Document:

Exhibit
10.6

BRIGGS &
STRATTON CORPORATION

and

NATIONAL CITY BANK

Rights Agent

Rights Agreement

Dated as of August
7, 1996

(as amended
through August 9, 2006)

 

TABLE OF CONTENTS

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Certain Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Appointment of Rights Agent

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Issue of Right Certificates.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Form of Right Certificates

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Countersignature and Registration

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Reservation and Availability of Common Shares

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Common Shares Record Date

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Adjustment of Purchase Price, Number of Shares or
  Number of Rights

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted Purchase Price or Number of
  Shares

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

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

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Fractional Rights and Fractional Shares.

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Rights of Action

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Agreement of Right Holders

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Right Certificate Holder Not Deemed a Shareholder

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Concerning the Rights Agent

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Merger or Consolidation or Change of Name of Rights
  Agent

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Duties of Rights Agent

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 21

  	
   

  	
  Change of Rights Agent

  	
   

  	
  26

  

 

 i
 

 

 

	
  Section 22.

  	
   

  	
  Issuance of New Right Certificates

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Redemption.

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Exchange

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Notice of Certain Events

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 26.

  	
   

  	
  Notices

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 27.

  	
   

  	
  Supplements and Amendments

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 28.

  	
   

  	
  Successors

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 29.

  	
   

  	
  Determinations and Actions by the Board of Directors

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 30.

  	
   

  	
  Benefits of this Agreement

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 31.

  	
   

  	
  Severability

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 32.

  	
   

  	
  Governing Law

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 33.

  	
   

  	
  Counterparts

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 34.

  	
   

  	
  Descriptive Headings

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signatures

  	
   

  	
   

  	
   

  	
  34

  

 

Exhibit A — Form of Right Certificate

Exhibit B — Summary of Rights
to Purchase Common Shares

 ii

 

RIGHTS AGREEMENT

Agreement, dated as of August 7, 1996, as amended
through August 9, 2006, between Briggs & Stratton Corporation, a Wisconsin
corporation (the “Company”), and National City Bank (the “Rights Agent”).

The Board of Directors of the Company has authorized
and declared a dividend of one common share purchase right (a “Right”) for each
Common Share (as hereinafter defined) of the Company outstanding on August 19,
1996 (the “Record Date”) payable on such date, each Right representing the
right to purchase one-half of one Common Share, 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.      Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:

(a)    “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 20% or more of the Common Shares of the Company
then outstanding, but shall not include the Company, any Subsidiary (as such term
is hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, any entity holding Common Shares for
or pursuant to the terms of any such plan, or any trustee, administrator or
fiduciary of such a plan.

Notwithstanding the foregoing, (i) no Person who or
which, at the close of business on August 7, 1996, shall have been the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding shall be deemed an “Acquiring Person”; provided, however, that, if
a Person is, at the close of business on the date hereof, the Beneficial Owner
of 20% or more of the Common Shares of the Company then outstanding and shall
thereafter become the Beneficial Owner of additional Common Shares of the Company
at any time that the Person is or thereby becomes the Beneficial Owner of 20%
or more of the Common Shares of the Company then outstanding (other than Common
Shares acquired solely as a result of corporate action of the Company not
caused, directly or indirectly, by such Person), then such Person shall be
deemed to be an “Acquiring Person”; and (ii) no Person shall become an “Acquiring
Person” as a result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 20% or more of the Common Shares
of the Company then outstanding; provided, however, that if a Person would, but
for the provisions of this clause (ii), become an Acquiring Person by reason of
share purchases by the Company and shall, after such share purchases by the
Company, become the 

 

Beneficial Owner of any
additional Common Shares of the Company at any time that the Person is or
thereby becomes the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding (other than Common Shares acquired solely as a result
of corporate action of the Company not caused, directly or indirectly, by such
Person), then such Person shall be deemed to be an “Acquiring Person”.

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

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

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

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

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

 2
 

 

has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of, or with respect to, acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.

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

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

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

(f)     “Common
Shares” when used with reference to the Company shall mean the shares of common
stock, par value $0.01 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.

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

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

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

(j)     “Qualified
Offer” shall mean an offer that has, to the extent required for the type of
offer specified, each of the following characteristics:

(i)     a fully
financed all-cash tender offer or an exchange offer offering at least 70
percent cash and Common Shares of the offeror (with the amount of such Common
Shares to be adjusted to reflect any decrease in the value of such shares prior
to the consummation of the offer), in each such case for any and all of the
outstanding Common Shares of the Company;

(ii)    an offer
that has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;

 3
 

 

(iii)   an offer
whose per-share offer price (A) is greater than the highest reported market
price for the Common Shares of the Company during the 24-month period
immediately preceding the date on which the offer is commenced within the
meaning of Rule 14d-2(a) under the Exchange Act and (B) represents a reasonable
premium above the average of the closing prices (as determined pursuant to
Section 11(d) hereof) for the five trading days immediately preceding the date
on which the offer is commenced, with, in the case of an offer that includes
shares of Common Shares of the offeror, such per-share offer price being
determined using the lower of (1) the lowest reported market price for Common
Shares of the offeror during the five trading days immediately preceding and
the five trading days immediately following the commencement of such offer
within the meaning of Rule 14d-2(a) under the Exchange Act and (2) the average
of the last sale prices (regular way) of such shares reported in the principal
consolidated transaction reporting system with respect to such shares for the
five trading days immediately preceding the date of any determination;

(iv)   an offer
that (A) is accompanied by a written opinion, in customary form, of a
nationally recognized investment banking firm that is addressed to the Company
and the holders of Common Shares of the Company other than such Person and
states that the price to be paid to such holders pursuant to the offer is fair
from a financial point of view to such holders and includes any written
presentation of such firm showing the analysis and range of values underlying
such conclusions, which written opinion and any such presentation are updated
and provided to the Company within two Business Days prior to the date such
offer is consummated, and (B) within 20 Business Days after the commencement
date of the offer within the meaning of Rule 14d-2(a) under the Exchange Act
(or within 10 Business Days after any increase in the offer consideration),
does not result in a nationally recognized investment banking firm retained by
the Board of Directors of the Company rendering an opinion to the Board of
Directors of the Company that the consideration being offered to the holders of
the Common Shares is either unfair or inadequate;

(v)    if the
offer includes Common Shares of the offeror, an offer pursuant to which (A) the
offeror shall permit a nationally recognized investment banking firm retained
by the Board of Directors of the Company and legal counsel designated by the
Company to have access to such offeror’s books, records, management,
accountants and other appropriate outside advisers for the purposes of
permitting such investment banking firm and such legal counsel to conduct a due
diligence review of the offeror in order to permit such investment banking firm
(relying as appropriate on the advice of such legal counsel) to be able to
render an opinion to the Board of Directors of the Company with respect to
whether the consideration being offered to the holders of the Common Shares of
the Company is fair or adequate, and (B) within 10 Business Days after such
investment banking firm shall have notified the Company and the offeror that it
had completed the due diligence review to its satisfaction (or following
completion of such due diligence review within 10 Business Days after any
increase in the consideration being offered), such investment banking firm does

