
Board, may adjourn the meeting without a vote of shareholders if (a) no
quorum is present for the transaction of business, or (b) the Board
determines that adjournment is necessary or appropriate to enable the
shareholders (1) to consider fully information which the Board determines
has not been made sufficiently or timely available to shareholders, or (2)
otherwise to exercise effectively their voting rights. At any such
adjourned meeting at which there is a quorum, any business may be
transacted that might have been transacted at the meeting originally
called.

   SECTION 9. PROXIES. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by delivering a valid appointment to the
person so appointed or such person's agent; provided that no shareholder
may name more than three persons as proxies to attend and to vote the
shareholder's shares at any meeting of shareholders. Such appointment may
be by any means, including means of electronic transmission, permitted by
law. No proxy shall be valid after the expiration of eleven months from the
date thereof unless otherwise provided in the proxy.

   SECTION 10. VOTING OF SHARES. Subject to the provisions of Section 12 of
this Article, each outstanding share, regardless of class, shall be
entitled to one vote upon each matter submitted to vote at a meeting of
shareholders.

   SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such
officer, agent, or proxy as the by-laws of such corporation may prescribe,
or, in the absence of such provision, as the board of directors of such
corporation may determine.

   Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy. Shares standing in
the name of a guardian, conservator, or trustee may be voted by such
fiduciary, either in person or by proxy, but no guardian, conservator, or
trustee shall be entitled, as such fiduciary, to vote shares held by him
without a transfer of such shares into his name.

   Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the court by which such receiver
was appointed.

   A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so
transferred.

   Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but
shares of its own stock held by it in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding shares at
any given time.

   SECTION 12. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote, in person or by proxy, the number
of shares owned by him, for as many persons as there are directors to be
elected, or to cumulate said shares, and give one candidate as many votes
as the number of directors multiplied by the number of his shares shall
equal, or to distribute them on the same principle among as many candidates
as he shall see fit.

   SECTION 13. VOTING BY BALLOT. Voting on any question or in any election
may be by voice, unless the officer or other person presiding over the
meeting shall order or any shareholder shall demand that voting be by
ballot.

                                    12

<PAGE>

   SECTION 14. PRESIDING OFFICERS AND ORDER OF BUSINESS. All meetings of
shareholders shall be called to order and presided over by the chairman of
the board, or in his absence, by another director designated by the board,
or in the absence of such designated director or if no such designation has
been made, by the senior chairman of the board, if any. The secretary of
the corporation shall act as secretary of the meeting, but in the absence
of the secretary of the corporation, the presiding officer may appoint a
secretary of the meeting.

   SECTION 15. PROCEDURAL MATTERS. At each meeting of shareholders, the
presiding officer shall fix and announce the date and time of the opening
and the closing of the polls for each matter upon which the shareholders
will vote at the meeting and shall determine the order of business and all
other matters of procedure. Except to the extent inconsistent with any such
rules and regulations as adopted by the Board, the presiding officer may
establish rules, which need not be in writing, to maintain order for the
conduct of the meeting, including, without limitation, restricting
attendance to bona fide shareholders of record and their proxies and other
persons in attendance at the invitation of the presiding officer and making
rules governing speeches and debates. The presiding officer acts in his or
her absolute discretion and his or her rulings are not subject to appeal.

                                ARTICLE III

                                 DIRECTORS

   SECTION 1.  GENERAL POWERS.  The business and affairs of the corporation
shall be managed under the direction of its board of directors.

   SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be not less than seven nor more than twelve. The
number of directors may be fixed or changed from time to time, within the
minimum and maximum, by the directors or the shareholders without amending
these by-laws. Each director shall hold office until the next annual
meeting of shareholders or until his successor shall have been elected and
qualified. Directors need not be residents of Illinois or shareholders of
the corporation.

   SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this by-law, immediately after the
annual meeting of shareholders. The board of directors may provide by
resolution, the time and place, either within or without the State of
Illinois, for the holding of additional regular meetings without other
notice than such resolution.

   SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or without the State of
Illinois, as the place for holding any special meeting of the board of
directors called by them.

   SECTION 5. NOTICE. Notice of any special meeting shall be given at least
two days previously thereto by written notice delivered personally, sent by
United States mail, sent by a third party entity that provides delivery
services in the ordinary course of business and guarantees delivery in the
particular case no later than the following day, or sent by electronic
transmission. If mailed, such notice shall be deemed to be delivered 24

                                                  13

<PAGE>

hours after deposited in the United States mail, next-day delivery
guaranteed, addressed to the director at the director's business address,
with postage thereon prepaid. If sent by delivery service, notice shall be
deemed to be delivered 24 hours after delivery to the third party delivery
service. If notice is sent by electronic transmission, such notice shall be
deemed to be delivered upon transmission. For this purpose, "electronic
transmission" may include, but shall not be limited to, a telex, wire or
wireless equipment that transmits a facsimile of the notice and provides
the transmitter with an electronically generated receipt, or other
electronic means. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of such
meeting.

   SECTION 6. QUORUM. A majority of the board of directors shall constitute
a quorum for transaction of business at any meeting of the board of
directors, provided, that if less than a majority of the directors are
present at said meeting, a majority of the directors present may adjourn
the meeting from time to time without further notice.

   SECTION 7.  MANNER OF ACTING.  The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors.

   SECTION 8. VACANCIES. Any vacancy occurring in the board of directors
and any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose; provided, however,
vacancies arising between meetings of shareholders by reason of an increase
in the number of directors or otherwise may be filled by a majority of the
board of directors then remaining. A director elected by the shareholders
to fill a vacancy shall hold office for the balance of the term for which
elected. A director appointed by the directors to fill a vacancy shall
serve until the next meeting of shareholders at which directors are to be
elected.

   SECTION 9. COMPENSATION. By resolution of the board of directors, the
directors may be paid their expenses, if any, for attendance at each
meeting of the board or of a committee thereof, and may be paid a fixed sum
for attendance at meetings and/or a stated retainer as directors. No such
payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.

   SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented
to the action taken unless his dissent shall be entered in the minutes of
the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary
of the corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor of such
action.

                                      14

<PAGE>

   SECTION 11.  COMMITTEES.  Committees of the board of directors shall
consist of an audit committee, a compensation committee, a board affairs and
nominating committee, and such other committees as the board of directors
by resolution may create. Each committee shall have such number of members
and shall exercise such authority and carry out such duties as are set
forth in resolutions of the board of directors. Committee members shall be
elected annually but shall serve at the discretion of the board of
directors and may be removed by the board of directors. The board of
directors may increase or decrease the number of members of any committee
at any time and may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member or members
at any meeting of the committee. A majority of members of a committee shall
constitute a quorum and, unless otherwise set forth in resolutions of the
board of directors, a majority of those members present at a meeting and
not disqualified from voting shall constitute the acts of the committee.

   SECTION 12. INFORMAL ACTION BY DIRECTORS. (a) Any action required to be
taken at a meeting of the board of directors of the corporation, or any
other action which may be taken at a meeting of the board of directors or a
committee thereof, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the directors
entitled to vote with respect to the subject matter thereof, or by all of
the members of such committee, as the case may be.

   (b) The consent shall be evidenced by one or more written approvals,
each of which sets forth the action taken and bears the signature of one or
more directors. All the approvals evidencing the consent shall be delivered
to the secretary to be filed in the corporate records. The action taken
shall be effective when all the directors have approved the consent unless
the consent specifies a different effective date.

   (c) Any such consent signed by all the directors or all the members of a
committee shall have the same effect as a unanimous vote, and may be stated
as such in any document filed with the Secretary of State.

   SECTION 13. TELEPHONE ATTENDANCE. (a) Members of the board of directors
or of any committee of the board of directors may participate in and act at
any meeting of such board or committee through the use of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such
meeting shall constitute attendance and presence in person at the meeting
of the person or persons so participating.

