Document:

ex4_1.htm

    
      

    

    Exhibit
4.1

    

    

    FARMERS
& MERCHANTS BANCORP

    

    And

    

    REGISTRAR
AND TRANSFER COMPANY, as

    

    Rights
Agent

    

    RIGHTS
AGREEMENT

    

    Dated
as of August 5, 2008

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

     

    
      	 
      	 
      	
              Page

            
	 	 	 
	
              SECTION
      1.

            	
              CERTAIN
      DEFINITIONS

            	
              1

            
	 
      	 
      	 
      
	
              SECTION
      2.

            	
              APPOINTMENT
      OF RIGHTS AGENT

            	
              4

            
	 
      	 
      	 
      
	
              SECTION
      3.

            	
              ISSUE
      OF RIGHT CERTIFICATES

            	
              5

            
	 
      	 
      	 
      
	
              SECTION
      4.

            	
              FORM
      OF RIGHT CERTIFICATES

            	
              6

            
	 
      	 
      	 
      
	
              SECTION
      5.

            	
              COUNTERSIGNATURE
      AND REGISTRATION

            	
              7

            
	 
      	 
      	 
      
	
              SECTION
      6.

            	
              TRANSFER,
      SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
      DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES

            	
              7

            
	 
      	 
      	 
      
	
              SECTION
      7.

            	
              EXERCISE
      OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS

            	
              8

            
	 
      	 
      	 
      
	
              SECTION
      8.

            	
              CANCELLATION
      AND DESTRUCTION OF RIGHT CERTIFICATES

            	
              9

            
	 
      	 
      	 
      
	
              SECTION
      9.

            	
              AVAILABILITY
      OF PREFERRED SHARES

            	
              9

            
	 
      	 
      	 
      
	
              SECTION
      10.

            	
              PREFERRED
      SHARES RECORD DATE

            	
              9

            
	 
      	 
      	 
      
	
              SECTION
      11.

            	
              ADJUSTMENT
      OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS

            	
              10

            
	 
      	 
      	 
      
	
              SECTION
      12.

            	
              CERTIFICATE
      OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES

            	
              17

            
	 
      	 
      	 
      
	
              SECTION
      13.

            	
              CONSOLIDATION,
      MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

            	
              17

            
	 
      	 
      	 
      
	
              SECTION
      14.

            	
              FRACTIONAL
      RIGHTS AND FRACTIONAL SHARES

            	
              20

            
	 
      	 
      	 
      
	
              SECTION
      15.

            	
              RIGHTS
      OF ACTION

            	
              21

            
	 
      	 
      	 
      
	
              SECTION
      16.

            	
              AGREEMENT
      OF RIGHT HOLDERS

            	
              21

            
	 
      	 
      	 
      
	
              SECTION
      17.

            	
              RIGHT
      CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER

            	
              22

            
	 
      	 
      	 
      
	
              SECTION
      18.

            	
              CONCERNING
      THE RIGHTS AGENT

            	
              22

            
	 
      	 
      	 
      
	
              SECTION
      19.

            	
              MERGER
      OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

            	
              23

            
	 
      	 
      	 
      
	
              SECTION
      20.

            	
              DUTIES
      OF RIGHTS AGENT

            	
              23

            
	 
      	 
      	 
      
	
              SECTION
      21.

            	
              CHANGE
      OF RIGHTS AGENT

            	
              25

            
	 
      	 
      	 
      
	
              SECTION
      22.

            	
              ISSUANCE
      OF NEW RIGHT CERTIFICATES

            	
              26

            
	 
      	 
      	 
      
	
              SECTION
      23.

            	
              REDEMPTION

            	
              26

            
	 
      	 
      	 
      
	
              SECTION
      24.

            	
              EXCHANGE

            	
              27

            

    

    
      
         

      

      
        - i
-

        
          

        

      

      
         

      

    

     

    
      	
              SECTION
      25.

            	
              NOTICE
      OF CERTAIN EVENTS

            	
              28

            
	 
      	 
      	 
      
	
              SECTION
      26.

            	
              NOTICES

            	
              29

            
	 
      	 
      	 
      
	
              SECTION
      27.