 4
 

 

not render an opinion to
the Board of Directors of the Company that the consideration being offered to
the holders of the Common Shares of the Company is either unfair or inadequate
and such investment banking firm does not after the expiration of such 10
Business Day period render an opinion to the Board of Directors of the Company
that the consideration being offered to the holders of the Common Shares of the
Company has become either unfair or inadequate based on a subsequent disclosure
or discovery of a development or developments that have had or are reasonably
likely to have a material adverse affect on the value of the Common Shares of
the offeror;

(vi)   an offer
that is subject only to the minimum tender condition described below in item
(ix) of this definition and other usual and customary terms and conditions,
which conditions shall not include any financing, funding or similar condition
or any requirements with respect to the offeror or its agents being permitted
any due diligence with respect to the books, records, management, accountants
and other outside advisers of the Company;

(vii)  an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offer will remain open for at least 60 Business Days and,
if a Special Meeting is duly requested in accordance with Section 23(c), for at
least 10 Business Days after the date of the Special Meeting or, if no Special
Meeting is held within 90 Business Days following receipt of the Special
Meeting Notice in accordance with Section 23(c), for at least 10 Business Days
following such 90 Business Day period; provided, however, that such offer need
not remain open, as a result of this Section 1(j), beyond (A) the time until
which any other offer satisfying the criteria for a Qualified Offer is then
required to be kept open under this Section 1(j), or (B) the scheduled
expiration date, as such date may be extended by public announcement on or
prior to the then scheduled expiration date, of any other tender or exchange
offer for Common Shares of the Company with respect to which the Board of
Directors has agreed to redeem the Rights immediately prior to acceptance for
payment of Common Shares thereunder (unless such other offer is terminated
prior to its expiration without any Common Shares having been purchased
thereunder);

(viii) an offer
pursuant to which the Company has received an irrevocable written commitment by
the offeror that, in addition to the minimum time periods specified in item
(vii) of this definition, the offer, it if is otherwise to expire prior
thereto, will be extended for at least 20 Business Days after any increase in
the price offered, and after any bona fide alternative offer is commenced
within the meaning of Rule 14d-2(a) of the Exchange Act;

(ix)    an offer
that is conditioned on a minimum of at least 90% of the outstanding Common
Shares (other than Common Shares held by the offeror or its Affiliates and
Associates) being tendered and not withdrawn as of the offer’s expiration date,
which condition shall not be waivable;

 5
 

 

(x)     an offer
pursuant to which the Company has received an irrevocable written commitment by
the offeror to consummate as promptly as practicable upon successful completion
of the offer a second step transaction whereby all Common Shares not tendered
into the offer will be acquired at the same amount and form of consideration
per share actually paid pursuant to the offer, subject to shareholders’
statutory appraisal rights, if any;

(xi)    an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that no amendments will be made to the offer to reduce the offer
consideration (other than a reduction to reflect any dividend declared by the
Company, other than a regular quarterly dividend, after the commencement of
such offer within the meaning of Rule 14d-2(a) under the Exchange Act or any
material change in the capital structure of the Company initiated by the
Company after the commencement of such offer, whether by way of
reclassification, recapitalization, reorganization, repurchase or otherwise),
change the form of consideration offered, reduce the number of shares being
sought, or otherwise change the terms of the offer in a way that is adverse to
a tendering shareholder;

(xii)   if the
offer includes Common Shares of the offeror, (A) the offeror is a publicly
owned United States corporation, and its Common Shares are freely tradable and
are listed or admitted to trading on either the New York Stock Exchange or the
Nasdaq National Market, (B) no shareholder approval of the offeror is required
to issue such Common Shares, or, if required, such approval has already been
obtained, (C) no Person (including such Person’s Affiliates and Associates)
beneficially owns more than 20% of the voting stock of the offeror at the time
of commencement of the offer within the meaning of Rule 14d-2(a) under the
Exchange Act or at any time during the term of the offer, and (D) no other
class of voting stock of the offeror is outstanding, and the offeror meets the
registrant eligibility requirements for use of Form S-3 for registering
securities under the Securities Act of 1933, as amended, including, without
limitation, the filing of all required Exchange Act reports in a timely manner
during the 12 calendar months prior to the date of commencement of the offer
within the meaning of Rule 14d-2(a) under the Exchange Act;

(xiii)  an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offeror will pay (or share with any other offeror) at
least one-half of the Company’s costs of a Special Meeting requested in
accordance with Section 23(c) with respect to such offer; and

(xiv) an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that, if the offer is not consummated, neither the offeror nor any
of its Affiliates or Associates will make any offer for or purchase any equity
securities of the Company for a period of one year after the commencement
within the meaning of Rule 14d-2(a) under the Exchange Act of the original
offer if such original offer does not result in the tender of at least 85% of
the outstanding Common Shares not owned by such 

 6
 

 

offeror (including its
Affiliates and Associates), unless another tender offer by another party for
all outstanding Common Shares of the Company is commenced that (A) constitutes
a Qualified Offer (in which event, any new offer by such offeror or of any of
its Affiliates or Associates must be at a price no less than that provided for
in such original offer) or (B) is approved by the Board of Directors of the
Company (in which event, any new offer by such offeror or of any of its
Affiliates or Associates must be at a price no less than that provided for in
such approved offer).

For the purposes of the definition of Qualified Offer,
“fully financed” shall mean that the offeror has sufficient funds for the offer
which shall be evidenced by (A) definitive financing agreements executed
between the offeror and responsible financial institutions having the necessary
financial capacity to provide funds for such offer subject only to customary
terms and conditions (which shall in no event include conditions requiring
access by such financial institutions to non-public information to be provided
by the Company, conditions based on the accuracy of any information concerning
the Company, or conditions requiring the Company to make any representations,
warranties or covenants in connection with such financing), (B) cash or cash
equivalents then available to the offeror, set apart and maintained solely for
the purpose of funding the offer with an irrevocable written commitment being
provided by the offeror to the Company to maintain such availability until the
offer is consummated or withdrawn, or (C) a combination of the foregoing; which
evidence (including certified copies of any such definitive financing
agreements (including exhibits and related documents) and copies of all written
materials prepared by the offeror for such financial institutions in connection
with entering into such financing agreements) has been provided to the Company
prior to, or upon, commencement of the offer within the meaning of Rule
14d-2(a) under the Exchange Act; provided that “sufficient funds for the offer”
shall be an amount sufficient to pay for all Common Shares outstanding on a
fully diluted basis the cash portion of the consideration pursuant to the offer
and the second-step transaction required by clause (x) above and all related
expenses. If an offer becomes a Qualified Offer in accordance with this
definition but subsequently ceases to be a Qualified Offer as a result of the
failure at a later date to continue to satisfy any of the requirements of this
definition, such offer shall cease to be a Qualified Offer and the provisions
of Section 23(c) shall no longer be applicable to such offer, provided the
actual redemption of the Rights pursuant to Section 23(c) shall not have
already occurred.

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

(l)     “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.

(m)   “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.

 7
 

 

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

Section 3.      Issue of Right Certificates.

(a)    Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Company’s Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, any entity holding Common Shares
for or pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
any entity holding Common Shares for or pursuant to the terms of any such plan,
or any trustee, administrator or fiduciary of such a plan) to commence, 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 20% or more of
the then outstanding Common Shares (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 registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares. As
soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form
of Exhibit A hereto (a “Right Certificate”), evidencing one Right for each
Common Share so held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.