   (b) The board of directors or any committee may, at its option, provide
for a tape recording of any such conference telephone portion of a meeting
but the lack thereof shall not affect the validity of any actions taken at
such meeting.

   SECTION 14. REMOVAL OF DIRECTORS. One or more of the directors may be
removed, with or without cause, at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding shares
then entitled to vote at an election of directors, except that:

   (1) No director shall be removed at a meeting of shareholders unless the
notice of such meeting shall state that a purpose of the meeting is to vote
upon the removal of one or more directors named in the notice. Only the
named director or directors may be removed at such meeting;

                                     15

<PAGE>

   (2) If less than the entire board is to be removed, no director may be
removed, with or without cause, if the votes cast against his removal would
be sufficient to elect him, if then cumulatively voted at an election of
the entire board of directors; and

   (3) If a director is elected by a class or series of shares, he may be
removed only by the shareholders of that class or series.

   SECTION 15. DIRECTOR CONFLICT OF INTEREST. If a transaction is fair to
the corporation at the time it is authorized, approved or ratified, the
fact that a director of the corporation is directly or indirectly a party
to the transaction shall not be grounds for invalidating the transaction.

   SECTION 16. NOMINATIONS OF DIRECTORS. Except for directors elected to
fill vacancies pursuant to these by-laws, nominations for election for the
board of directors may be made by the board of directors, by the nominating
committee of the board of directors and approved by the board of directors,
or by shareholders in accordance with the procedures set forth in Article
II. Such nominations shall be submitted to a vote of the shareholders at
the next annual meeting of shareholders or at a special meeting of
shareholders called for such purpose.

                                 ARTICLE IV

                                  OFFICERS

   SECTION 1. NUMBER. The officers of the corporation shall be a chairman
of the board, one or more presidents, a chief financial officer, one or
more vice presidents, a treasurer, a secretary, and such other officers and
such assistant or administrative officers as may be elected or appointed as
hereinafter provided. Any two or more offices may be held by the same
person.

   SECTION 2. ELECTION, APPOINTMENT AND TERM OF OFFICE. Officers of the
corporation shall be elected or appointed annually by the board of
directors, although vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer elected or
appointed by the board of directors shall hold office until the next annual
election or appointment of officers by the board of directors, or until his
earlier death, resignation or removal. Officers and assistant or
administrative officers of the corporation may also be appointed from time
to time by the chairman of the board, to serve as such at his pleasure.

   SECTION 3. REMOVAL. Any officer or assistant or administrative officer
of the corporation elected or appointed by the board of directors may be
removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby. Any officer or
assistant or administrative officer of the corporation appointed by the
chairman of the board may be removed by the chairman of the board whenever
in his judgment the best interests of the corporation would be served
thereby. Any removal provided for in this Section 3 shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or assistant or administrative
officer of the corporation shall not itself create contract rights.

                                    16

<PAGE>

   SECTION 4. CHAIRMAN OF THE BOARD. The chairman of the board shall be the
chief executive officer. He shall preside at all meetings of the
shareholders and the board of directors. He shall be primarily responsible
for carrying out the policies established by and the directions of the
board of directors and shall perform such other duties as may be prescribed
from time to time by the board of directors. He may from time to time, to
the extent not delegated by the board of directors, delegate and
re-delegate any part of any of the responsibilities and authority set forth
herein to the senior chairman of the board, if any, to any other member of
the board of directors and/or to a president. The chairman of the board
must be a director of the corporation.

   The chairman of the board may sign deeds, mortgages, bonds, contracts or
other instruments which the board of directors has authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some
other officer or agent of the corporation, or shall be required by law to
be otherwise signed or executed. The chairman of the board may delegate
signing authority to other persons within the corporation as shall be
deemed necessary.

   SECTION 5. PRESIDENTS. The president or, if there be more than one, the
presidents shall oversee and direct such operations, shall be responsible
for such day-to-day activities, and shall do and perform such other duties
as from time to time may be assigned by the board of directors or the
chairman of the board. If there be more than one president, the board of
directors may designate one or more of them as group president or use a
similar descriptive designation.