            	
              SUPPLEMENTS
      AND AMENDMENTS

            	
              29

            
	 
      	 
      	 
      
	
              SECTION
      28.

            	
              REGISTRATION
      OF SECURITIES

            	
              29

            
	 
      	 
      	 
      
	
              SECTION
      29.

            	
              DETERMINATIONS
      AND ACTIONS BY THE BOARD OF DIRECTORS

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      30.

            	
              SUCCESSORS

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      31.

            	
              BENEFITS
      OF THIS AGREEMENT

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      32.

            	
              SEVERABILITY

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      33.

            	
              GOVERNING
      LAW

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      34.

            	
              COUNTERPARTS

            	
              31

            
	 
      	 
      	 
      
	
              SECTION
      35.

            	
              DESCRIPTIVE
      HEADINGS

            	
              31

            

    

    
      
         

      

      
        - ii
-

        
          

        

      

      
         

      

    

    RIGHTS
AGREEMENT

     

    Agreement,
dated as of August 5, 2008 between Farmers & Merchants Bancorp, a Delaware
corporation (the “Company”), and Registrar and Transfer Company, a New Jersey
corporation (the “Rights Agent”).

     

    Pursuant
to this Agreement, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a “Right”) for each
Common Share (as hereinafter defined) of the Company outstanding on August 15,
2008 (the “Record Date”), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).

     

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

     

    
      	
              SECTION
      1.

            	
              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 10% or more of the Common Shares of the Company then
outstanding (other than as the result of a Permitted Offer (as such term is
hereinafter defined)), but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company (including without limitation the Employee Plans) or of any
Subsidiary of the Company, or of any entity holding Common Shares for or
pursuant to the terms of any such plan, PROVIDED, HOWEVER, that the term
“Acquiring Person” shall not include any Grandfathered Person (as such term is
hereinafter defined), unless such Grandfathered Person subsequently becomes the
Beneficial Owner of more than the Grandfathered Percentage (as such term is
hereinafter defined) of the Common Shares of the Company; and PROVIDED, FURTHER,
that any person who first obtains the written approval of a majority of the
Board of Directors of the Company for the acquisition of 10% or more of the
Common Shares of the Company and therefore accumulates at least 10% of the
Common Shares, within six months of the date of such written approval shall not
be an “Acquiring Person.”  Any Grandfathered Person who subsequently
becomes the Beneficial Owner of less than 10% of the Common Shares of the
Company shall cease to be a Grandfathered Person.  Notwithstanding the
foregoing, no Person shall become an “Acquiring Person” as the result of either
(x) 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 10% or more of the Common Shares of the Company then
outstanding; PROVIDED, HOWEVER, that if a Person shall become the Beneficial
Owner of 10% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an “Acquiring Person” or (y)
if (i) within 8 days after such Person would otherwise have become an Acquiring
Person (but for the operation of this subclause y), such Person notifies the
Board of Directors that such Person did so inadvertently and (ii) within 5 days
after such notification, such Person is the Beneficial Owner of less than 10% of
the outstanding Common Shares or, if the Person is a Grandfathered Person, such
Person is the Beneficial Owner of less than the Grandfathered
Percentage.

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

    (b)           “Adjustment
Shares” shall have the meaning set forth in Section 11(a)(ii)
hereof.

     

    (c)           “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.

     

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

     

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

     

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

     

    (iii)           which
are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso in Section l(d)(ii)(B)) or disposing of
any securities of the Company; PROVIDED, HOWEVER, that in no case shall an
officer or director of the Company be deemed the Beneficial Owner of securities
held of record by the trustee of any employee benefit plan of the Company
(including without limitation the Plans) or any Subsidiary of the Company for
the benefit of any employee of the Company or any Subsidiary of the Company,
other than the officer or director, by reason of any influence that such officer
or director may have over the voting of the securities held in the
plan.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

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

     

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

     

    (f)          
 “Close of business” on any given date shall mean 5:00 P.M., San Francisco
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it shall mean 5:00 P.M., San Francisco time, on the next succeeding Business
Day.

     

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

     

    (h)           “Current
Value” shall have the meaning set forth in Section 11(a)(iv)
hereof.