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

 8
 

 

(c)    Certificates
for Common Shares which become outstanding (including, without limitation,
certificates for reacquired Common Shares referred to in the last sentence of
this paragraph (c) and certificates issued on the transfer of Common Shares)
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:

This certificate also
evidences and entitles the holder hereof to certain rights as set forth in a
Rights Agreement between Briggs & Stratton Corporation and National City
Bank, dated as of August 7, 1996, and as such agreement may be amended (the “Rights
Agreement”), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices of Briggs &
Stratton Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Briggs & Stratton Corporation will
mail to the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As described in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring Person (as
defined in the Rights Agreement) shall become null and void.

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

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

 9
 

 

Section 5.      Countersignature and Registration.

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

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

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

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

 10

 

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

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

(a)    The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with payment
of the Purchase Price for each Common Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on October
18, 2009 (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 Common Share purchasable pursuant to the exercise of a
Right shall initially be $160, shall be subject to adjustment from time to time
as provided in Sections 11 and 13 hereof (including an adjustment of such price
to $80 as a result of the two-for-one stock split of the Common Shares effected
as a 100% stock dividend effective October 29, 2004) 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, as set forth below, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified check, cashier’s
check, bank draft or money order payable to the order of the Company, except
that, if so provided by the Board of Directors of the Company, the payment of
the Purchase Price following the occurrence of a Section 11(a)(ii) Event (as
hereinafter defined) and until 

 11
 

 

the first occurrence of
an event described in clauses (a), (b) or (c) of Section 13 may be made wholly
or in part by delivery of a certificate or certificates (with appropriate stock
powers executed in blank attached thereto) evidencing a number of Common Shares
of the Company equal to the then Purchase Price divided by the closing price
(as determined pursuant to Section 11(d) hereof) per Common Share on the
Trading Day (as such term is hereinafter defined) immediately preceding the date
of such exercise. If the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.

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

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

(f)     Prior to
the time and date that an Acquiring Person becomes such, nothing in this
Agreement will prevent the Company from issuing previously authorized and
unissued Common Shares for any purpose or purposes approved by the Company’s
Board of Directors, subject to any applicable law and any rules or regulations
of any stock exchange on which the Common Shares are then listed.

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

 12
 

 

Section 9.      Reservation and Availability of Common
Shares.

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

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

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

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

Section 10.    Common
Shares Record Date. Each person in whose name any certificate for Common Shares
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Shares transfer
books of the Company are open. 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 Common Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other

 13
 

 

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 Common Shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.

(a)    (i)  In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Common Shares
payable in Common Shares, (B) subdivide the outstanding Common Shares, (C)
combine the outstanding Common Shares into a smaller number of Common Shares,
or (D) issue any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such date
and at a time when the Common Shares transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).

(ii)    Subject
to Section 24 of this Agreement, in the event that any Person shall become an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to two times the then current
Purchase Price multiplied by the number of Common Shares for which a Right is
then exercisable, in accordance with the terms of this Agreement, such number
of Common Shares of the Company as shall equal the result obtained by (x)
multiplying two times the then current Purchase Price by the number of Common
Shares for which a Right is then exercisable and dividing that product by (y)
50% of the then current per share market price of the Company’s Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event (such number of shares, the “Adjustment Shares”). In the event that
any Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not, except as permitted by Section 24 or
Section 27, take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.

 14
 

 

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

(iii)   In the
event that there shall not be sufficient Common Shares of the Company issued
but not outstanding or authorized but unissued (and not reserved for issuance
for purposes other than upon exercise of the Rights) to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the “Current Value”) over (2) the
Purchase Price (such excess, the “Spread”), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) equity securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of Directors of the Company
has deemed to have the same value as Common Shares (such shares of preferred
stock, hereinafter referred to as “common stock equivalents”)), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to substitute for the Adjustment
Shares pursuant to clause (B) above within thirty (30) days following the
occurrence of a Section 11(a)(ii) Event (the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors of
the Company shall determine in good faith that it is likely that sufficient
additional Common Shares might be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be 

 15
 

 

extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be extended,
the “Substitution Period”). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to the last
paragraph of Section 11(a)(ii) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the current per share market price (as determined pursuant to Section
11(d) hereof) of the Common Shares on the Section 11(a)(ii) Trigger Date and
the value of any “common stock equivalent” shall be deemed to have the same
value as the Common Shares on such date.

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

 16
 

 

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

(d)    For the
purpose of any computation hereunder, the “current per share market price” of
the Common Shares or any other security (a Common Share or other security, a “Security”
for the purpose of this Section 11(d)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or reclassification of
such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each Trading Day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Securities 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 Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System (“Nasdaq”) or such other system then
in use, or, if on 

 17
 

 

any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. The term “Trading
Day” shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day. If the Security is not publicly
held or so listed or traded, then “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-thousandth of a share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which requires such adjustment or
(ii) the date of the expiration of the right to exercise any Rights.

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

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

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

 18
 

 

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

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

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

(l)     In any
case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuing to the holder
of any Right exercised after such record date of the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; 

 19
 

 

provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares
upon the occurrence of the event requiring such adjustment.

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

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

Section 12.    Certificate
of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made
as provided in Sections 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 a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.

 20
 

 

Section 13.    Consolidation,
Merger, Share Exchange 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, or any Person or Persons shall consummate
a share exchange with the Company, and, in connection with such merger or share
exchange, 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 two times the then current Purchase Price multiplied by the number of
Common Shares for which a Right is then exercisable, in accordance with the
terms of this Agreement, such number of Common Shares of such other Person
(including the Company as successor thereto or as the surviving corporation) as
shall equal the result obtained by (A) multiplying two times the then current
Purchase Price by the number of Common Shares 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 other Person (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation,
merger, share exchange, 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 thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, share exchange,
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,
consolidations, share exchanges or sales or other transfers.

 21
 

 

Section 14.    Fractional Rights and Fractional Shares.

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

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

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

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

 22

 

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 Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.

Section 17.    Right
Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Right
Certificate shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Common Shares or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a 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.

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

(b)    The Rights
Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration
of this Agreement in reliance upon any Right Certificate or certificate for the
Common Shares or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be 

 23
 

 

signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

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

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

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

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

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

(b)    Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed
by any one 

 24
 

 

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.

(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, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Shares to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Common 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.

(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, or act as the transfer agent for, any of the Rights,
Common Shares or other securities of the Company or become pecuniarily
interested in 

 25
 

 

any transaction in which
the Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

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

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

 26
 

 

not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.

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

Section 23.    Redemption.

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

(b)    The Board
of Directors of the Company may, at its option, at any time prior to such time
as any Person becomes an Acquiring Person, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the “Redemption Price”). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.