   SECTION 6. CHIEF FINANCIAL OFFICER. The chief financial officer shall be
the principal financial officer. He shall have responsibility for
administering the financial affairs of the Corporation and, in general
perform all duties incident to the office of the chief financial officer
and such other duties as from time to time may be assigned to him by the
board of directors or the chairman of the board.

        SECTION 7. VICE PRESIDENTS. Each of the vice presidents shall be
responsible for those activities and shall perform those duties as from
time to time may be assigned by the board of directors, the chairman of the
board, or a president. The board of directors may designate one or more of
the vice presidents as executive, group or senior vice presidents or use a
similar descriptive designation.

        SECTION 8. SENIOR CHAIRMAN OF THE BOARD. The senior chairman of the
board, if any, shall, in the absence of the chairman of the board, or
another director to whom the responsibilities have been delegated, preside
at all meetings of the shareholders and the board of directors. He shall
consult with the chairman of the board on matters of long- and short-term
strategic planning and policy and other significant matters affecting the
corporation, and shall perform such other duties as may from time to time
be prescribed by the board of directors, or delegated to him by the
chairman of the board. The senior chairman of the board, if any, must be
the senior inside director of the corporation.

        SECTION 9.  TREASURER.  If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the board of directors shall

                                   17

<PAGE>

determine. He shall (a) have charge and custody of and be responsible for
all funds and securities of the corporation, (b) receive and give receipts
for moneys due and payable to the corporation from any source whatsoever,
and deposit all such moneys in the name of the corporation in such banks,
trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these by-laws and (c) in general
perform all the duties incident to the office of treasurer and such other
duties as from time to time may be assigned to him by the board of
directors, the chairman of the board, or the chief financial officer.

        SECTION 10. SECRETARY. The secretary shall (a) keep the minutes of
the shareholders' and of the board of directors' meetings in one or more
books provided for that purpose, (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law, (c)
be custodian of the corporate records and of the seal of the corporation
and see that the seal of the corporation is affixed to all certificates for
shares prior to the issue thereof and to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized in
accordance with the provisions of these by-laws, (d) keep, or cause the
transfer agent to keep, a register of the post office address of each
shareholder which shall be furnished to the secretary by such shareholder,
(e) sign with the chairman of the board certificates for shares of the
corporation, the issue of which shall have been authorized by resolution of
the board of directors, (f) have general charge of the stock transfer books
of the corporation and (g) in general perform all duties incident to the
office of secretary and such other duties as from time to time may be
assigned to him by the board of directors or the chairman of the board.

        SECTION 11. SALARIES. The salaries of the officers elected or
appointed by the board of directors shall be fixed from time to time by the
board of directors and no such officer shall be prevented from receiving
such salary by reason of the fact that he is also a director of the
corporation.

                                 ARTICLE V

                   CONTRACTS, LOANS, CHECKS AND DEPOSITS

        SECTION 1. CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific instances.

        SECTION 2.  LOANS.  No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the board of directors.  Such authority
may be general or confined to specific instances.

        SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes, or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by resolution of the board of directors.

                                     18

<PAGE>

       SECTION 4.  DEPOSITS.  All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies, or other depositaries as the board of
directors may select.

                                 ARTICLE VI

                          CERTIFICATES FOR SHARES
                             AND THEIR TRANSFER

        SECTION 1. CERTIFICATES FOR SHARES. The issued shares of the
corporation shall be represented by certificates, except as and to the
extent determined by, or pursuant to, resolution adopted by the board of
directors. Certificates representing shares of the corporation shall be in
such form as may be determined by the board of directors. Such certificates
shall be signed by the chairman of the board and by the secretary or an
assistant secretary, and shall be sealed with the seal of corporation. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be entered
in the books of the corporation, as shall similar information with respect
to shares that are uncertificated. All certificates surrendered to the
corporation for transfer shall be canceled. No new certificate shall be
issued until the former certificate for a like number of shares, unless the
shares are uncertificated, shall have been surrendered and canceled except
that in the case of a lost, destroyed or mutilated certificate a new one
may be issued therefor upon such terms and indemnity to the corporation as
the board of directors may prescribe.