     

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

     

    (j)          
 “Employee Plans” shall mean the Farmers & Merchants Bancorp Profit
Sharing Plan and any other tax-qualified employee benefit plan, or any of them,
and any successor to any of them.

     

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

     

    (l)          
 “Grandfathered Percentage” shall mean, with respect to any Grandfathered
Person (as such term is hereinafter defined), the percentage of the outstanding
Common Shares that such Grandfathered Person beneficially owned on the date of
this Agreement, plus five percentage points.

     

    (m)          “Grandfathered
Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, was, on the date of this Agreement, the Beneficial
Owner of 10% or more of the Common Shares of the Company outstanding on such
date.

     

    (n)           “Permitted
Offer” shall mean a tender or exchange offer which is for all outstanding Common
Shares at a price and on terms determined, prior to the purchase of shares under
such tender or exchange offer, by at least a majority of the members of the
Board of Directors who are not officers of the Company and who are not Acquiring
Persons or Affiliates, Associates, nominees or representatives of an Acquiring
Person, to be adequate (taking into account all factors that such Director deem
relevant including, without limitation, prices that could reasonably be achieved
of the Company or its assets were sold on an orderly basis designed to realize
maximum value) and otherwise in the best interest of the Company and its
stockholders (other than the Person or any Affiliates or Associate thereof on
whose basis the offer is being make) taking into account all factors that such
directors may deem relevant.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

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

     

    (p)           “Preferred
Shares” shall mean shares of Series A Junior Participating Preferred Stock, no
par value, of the Company having the rights and preferences set forth in the
Certificate of Designation for Series A Junior Participating Preferred Stock
attached hereto as Exhibit
A.

     

    (q)           “Principal
Party” shall have the meaning set forth in Section 13(b) hereof.

     

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

     

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

     

    (t)        
   “Registered Common Shares” shall have the meaning set forth in
Section 13(d) hereof.

     

    (u)           “Shares
Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such or such earlier date as a
majority of the directors of the Company shall become aware of the existence of
an Acquiring Person.

     

    (v)           “Spread”
shall have the meaning set forth in Section 11(a)(iv) hereof.

     

    (w)          “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.

     

    (x)           “Substitution
Period” shall have the meaning set forth in Section 11(a)(iv)
hereof.

     

    (y)           “Trading
Day” shall have the meaning set forth in Section 11(a)(iv) hereof.

     

    (z)           
A “Trigger Event” shall be deemed to have occurred upon any Person, together
with all Affiliates and Associates of such Person, becoming an Acquiring
Person.

     

    
      	
              SECTION
      2.

            	
              APPOINTMENT OF RIGHTS
      AGENT

            

    

     

    The
Company hereby appoints the Rights Agent to act as agent for 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.

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    
      	
              SECTION
      3.

            	
              ISSUE OF RIGHT
      CERTIFICATES

            

    

     

    (a)           Until
the earlier of the close of business on (i) the tenth day after the Shares
Acquisition Date, or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors 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 (including without limitation the Employee Plans) or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such 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 (including without limitation the
Employee Plans) or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 10% or more of the then
outstanding Common Shares (irrespective of whether any Common Shares are
actually purchased pursuant to such offer) (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights), (the
earliest 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 B hereto (a
“Right Certificate”), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

     

    (b)           On
the Record Date, or as soon as practicable thereafter, the Company will send a
copy of a Summary of Rights to Purchase Preferred Shares, in substantially the
form of Exhibit
C hereto (the “Summary of Rights”), by first-class, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the Record
Date, at the address of such 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 regardless
of whether a copy of the Summary of Rights is attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
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.

    
      
         

      

      
        - 5
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    (c)           Certificates
for Common Shares which become outstanding (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:

     

    This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in a Rights Agreement between Farmers & Merchants Bancorp and
Registrar and Transfer Company, dated as of August 5, 2008 (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 Farmers &
Merchants Bancorp.  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. Farmers & Merchants Bancorp
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights Agreement) may 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, the Company shall not be
entitled to exercise any Rights associated with such Common Shares while they
are not outstanding.

     

    
      	
              SECTION
      4.