(c)    If the
Company, not earlier than 60 Business Days nor later than 80 Business Days
following the commencement of a Qualified Offer within the meaning of Rule
14d-2(a) under the Exchange Act, which has not been terminated prior thereto
and which continues to be a Qualified Offer, receives a written notice
complying with the terms of this Section 23(c) (the “Special Meeting Notice”)
that is properly executed by the holders of record (or their duly authorized proxy)
of at least ten percent (10%) of the Common Shares of the Company then
outstanding (other than Common Shares held by the offeror or its Affiliates and
Associates) directing the Board of Directors of the Company to submit to a vote
of shareholders at a special meeting of the shareholders of the Company (a “Special
Meeting”) a resolution authorizing the redemption of all, but not less than
all, of the then outstanding Rights at the Redemption Price (the “Redemption
Resolution”), then the Board of Directors of the Company shall take such
actions as are necessary or desirable to cause the Redemption Resolution to be
so submitted to a vote of shareholders by including a proposal relating to
adoption of the Redemption Resolution in the proxy materials of the Company for
the Special Meeting; provided, however, that in any 12-month period the Company
shall not be required to submit more than one Redemption Resolution to a vote
of shareholders with respect to Qualified Offers from any given potential
Acquiring Person (including any Affiliates or Associates). For purposes of a
Special Meeting Notice, the record date for determining eligible holders of
record shall be the 60th Business Day following the commencement of a Qualified
Offer within the meaning of Rule 14d-2(a) under the Exchange Act. Any Special
Meeting Notice must be delivered to the Secretary of the Company at the 

 27
 

 

principal executive
offices of the Company and must set forth as to the shareholders of record
executing the request (i) the name and address of such shareholders, as they
appear on the Company’s books and records, (ii) the class and number of Common
Shares of the Company that are owned of record by each of such shareholders,
and (iii) in the case of Common Shares owned beneficially by another Person, an
executed certification by the holder of record that such holder has executed
such Special Meeting Notice only after obtaining instructions to do so from
such beneficial owner. The Board of Directors shall set a date for determining
the shareholders of record entitled to notice of and to vote at the Special
Meeting in accordance with the Company’s Articles of Incorporation, By-Laws and
applicable law. Subject to the requirements of applicable law, the Board of
Directors of the Company may take a position in favor of or opposed to the
adoption of the Redemption Resolution, or no position with respect to the
Redemption Resolution, as it determines to be appropriate in the exercise of
its duties. At the offeror’s request, the Company shall include in any proxy
soliciting material prepared by it in connection with the Special Meeting proxy
soliciting material submitted by the offeror; provided, however, that the
offeror, by written agreement with the Company contained in or delivered with
such request, shall have indemnified the Company against any and all
liabilities resulting from any statements found to be defamatory,
misstatements, misleading statements or omissions contained in or omitted from
the offeror’s proxy soliciting materials and have agreed to pay the Company’s
incremental costs incurred as a result of including such material in the
Company’s proxy soliciting material. Notwithstanding anything to the contrary
contained in this Agreement, if the Board of Directors determines that it is in
the best interests of shareholders to seek an alternative transaction so as to
obtain greater value for shareholders than that provided by any Qualified
Offer, the Company shall be entitled to include information relating to such
alternative transaction in the proxy soliciting material prepared by it in
connection with the Special Meeting. If no Person has become an Acquiring
Person prior to the redemption date referred to in this Section 23(c), and the
Qualified Offer continues to be a Qualified Offer and either (A) the Special
Meeting is not held on or prior to the 90th Business Day following receipt of
the Special Meeting Notice, or (B) at the Special Meeting, the holders of at
least a majority of the Common Shares outstanding and entitled to vote as of the
record date for the Special Meeting, not giving effect to any affirmative votes
cast by the offeror or any of its Affiliates or Associates, shall vote in favor
of the Redemption Resolution (and the results of the vote are certified as
official by the appointed inspectors of election for the Special Meeting), then
all of the Rights shall be deemed redeemed by such failure to hold the Special
Meeting or as a result of such shareholder action, as the case may be, at the
Redemption Price, or the Board of Directors shall take such other action as
would prevent the existence of the Rights from interfering with the
consummation of the Qualified Offer, effective immediately prior to the
consummation of the Qualified Offer, if, and only if, the Qualified Offer is
consummated within 60 days after either (x) the close of business on the 90th
Business Day following receipt of the Special Meeting Notice if a Special
Meeting is not held on or prior to such date or (y) the date on which the
results of the vote on the Redemption Resolution at the Special Meeting are
certified as official by the appointed inspectors of election for the Special
Meeting, as the case may be. Nothing in this subparagraph (c) shall be
construed as limiting or prohibiting the Company or any offeror from proposing
or engaging in any 

 28
 

 

acquisition, disposition
or other transfer of any securities of the Company, any merger or consolidation
involving the Company, any sale or other transfer of assets of the Company, any
liquidation, dissolution or winding-up of the Company, or any other business
combination or other transaction, or any other action by the Company or such
offeror; provided, however, that the holders of Rights shall have the rights
set forth in this Rights Agreement with respect to any such acquisition,
disposition, transfer, merger, consolidation, sale, liquidation, dissolution,
winding-up, business combination, transaction or action.

(d)    Immediately
upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (b) of this Section
23 or the effectiveness of such redemption pursuant to paragraph (c) of this
Section 23 (or, if the resolution of the Board of Directors electing to redeem
the Rights pursuant to paragraph (b) of this Section 23 states that the
redemption will not be effective until the occurrence of a specified future
time or event, upon the occurrence of such future time or event), and without
any further action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after the effectiveness of the action of the Board of Directors
ordering the redemption of the Rights, 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.

 29
 

 

Section 24.    Exchange.

(a)    The Board
of Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares of
the Company at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, any entity holding Common
Shares for or pursuant to the terms of any such plan, or any trustee,
administrator or fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares 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 accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.

(d)    The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company may, at its sole option, 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) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

 30
 

 

Section 25.    Notice of Certain Events.

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

(b)    In case a
Section 11(a)(ii) Event 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 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:

Briggs & Stratton Corporation

12301 West Wirth Street

Wauwatosa, Wisconsin 53222

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:

National City Bank, Department 3116

Corporate Trust Administration

629 Euclid Avenue, Suite 635

Cleveland, Ohio 44114

Notice 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.

 31
 

 

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 Certificates 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.    Determinations and Actions by the Board of
Directors.

(a)    For all
purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act
as in effect on the date hereof.

(b)    The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by
the Board of Directors in good faith shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject any member of the Board of Directors to any
liability to the holders of the Rights or to any other person.

(c)    Without
limiting the foregoing, nothing contained herein shall be construed to suggest
or imply that the Board of Directors shall not be entitled to reject any
Qualified Offer or any other tender offer or exchange offer or other
acquisition proposal, or to recommend that holders of Common Shares reject any
Qualified Offer or any other tender offer or exchange offer or other
acquisition proposal, or to take any other action (including, without
limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any Qualified Offer or any other tender offer or
exchange offer or other acquisition proposal that the Board of Directors
believes is necessary or appropriate in the exercise of its fiduciary duties.

 32
 

 

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

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

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

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

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

 33
 

 

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.