        SECTION 2. TRANSFERS OF SHARES. Transfers of shares of the
corporation shall be made either on the books of the corporation or on the
books of the duly authorized and appointed agent or agents of the
corporation by the holder of record thereof or by his legal representative,
who shall furnish proper evidence of authority to transfer, or by his
attorney thereunto authorized by power of attorney duly executed and filed
with the secretary of the corporation or proper officer of the transfer
agent and, unless such shares are uncertificated, on surrender for
cancellation of the certificate for such shares. The person in whose name
shares stand on the books of the corporation or its duly authorized and
appointed transfer agent or agents shall be deemed the owner thereof for
all purposes as regards the corporation.

                                ARTICLE VII

                                FISCAL YEAR

        The fiscal year of the corporation shall begin on the first day of
January in each year and end on the last day of December in each year.

                                ARTICLE VIII

                                 DIVIDENDS

        The board of directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and
upon the terms and conditions provided by law and its articles of
incorporation.

                                     19

<PAGE>

                                 ARTICLE IX

                                    SEAL

        The board of directors shall provide a corporate seal which shall
be in the form of a circle and shall have inscribed thereon the name of the
corporation and the words, "Corporate Seal, Illinois".

                                 ARTICLE X

                              WAIVER OF NOTICE

        Whenever any notice whatever is required to be given under the
provisions of these by-laws or under the provisions of the articles of
incorporation or under the provisions of the Illinois Business Corporation
Act, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein shall be
deemed equivalent to the giving of such notice.

                                 ARTICLE XI

                                 AMENDMENTS

        These by-laws may be altered, amended or repealed and new by-laws
may be adopted at any meeting of the board of directors of the corporation
by a majority vote of the directors present at the meeting.

                                ARTICLE XII

                 INDEMNIFICATION OF DIRECTORS AND OFFICERS

        SECTION 1. The corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

                                     20

<PAGE>

        SECTION 2.  The corporation shall indemnify any person who was or is
a party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he is or was
a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to the best interests of the corporation,
and except that no indemnification shall be made with respect to any claim,
issue or matter as to which such person has been finally adjudged to have
been liable to the corporation, unless, and only to the extent that the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.

        SECTION 3. Any indemnification under Sections 1 or 2 (unless
ordered by a court) shall be made only as authorized in the specific case,
upon a determination that indemnification of the director or officer is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 1 or 2. Such determination shall be made (1)
by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable (or, even if obtainable, a quorum of
disinterested directors so directs) by independent legal counsel in a
written opinion, or (3) by the shareholders. In any event, to the extent
that a director or officer of the corporation has been successful, on the
merits or otherwise, in the defense of any action, suit or proceeding
referred to in Sections 1 or 2 or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including reasonable
attorneys' fees) actually and reasonably incurred by him in connection
therewith.

        SECTION 4. (a) Reasonable expenses incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding, upon
receipt of (i) a statement signed by such director or officer to the effect
that such director or officer acted in good faith and in a manner which he
believed to be in, or not opposed to the best interests of the corporation
and (ii) an undertaking by or on behalf of the director or officer to repay
such amount, if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized in this Article.

        (b) The board of directors may, by separate resolution adopted
under and referring to this Article of the by-laws, provide for securing
the payment of authorized advances by the creation of escrow accounts, the
establishment of letters of credit or such other means as the board deems
appropriate and with such restrictions, limitations and qualifications with
respect thereto as the board deems appropriate in the circumstances.

        SECTION 5. (a) The indemnification and advancement of expenses
provided by or granted under other subsections of this Article shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while

                                                  21

<PAGE>

holding such office, and shall continue as to a person who has ceased to be
a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.