            	
              FORM OF RIGHT
      CERTIFICATES

            

    

     

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

    
      
         

      

      
        - 6
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              SECTION
      5.

            	
              COUNTERSIGNATURE AND
      REGISTRATION

            

    

     

    The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, it Chief Financial Officer or
any of its Executive Vice Presidents, either manually or by facsimile signature
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.

     

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

     

    
      	
              SECTION
      6.

            	
              TRANSFER, SPLIT UP,
      COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST
      OR STOLEN RIGHT CERTIFICATES

            

    

     

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

     

    Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them and 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.

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    
      	
              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 (but not prior thereto) 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 one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on August 5, 2018 (the “Final Expiration
Date”), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the “Redemption Date”), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.

     

    (b)        
  The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $1,200, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.

     

    (c)           Upon
receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance
with Section 9 hereof by cash, certified check, cashier’s check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Shares certificates
for the number of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) requisition from the depository agent depository receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depository agent) and the
Company hereby directs the depository agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depository receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.

     

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

     

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

    
      
         

      

      
        - 8
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              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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled 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 canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

     

    
      	
              SECTION
      9.

            	
              AVAILABILITY OF
      PREFERRED SHARES

            

    

     

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

     

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

     

    
      	
              SECTION
      10.

            	
              PREFERRED SHARES
      RECORD DATE

            

    

     

    Each
person in whose name any certificate for Preferred Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender
and payment is a date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

    
      
         

      

      
        - 9
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              SECTION
      11.

            	
              ADJUSTMENT OF PURCHASE
      PRICE, NUMBER OF SHARES OR NUMBER OF
  RIGHTS

            

    

     

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

     

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

     

    (ii)          
 Subject to Section 24 of this Agreement, in the event:

     

    (A)           a
Trigger Event shall have occurred (other than through an acquisition described
in subparagraph (iii) of this paragraph (a)); or

     

    (B)           during
such time as there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or recapitalization or
reorganization of the Company or other transaction or series of transactions
involving the Company which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its Subsidiaries
beneficially owned by any Acquiring Person or any Affiliate or Associate
thereof,

     

    each
holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company (such number of
shares being referred to herein as the “Adjustment Shares”) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share 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 the earliest of the events described in clauses
(A) and (B) above.

    
      
         

      

      
        - 10
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    From and
after the occurrence of the earliest of the events described in clauses (A) and
(B) above, any Rights that are or were acquired or are or were beneficially
owned by any Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void and any holder of such Rights (including any subsequent
transferee) 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
canceled.

     

    (iii)           The
right to buy Common Shares of the Company pursuant to subparagraph (ii) of this
paragraph (a) shall not arise as a result of any Person becoming an Acquiring
Person through a purchase of Common Shares pursuant to a tender offer made in
the manner prescribed by Section 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder; PROVIDED, HOWEVER, that such tender offer
shall provide for the acquisition of all of the outstanding Common Shares held
by any Person other than such Person and its Affiliates or Associates at a price
and on terms determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person, after receiving
advice from one or more investment or financial advisers, to be (A) fair to
stockholders (taking into account all factors which such members of the Board
deem relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (B) otherwise in the best interests of the Company
and its stockholders, employees, customers and communities in which the Company
does business.

     

    (iv)           In
the event that there shall not be sufficient Common Shares authorized but
unissued 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 being hereinafter
referred to as the “Spread”), and (B) with respect to each Right, make adequate
provision to substitute for such unavailable Adjustment Shares either (1) cash,
(2) a reduction in the Purchase Price, (3) other equity securities of the
Company, including without limitation, Preferred Shares, (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing, having,
together with the Adjustment Shares issued upon exercise of such Right, 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
reputable investment banking firm selected by the Board of Directors of the
Company; PROVIDED, HOWEVER, if, within 30 days following the date of the
occurrence of the earliest of the events described in clauses (A) and (B) of
Section 11(a)(ii) above, the Company shall have not made adequate provision to
deliver value pursuant to clause (B) above, 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 such shares are
available) and then, if necessary, cash or Preferred Shares, 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 could be authorized for issuance upon exercise in full
of the Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 120 days following the date of the occurrence of
the earliest of the events described in clauses (A) and (B) of Section 11(a)(ii)
above, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended,
hereinafter referred to as the “Substitution Period”). To the extent that the
Company determines that action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iv), the Company (x) shall provide, subject to
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 in order 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)(iv), the value of the Common Shares
shall be the current per share market price (as determined pursuant to Section
11(d) hereof) per Common Share on the date of the occurrence of the earliest of
the events described in clauses (A) and (B) of Section 11(a)(ii)
above.