	
  

  	
   

  	
  BRIGGS & STRATTON CORPORATION

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert F.
  Heath

  	
   

  	
  By:

  	
  /s/ Thomas R. Savage

  
	
   

  	
  Robert F. Heath

  	
   

  	
   

  	
  Thomas R. Savage

  
	
   

  	
  Secretary

  	
   

  	
   

  	
  Senior Vice President - Administration

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Matthew R.
  Hostelley

  	
   

  	
  By:

  	
  /s/ Victor W. LaTessa

  
	
   

  	
  Matthew R.
  Hostelley

  	
   

  	
   

  	
  Victor W. LaTessa

  
	
   

  	
  Vice President

  	
   

  	
   

  	
  Vice President

  

 

 34

 

Exhibit A

Form of Right
Certificate

	
  Certificate No. R-

  	
   

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER
OCTOBER 18, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS AS PROVIDED IN THE
RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

Right Certificate

BRIGGS &
STRATTON CORPORATION

This certifies that _______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 7, 1996, as amended through August 9, 2006, and
as such agreement may be amended (the “Rights Agreement”), between Briggs &
Stratton Corporation, a Wisconsin corporation (the “Company”), and National
City Bank (the “Rights Agent”), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M., Milwaukee, Wisconsin time, on October 18, 2009 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one-half of one fully paid nonassessable (except as otherwise
provided by any corporation law applicable to the Company) share of Common
Stock, par value $0.01 per share (the “Common Shares”), of the Company, at a
purchase price of $80 per full Common Share (as adjusted as a result of the
two-for-one stock split of the Common Shares effected as a 100% stock dividend
effective October 29, 2004) (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Common Shares which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase
Price as of August 7, 1996, based on the Common Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
Common Shares which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

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

 

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

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

The Company is not required to issue any fractional
Common Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu thereof, the Company may, at its sole option, make a cash payment, as
provided in the Rights Agreement.

No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the Rights of a 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 Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

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

WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of _________, 20__.

	
  ATTEST:

  	
   

  	
  BRIGGS & STRATTON CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NATIONAL CITY BANK

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signature

  	
   

  	
   

  

 

Form of Reverse
Side of Right Certificate

 

 2

 

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.

Date: ____________, 20___

	
  

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

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

 

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

	
  

  	
   

  
	
   

  	
  Signature

  

 

 

 

 

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 BRIGGS & STRATTON CORPORATION:

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

Please insert social security

or other identifying number

 

	
   

  
	
  (Please print name and
  address)

  

 

 

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

Please insert social security

or other identifying number

	
   

  
	
  (Please print name and
  address)

  

 

Dated: ____________, 20___

	
  

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

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

 2
 

 

Form of Reverse
Side of Right Certificate — continued

 

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

 

	
  

  	
   

  
	
   

  	
  Signature

  

 

NOTICE

The signature in the 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 Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

 3

 

Exhibit B

SUMMARY OF RIGHTS
TO PURCHASE

COMMON SHARES

On August 6, 1996, the Board of Directors of Briggs
& Stratton Corporation (the “Company”) declared a dividend of one common
share purchase right (a “Right”) for each outstanding share of common stock, par
value $0.01 per share (the “Common Shares”), of the Company. The dividend is
payable on August 19, 1996 (the “Record Date”) to the shareholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one-half of one Common Share of the Company at a price (the “Purchase
Price”) of $80 per full share (after giving effect to the two-for-one stock
split of the Common Shares effected as a 100% stock dividend effective October
29, 2004), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the “Rights Agreement”) between the Company
and National City Bank, as Rights Agent (the “Rights Agent”) dated as of August
7, 1996, as amended through August 9, 2006 and as may thereafter be amended.
Until the earlier to occur of (i) 10 days following public announcement that a
person or group of affiliated or associated persons (other than the Company, a
subsidiary of the Company or an employee benefit plan of the Company or a
subsidiary) (an “Acquiring Person”) have acquired beneficial ownership of 20%
or more of the outstanding Common Shares or (ii) 10 business days (or such
later date as may be determined by action of the Company’s Board of Directors
prior to such time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group (other than the
Company, a subsidiary of the Company or an employee benefit plan of the Company
or a subsidiary) of 20% or more of the outstanding Common Shares (the earlier
of such dates being called the “Distribution Date”), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate. Notwithstanding the
foregoing, any other person or group of affiliated or associated persons who,
at the close of business on August 7, 1996, was the beneficial owner of at
least 5,785,400 Common Shares (which number of shares constituted 20% of the
number of Common Shares outstanding on such date, without giving effect to the
two-for-one stock split of the Common Shares effective October 29, 2004) will
not be deemed an “Acquiring Person” unless such person or group of affiliated
or associated persons acquires beneficial ownership of additional Common Shares
at any time that such person or group of affiliated or associated persons is or
thereby becomes the beneficial owner of 20% or more of the Common Shares then
outstanding.

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

 4
 

 

The Rights are not exercisable until the Distribution
Date. The Rights will expire on October 18, 2009 (the “Final Expiration Date”),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company (including by shareholder action in
connection with a “Qualified Offer” as defined in the Agreement), in each case,
as described below.

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

In the event that the Company is acquired in a merger
or other business combination transaction or 50% or more of its consolidated
assets or earning power are sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then-current Purchase Price, that number of shares of common
stock of the acquiring company which at the time of such transaction will have
a market value of two times the then current Purchase Price. In the event that
any person or group of affiliated or associated persons becomes an Acquiring
Person, each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise at the then current Purchase Price that number
of Common Shares having a market value of two times the Purchase Price.

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

With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. The Company is not required to issue any
fractional Common Shares and in lieu thereof, an adjustment in cash may be made
based on the market price of the Common Shares on the last trading day prior to
the date of exercise.

At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial ownership of 20% or
more of the outstanding Common Shares, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the “Redemption Price”). The redemption of the Rights may be made effective at
such time on such basis with such conditions as the Board of Directors in its
sole discretion may establish. In addition, if the Company receives a Qualified
Offer (as defined in the Agreement), then the Rights may be redeemed by way of
shareholder action taken at a special meeting of 

 5
 

 

shareholders called by the Board upon the written
notice of the holders of at least 10% of Common Shares then outstanding (other
than Common Shares held by the offeror or its Affiliates and Associates) for
the purpose of voting on a resolution accepting the Qualified Offer and
authorizing the redemption of the Rights pursuant to the provisions of the
Agreement. The written notice must be received by the Company not earlier than
60 nor later than 80 business days following the commencement of a Qualified
Offer that has not been terminated prior thereto and that continues to be a
Qualified Offer. The special meeting must be held on or prior to the 90th
business day following Company’s receipt of such notice. Such an action by the
shareholders requires the affirmative vote of a majority of all Common Shares
entitled to vote on such issue (excluding Common Shares held by the offeror and
its Affiliates or Associates). If either (A) the special meeting is not held on
or prior to the 90th business day following receipt of the special meeting
notice, or (B) at the special meeting, the requisite holders of Common Shares
vote in favor of the redemption resolution, then all of the Rights will be
deemed redeemed by such failure to hold the special meeting or as a result of
such shareholder action, as the case may be, at the Redemption Price, or the
Board of Directors shall take such other action as would prevent the existence
of the Rights from interfering with the consummation of the Qualified Offer,
effective immediately prior to the consummation of the Qualified Offer if, and
only if, the Qualified Offer is consummated within 60 days after either (x) the
close of business on the 90th business day following receipt of the special
meeting notice if a special meeting is not held on or prior to such date or (y)
the date on which the results of the vote on the redemption resolution at the
special meeting are certified as official, as the case may be. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.