        (b) The provisions of this ARTICLE XII shall be deemed to be a
contract between the corporation and each director and officer who serves
in such capacity at anytime while this ARTICLE XII is in effect and any
indemnification provided under this ARTICLE XII to a person shall continue
after such person ceases to be an officer, director, agent or employee of
the corporation as to all facts, circumstances and events occurring while
such person was such officer, director, agent or employee, and shall not be
decreased or diminished in scope without such person's consent, regardless
of the repeal or modification of this Article or any repeal or modification
of the Illinois Business Corporation Act or any other applicable law. If
the scope of indemnity provided by this ARTICLE XII or any replacement
article, or pursuant to the Illinois Business Corporation Act or any
modification or replacement thereof is increased, then such person shall be
entitled to such increased indemnification as is in existence at the time
indemnity is provided to such person, it being the intent, subject to
Section 10 of this ARTICLE XII, to indemnify persons under this ARTICLE XII
to the fullest extent permitted by law.

        SECTION 6. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the provisions
of this Article.

        SECTION 7. Subject to Section 10 of this Article, if a claim under
this Article is not promptly paid in full by the corporation after a
written claim has been received by the corporation or if expenses pursuant
to Section 4 of this Article have not been promptly advanced after a
written request for such advancement accompanied by the statement and
undertaking required by Section 4 of this Article has been received by the
corporation, the director or officer may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim or the
advancement of expenses. If successful, in whole or in part, in such suit,
such director or officer shall also be entitled to be paid the reasonable
expense thereof, including attorneys' fees. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking has been tendered to the corporation) that
the director or officer has not met the standards of conduct which make it
permissible under the Illinois Business Corporation Act for the corporation
to indemnify the director or officer for the amount claimed, but the burden
of proving such defense shall be on the corporation. Neither the failure of
the corporation (including its board of directors, independent legal
counsel, or its shareholders) to have made a determination, if required,
prior to the commencement of such action that indemnification of the
director or officer is proper in the circumstances because he or she has
met the applicable standard of conduct required under the Illinois Business
Corporation Act, nor an actual determination by the corporation (including
its board of directors, independent legal counsel, or its shareholders)
that the director or officer had not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
director or officer had not met the applicable standard of conduct.

                                     22

<PAGE>

        SECTION 8. For purposes of this Article, references to "the
corporation" shall include, in addition to the surviving corporation, any
merging corporation (including any corporation having merged with a merging
corporation) absorbed in a merger which, if its separate existence had
continued, would have had the power and authority to indemnify its
directors, officers and employees or agents, so that any person who was a
director or officer of such merging corporation, or was serving at the
request of such merging corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Article with
respect to the surviving corporation as such person would have with respect
to such merging corporation if its separate existence had continued.

        SECTION 9. For purposes of this Article, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; references to "serving at the request of the
corporation" shall include any service as a director, officer, employee or
agent of the corporation which imposes duties on, or involves services by
such director, officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and references to
"officers" shall include elected and appointed officers. A person who acted
in good faith and in a manner he reasonably believed to be in the best
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interest
of the corporation" as referred to in this Article.

        SECTION 10. Anything herein to the contrary notwithstanding, if the
corporation purchases insurance in accordance with Section 6 of this
ARTICLE XII, the corporation shall not be required to, but may (if the
board of directors so determines in accordance with this ARTICLE XII)
reimburse any party instituting any action, suit or proceeding if a result
of the institution thereof is the denial of or limitation of payment of
losses under such insurance when such losses would have been paid
thereunder if a non- insured third party had instituted such action, suit
or proceedings.

                                ARTICLE XIII

                  INDEMNIFICATION OF EMPLOYEES AND AGENTS

        The corporation may indemnify any agent or employee of the
corporation who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding (including,
but not limited to any such proceeding by or in the right of the
corporation) whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was serving the corporation at its request
and in the course and scope of his duties and acting in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, against expenses (including reasonable
attorney's fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action, suit or proceeding. The standards
of conduct, the provisions for payment and advances, and the terms and
conditions contained in Article XII, Sections 1, 2, 3, 4, 5(a), 6, 8, 9 and
10 shall apply to any indemnification hereunder.

                                     23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}]]