“Qualified Offer”
means an offer that has each of the following characteristics:

·                    a fully
financed all-cash tender offer or an exchange offer offering at least 70
percent cash and Common Shares of the offeror, in each such case for any and
all of the outstanding Common Shares of the Company;

·                    an offer that
has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;

·                    an offer whose
per-share offer price (A) is greater than the highest reported market price for
the Common Shares of the Company during the 24-month period immediately
preceding the date on which the offer is commenced and (B) represents a
reasonable premium above the average of the closing prices for the five trading
days immediately preceding the date on which the offer is commenced;

·                    an offer that
(A) is accompanied by a written opinion of a nationally recognized investment
banking firm that is addressed to the Company and the holders of Common Shares
of the Company other than such Person and states that the price to be paid to
such holders pursuant to the offer is fair from a financial point of view to
such holders and includes any written presentation of such firm showing the
analysis and range of values underlying such conclusions, which written opinion
and any such presentation are updated and provided to the Company prior to the
date such offer is consummated, and (B) within 20 business days after the
commencement date of the offer (or within 10 business days after any increase
in the offer consideration), does not result in a nationally 

 6
 

 

recognized
investment banking firm retained by the Board of Directors of the Company
rendering an opinion to the Board of Directors of the Company that the
consideration being offered to the holders of the Common Shares is either
unfair or inadequate;

·                    if the offer
includes Common Shares of the offeror, an offer pursuant to which (A) the
offeror shall permit a nationally recognized investment banking firm retained
by the Board of Directors of the Company and legal counsel designated by the
Company to have access to such offeror’s books, records, management,
accountants and other appropriate outside advisers for the purposes of
permitting such investment banking firm and such legal counsel to conduct a due
diligence review of the offeror in order to permit such investment banking firm
to be able to render an opinion to the Board of Directors of the Company with
respect to whether the consideration being offered to the holders of the Common
Shares of the Company is fair or adequate, and (B) within 10 business days
after such investment banking firm shall have notified the Company and the
offeror that it had completed the due diligence review to its satisfaction (or
following completion of such due diligence review within 10 business days after
any increase in the consideration being offered), such investment banking firm
does not render an opinion to the Board of Directors of the Company that the
consideration being offered to the holders of the Common Shares of the Company
is either unfair or inadequate and such investment banking firm does not after
the expiration of such 10 business day period render an opinion to the Board of
Directors of the Company that the consideration being offered to the holders of
the Common Shares of the Company has become either unfair or inadequate based
on a subsequent disclosure or discovery of a development or developments that
have had or are reasonably likely to have a material adverse affect on the
value of the Common Shares of the offeror;

·                    an offer that
is subject only to the minimum tender condition described below and other usual
and customary terms and conditions, which conditions shall not include any
financing, funding or similar condition or any requirements with respect to the
offeror or its agents being permitted any due diligence with respect to the
books, records, management, accountants and other outside advisers of the
Company;

·                    an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offer will remain open for at least 60 business days and,
if a special meeting is duly requested under the redemption provisions, for, at
least 10 business days after the date of the special meeting or, if no special
meeting is held within 90 business days following receipt of the special
meeting notice, for at least 10 business days following such 90 business day
period;

·                    an offer
pursuant to which the Company has received an irrevocable written commitment by
the offeror that the offer, it if is otherwise to expire prior thereto, will be
extended for at least 20 business days after any increase in the price offered,
and after any bona fide alternative offer is commenced;

·                    an offer that
is conditioned on a minimum of at least 90% of the outstanding Common Shares
(other than Common Shares held by the offeror) being tendered and not withdrawn
as of the offer’s expiration date, which condition shall not be waivable;

·                    an offer
pursuant to which the Company has received an irrevocable written commitment by
the offeror to consummate as promptly as practicable upon successful completion
of the offer a second step transaction whereby all Common Shares not tendered
into the 

 7
 

 

offer will be acquired at
the same amount and form of consideration per share actually paid pursuant to
the offer, subject to shareholders’ statutory appraisal rights, if any;

·                    an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that no amendments will be made to the offer to reduce the offer
consideration, change the form of consideration offered, reduce the number of
shares being sought, or otherwise change the terms of the offer in a way that
is adverse to a tendering shareholder;

·                    if the offer
includes Common Shares of the offeror, (A) the offeror is a publicly owned
United States corporation, and its Common Shares are freely tradable and are
listed or admitted to trading on either the New York Stock Exchange or the
Nasdaq National Market, (B) no shareholder approval of the offeror is required
to issue such Common Shares, or, if required, such approval has already been
obtained, (C) no Person beneficially owns more than 20% of the voting stock of
the offeror at the time of commencement of the offer or at any time during the
term of the offer, and (D) no other class of voting stock of the offeror is
outstanding, and the offeror meets the registrant eligibility requirements for use
of Form S-3 for registering securities under the Securities Act of 1933, as
amended, including, without limitation, the filing of all required Exchange Act
reports in a timely manner during the 12 calendar months prior to the date of
commencement of the offer;

·                    an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offeror will pay (or share with any other offeror) at
least one-half of the Company’s costs of a special meeting requested with respect
to such offer; and

·                    an offer
pursuant to which the Company has received an irrevocable written commitment of
the offeror that if the offer is not consummated, the offeror will not make any
offer for or purchase any equity securities of the Company for a period of one
year after the commencement of the original offer if such original offer does
not result in the tender of at least 85% of the outstanding Common Shares, not
owned by the offeror.

The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.

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

A copy of the Rights Agreement, as amended through
August 9, 2006, has been filed with the Securities and Exchange Commission as
an Exhibit to the Company’s Amended Registration Statement on Form 8-A/A filed
on August 15, 2006. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.

 8Exhibit 4.5

 

RESALE
REGISTRATION RIGHTS AGREEMENT

 

Resale Registration Rights
Agreement (this “Agreement”), dated August 2, 2006, between Vertex
Pharmaceuticals Incorporated, a Massachusetts corporation (together with any
successor entity, the “Issuer”), and Highbridge International LLC (the “Investor”).

 

Pursuant to the Exchange
Agreement, dated August 2, 2006, between the Issuer and the Investor (the “Exchange
Agreement”), the Issuer has agreed to issue 136,489 restricted shares (the “Shares”)
of common stock, par value $0.01 per share, of the Issuer (the “Common Stock”)
to Investor in exchange for $2,000,000 principal amount of 53⁄4% Convertible
Senior Subordinated Notes due 2011. In connection with the exchange, the Issuer
has agreed to provide the registration rights set forth in this Agreement.

 

The parties hereby agree as
follows:

 

1.                                      DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings:

 

AGREEMENT:  As defined in the preamble hereto.

 

BUSINESS DAY:  A day other than a Saturday or Sunday or any
federal holiday in the United States.

 

COMMISSION:  Securities and Exchange Commission.

 

COMMON STOCK:  As defined in the preamble hereto.

 

EFFECTIVENESS PERIOD:  As defined in Section 2(ii) hereof.

 

EXCHANGE ACT:  Securities Exchange Act of 1934, as amended.

 

ISSUER:  As defined in the preamble hereto.

 

PERSON:  An individual, partnership, corporation,
unincorporated organization, trust, joint venture or a government or agency or
political subdivision thereof.

 

PROSPECTUS:  The prospectus included in a Shelf
Registration Statement, as amended or supplemented by any prospectus supplement
and by all other amendments thereto, including post-effective amendments, and
all material incorporated by reference into such Prospectus.

 

SECURITIES ACT:  Securities Act of 1933, as amended.

 

SHELF REGISTRATION
STATEMENT:  As defined in Section 2(i)
hereof.

 

SUSPENSION PERIOD:  As defined in Section 4(b)(i) hereof.

 

TRANSFER RESTRICTED
SECURITIES: Each Share until the earlier of:

 

(i)                                     the date on which such Share has been
effectively registered under the Securities

 

 

Act
and disposed of in accordance with the Shelf Registration Statement;

 

(ii)                                  the earlier of (i) the date on which such
Share is transferred in compliance with Rule 144 under the Securities Act or
may be sold or transferred pursuant to Rule 144(k) under the Securities Act (or
any other similar provision then in force) or (ii) November 30, 2007; or

 

(iii)                               the date on which such Share ceases to be
outstanding (whether as a result of redemption, repurchase and cancellation,
conversion or otherwise).

 

2.                                      SHELF REGISTRATION.

 

The
Issuer shall:

 

(i)                                     not later than August 16, 2006, cause to be
filed an automatic shelf registration statement, as defined in Rule 405 under
the Securities Act, or an automatically effective, post-effective amendment to
a currently effective registration statement (the “Shelf Registration Statement”),
which Shelf Registration Statement shall, among other things, provide for
resales of all Transfer Restricted Securities held by the Investor (it being
understood that the Shelf Registration Statement may include other securities
of the Issuer with respect to registration rights have been granted in
connection with other exchanges);

 

(ii)                                  use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 3(b) hereof to the extent necessary to
ensure that (A) it is available for resales by the Investor of Transfer Restricted
Securities entitled to the benefit of this Agreement and (B) conforms with the
requirements of this Agreement and the Securities Act and the rules and
regulations of the Commission promulgated thereunder as announced from time to
time for a period (the “Effectiveness Period”) of:

 

(1)                                  up to November 30, 2007; or

 

(2)                                  such shorter period that will terminate when
(X) the Investor is able to sell all Transfer Restricted Securities immediately
without restriction pursuant to Rule 144(k) under the Securities Act or any
successor rule thereto, (Y) when all Transfer Restricted Securities have ceased
to be outstanding (whether as a result of repurchase and cancellation or
otherwise) or (Z) all Transfer Restricted Securities registered under the Shelf
Registration Statement have been sold.

 

3.                                      REGISTRATION PROCEDURES.

 

(a)                                  In connection with the Shelf Registration
Statement, the Issuer shall comply with all the provisions of Section 3(b)
hereof and shall use its commercially reasonable efforts to effect such registration
to permit the sale of the Transfer Restricted Securities being

 

2

 

sold in accordance with the
intended method or methods of distribution thereof, and pursuant thereto, shall
as expeditiously as possible prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Securities Act.

 

(b)                                 In connection with the Shelf Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Issuer shall:

 

(i)                                     Subject to any notice by the Issuer in
accordance with this Section 3(b) of the existence of any fact or event of the
kind described in Section 4(b)(iii)(D), use its commercially reasonable efforts
to keep the Shelf Registration Statement continuously effective during the
Effectiveness Period. Upon the occurrence of any event that would cause the
Shelf Registration Statement or the Prospectus contained therein (A) to contain
a material misstatement or omission or (B) not be effective and usable for
resale of Transfer Restricted Securities during the Effectiveness Period, the
Issuer shall file promptly an appropriate amendment to the Shelf Registration
Statement or a report filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, in the case of clause (A), correcting
any such misstatement or omission, and, in the case of either clause (A) or
(B), use its commercially reasonable efforts to cause any such amendment to be
declared effective and the Shelf Registration Statement and the related
Prospectus to become usable for their intended purposes as soon as practicable
thereafter. Notwithstanding the foregoing, the Issuer may suspend the effectiveness
of the Shelf Registration Statement by written notice to the Investor for a
period not to exceed an aggregate of 45 days in any 90-day period (each such
period, a “Suspension Period”) if:

 

(x)                                   an event occurs and is continuing as a result
of which the Shelf Registration Statement would, in the Issuer’s reasonable
judgment, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and

 

(y)                                 the Issuer reasonably determines that the
disclosure of such event at such time would have a material adverse effect on
the business of the Issuer (and its subsidiaries, if any, taken as a whole);

 

PROVIDED that in the event the disclosure relates to
a previously undisclosed proposed or pending material business transaction, the
disclosure of which would impede the Issuer’s ability to consummate such
transaction, the Issuer may extend a Suspension Period from 45 days to 60 days;
PROVIDED, HOWEVER, that Suspension Periods shall not exceed an aggregate of 90
days in any 360-day period.

 

(ii)                                  Prepare and file with the Commission such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement effective during the
Effectiveness Period; cause the Prospectus to be supplemented by any required
Prospectus supplement,

 

3

 

and as so supplemented to be filed pursuant to Rule
424 under the Securities Act, and to comply fully with the applicable
provisions of Rules 424, 430A and 430B under the Securities Act in a timely
manner; and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in the Shelf Registration
Statement or Prospectus supplement.

 

(iii)                               Advise the Investor promptly:

 

(A)                              with respect to the Shelf Registration
Statement or any post-effective amendment thereto, when the same has become
effective, and when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed,

 

(B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto,

 

(C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Securities Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, or

 

(D)
of the existence of any fact or the happening of any event, during the
Effectiveness Period, that makes any statement of a material fact made in the
Shelf Registration Statement or the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading.

 

If at any time the Commission
shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Issuer shall use its commercially reasonable efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.

 

(iv)                              Furnish to the Investor a copy of the Shelf Registration
Statement and copies of any Prospectus included therein or any amendments or
supplements to the Shelf Registration Statement or Prospectus (other than
documents incorporated by reference after the initial filing of the Shelf
Registration Statement).

 

4

 

(v)                                 Make available at reasonable times for
inspection by the Investor and any attorney or accountant retained by the
Investor, all financial and other records, pertinent corporate documents and
properties of the Issuer as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the Issuer’s
officers, directors, managers and employees to supply all information
reasonably requested by any such representative or representatives of the
Investor, attorney or accountant in connection with the Shelf Registration
Statement after the filing thereof and before its effectiveness; PROVIDED,
HOWEVER, that any information designated by the Issuer as confidential at the
time of delivery of such information shall be kept confidential by the
recipient thereof.

 

(vi)                              If requested by the Investor, promptly
incorporate in the Shelf Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as the
Investor may reasonably request to have included therein, including, without
limitation: (1) information relating to the “Plan of Distribution” of the
Transfer Restricted Securities, and (2) any other terms of the offering of the
Transfer Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective amendment as
soon as reasonably practicable after the Issuer is notified of the matters to
be incorporated in such Prospectus supplement or post-effective amendment. Notwithstanding
the foregoing, following the effective date of the Shelf Registration
Statement, the Issuer shall not be required to file more than one such
supplement or post-effective amendment to reflect changes in the amount of
Transfer Restricted Securities held by the Investor at the request of such
Investor in any 30-day period.

 

(vii)                           Furnish to the Investor without charge, at
least one copy of the Shelf Registration Statement, as first filed with the
Commission, and of each amendment thereto (and any documents incorporated by
reference therein or exhibits thereto (or exhibits incorporated in such
exhibits by reference) as the Investor may request).

 

(viii)                        Deliver to the Investor, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as the Investor reasonably may request; subject
to any notice by the Issuer in accordance with this Section 3(b) of the existence
of any fact or event of the kind described in Section 3(b)(iii)(D), the Issuer
hereby consents to the use of the Prospectus and any amendment or supplement
thereto by the Investor, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto.

 

(ix)                                Cooperate with the Investor to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends
(unless required by applicable securities laws); and enable such Transfer
Restricted Securities to be in such denominations and

 

5

 

registered in such names as the Investor may request
at least two Business Days before any sale of Transfer Restricted Securities
made by the Investor.

 

(x)                                   Use its commercially reasonable efforts to
cause the Transfer Restricted Securities covered by the Shelf Registration
Statement to be registered with or approved by such other U.S. governmental
agencies or authorities as may be necessary to enable the seller or sellers
thereof or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities.

 

(xi)                                Subject to Section 3(b)(i) hereof, if any
fact or event contemplated by Section 3(b)(iii)(D) hereof shall exist or have
occurred, use its reasonable commercially reasonable efforts to prepare a
supplement or post-effective amendment to the Shelf Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the purchasers
of Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

 

(xii)                             Provide CUSIP numbers for all Transfer
Restricted Securities not later than the effective date of the Shelf
Registration Statement.

 

(xiii)                          Otherwise use its commercially reasonable
efforts to comply with all applicable rules and regulations of the Commission
and all reporting requirements under the rules and regulations of the Exchange
Act.

 

(c)                                  The Investor agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the Issuer of the
existence of any fact of the kind described in Section 3(b)(iii)(D) hereof, the
Investor will discontinue disposition of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, and hold the content of such
notice from the Issuer in confidence, until:

 

(i)                                     the Investor has received copies of the
supplemented or amended Prospectus contemplated by Section 3(b)(viii) hereof;
or

 

(ii)                                  the Investor is advised in writing by the
Issuer that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus.

 

If so directed by the
Issuer, the Investor will deliver to the Issuer all copies, other than
permanent file copies then in the Investor’s possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice of suspension.

 

(d)                                 (1)                                  The Investor shall furnish to the Issuer in
writing such information regarding the Investor and the proposed distribution
by the Investor of its Transfer Restricted Securities as the Issuer may
reasonably request for use in connection with the Shelf Registration Statement
or Prospectus or preliminary Prospectus included therein. The Investor shall
promptly furnish to the Issuer in writing such other information as the Issuer
may from time to time

 

6

 

reasonably request in
writing. The Investor agrees to furnish promptly to the Issuer all information
required to be disclosed in order to make information previously furnished to
the Issuer by the Investor not materially misleading. The Issuer shall take
action so that the Investor is permitted to deliver the Prospectus forming a
part thereof as of such time to purchasers of the Investor’s Transfer
Restricted Securities in accordance with applicable law.

 

4.                                      REGISTRATION EXPENSES.

 

(a)                                  All expenses incident to the Issuer’s
performance of or compliance with this Agreement shall be borne by the Issuer
regardless of whether a Shelf Registration Statement becomes effective,
including, without limitation:

 

(i)                                     all registration and filing fees and
expenses;

 

(ii)                                  all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws;

 

(iii)                               all expenses of printing (including printing
of Prospectuses, messenger and delivery services and telephone;

 

(iv)                              all fees and disbursements of counsel to the
Issuer;

 

(v)                                 all application and filing fees in connection
with listing (or authorizing for quotation) the Common Stock on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and

 

(vi)                              all fees and disbursements of independent
certified public accountants of the Issuer (including the expenses of any
special audit and comfort letters required by or incident to such performance).

 

The
Issuer shall bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal,
accounting or other duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by the Issuer.

 

5.                                      INDEMNIFICATION AND
CONTRIBUTION.

 

(a)                                  The Issuer agrees to indemnify and hold
harmless the Investor and each Person, if any, who controls the Investor within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of
a material fact contained in any Shelf Registration Statement (or any amendment
or supplement thereto), including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement
of a material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were

 

7

 

made, not misleading; PROVIDED,
HOWEVER, that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Issuer by the Investor
expressly for use in a Shelf Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto).

 

(b)                                 The Investor agrees to indemnify and hold
harmless the Issuer, and each Person, if any, who controls the Issuer, within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 5(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in any Shelf Registration Statement (or any amendment or
supplement thereto) or any Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information with respect to the
Investor furnished to the Issuer by the Investor expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); PROVIDED, HOWEVER, that the Investor shall
not be liable for any claims hereunder in excess of the amount of net proceeds
received by the Investor from the sale of Transfer Restricted Securities
pursuant to such Shelf Registration Statement.

 

(c)                                  Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure so to notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of such action; PROVIDED, HOWEVER, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.

 

For purposes of this Section
5, each Person, if any, who controls the Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Investor, and each director of the Issuer, and
each Person, if any, who controls the Issuer within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Issuer.

 

6.                                      MISCELLANEOUS.

 

(a)                                  NO INCONSISTENT AGREEMENTS. The Issuer will
not, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Investor in this Agreement or otherwise conflicts with the provisions hereof.

 

8

 

(b)                                 AMENDMENTS AND WAIVERS. This Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given, unless the Issuer has
obtained the written consent of the Investor.

 

(c)                                  NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight delivery:

 

(i)                                     if to the Investor:

 

Highbridge Capital
Management, LLC

9 West 57th Street 

New York, NY  10019

Facsimile: (212) 287-4915

 

(ii)                                  if to the Issuer:

 

Vertex
Pharmaceuticals Incorporated 130 Waverly Street

Cambridge, Massachusetts 02139

Attention: Investor Relations

 

With
a copy to:

 

Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

One
Financial Center Boston, Massachusetts 02111

Attention: Michael Fantozzi, Esq.

 

All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and on the next Business Day, if timely delivered to an air
courier guaranteeing overnight delivery.

 

(d)                                 SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties, PROVIDED, HOWEVER, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of the Investor unless and
to the extent such successor or assign acquired Transfer Restricted Securities
from the Investor. If any transferee of the Investor shall acquire Transfer
Restricted Securities, in any manner, whether by operation of law or otherwise,
such Transfer Restricted Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Transfer Restricted
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement.

 

(e)                                  COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed

 

9

 

shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

(f)                                    HEADINGS. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(g)                                 GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the law of the Commonwealth of
Massachusetts, without regard to conflict of laws principles thereof.

 

(h)                                 SEVERABILITY. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.

 

(i)                                     ENTIRE AGREEMENT. This Agreement is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuer with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

[SIGNATURES
PAGE FOLLOWS]

 

10

 

[Counterpart signature page of Resale Registration Rights Agreement
made as of the 2nd day of August, 2006, by and among Vertex Pharmaceuticals
Incorporated and the undersigned.]

 

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

 

	
   

  	
  VERTEX
  PHARMACEUTICALS

  
	
   

  	
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard C. Garrison

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:
  

  	
  Richard C. Garrison

  
	
   

  	
  Title:
  

  	
  Senior
  Vice President and Catalyst

  
	
   

  	
   

  
	
   

  	
  HIGHBRIDGE
  INTERNATIONAL LLC

  
	
   

  	
   

  
	
   

  	
  BY:
  HIGHBRIDGE CAPITAL MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  A. J. Starr

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Signatory

  
					

 

11

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