    
      
         

      

      
        - 11
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    (b)           In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares (“equivalent preferred shares”)) or
securities convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a conversion
price per share, if a security convertible into Preferred Shares or equivalent
preferred shares) less than the then current per share market price of the
Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible).  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. Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

    
      
         

      

      
        - 12
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    (c)           In
case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares.  Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.

     

    (d)           For
the purpose of any computation hereunder, the “current per share market price”
of any security (a “Security” for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (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 day shall be the last sale price or, in case no such sale
takes place on such day, the average of the closing bid and asked prices in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last reported trade in the over-the-counter market, as reported by
the Nasdaq National Market (“Nasdaq”) or such other system then in use, or, if
on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company, or, if in the judgment of the Board of Directors of the Company
it shall not be practicable to obtain such information from such market maker,
as determined in good faith by the Board of Directors.  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.

    
      
         

      

      
        - 13
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    (ii)           For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the
“current per share market price” of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, “current per share
market price” shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.

     

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

     

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

     

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

     

    (h)           Unless
the Company shall have exercised its election as provided in Section 11(i), 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 one one-hundredths of a Preferred Share
(calculated to the nearest one one-hundredth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

    
      
         

      

      
        - 14
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    (i)          
 The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share 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 one-hundredth) 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 one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Right Certificates previously and thereafter issued may continue to express
the Purchase Price and the number of one one-hundredths of a Preferred Share
that were expressed in the initial Right Certificates issued
hereunder.

     

    (k)           Before
taking any action that would cause an adjustment reducing the Purchase Price
below one one-hundredth of the then par value, if any, of the Preferred Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable Preferred
Shares at such adjusted Purchase Price.

    
      
         

      

      
        - 15
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    (l)           
 In any case in which this Section 11 shall require that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the Preferred Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares upon
the occurrence of the event requiring such adjustment.

     

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

     

    (n)           The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)), (ii) permit or cause any Person to consolidate with the
Company, or merge with and into the Company (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), or (iii) sell or
otherwise transfer (or permit any Subsidiary to sell or 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 or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if at
the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.

     

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

     

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

    
      
         

      

      
        - 16
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              SECTION
      12.

            	
              CERTIFICATE OF
      ADJUSTED PURCHASE PRICE OR NUMBER OF
  SHARES

            

    

     

    Whenever
an adjustment is made as provided in Sections 11 and 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares or the Preferred
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.  The Rights Agent shall be fully protected in relying on any
such  certificate and on any adjustment therein contained, and shall
not be obligated or responsible for calculating any adjustment, nor shall it
be  deemed to have knowledge of such an adjustment unless and until it
shall have  received such certificate.

     

    
      	
              SECTION
      13.

            	
              CONSOLIDATION, MERGER
      OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

            	
               

            

    

     

    (a)           If,
following the Distribution Date, directly or indirectly, (i) the Company shall
consolidate with, or merge with and into, any other Person and the Company shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) any Person shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such
merger and, in connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, (iii) any Person shall
acquire all or a majority of the Common Shares pursuant to a statutory plan of
exchange, or (iv) 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 (A) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Principal Party (as hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product by (2) 50% of the
then current per share market price of the Common Shares (determined pursuant to
Section 11(d) hereof) of such Principal Party on the date of consummation of
such consolidation, merger, sale or transfer; (B) such Principal Party 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; (C) the term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party after the first occurrence
of an event described in this Section 13(a); (D) such Principal Party 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; and
(E) the provisions of Section 11(a)(ii) shall be of no further effect following
the first occurrence of any event described in this Section
13(a).

    
      
         

      

      
        - 17
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    (b)           “Principal
Party” shall mean:

     

    (i)           in
the case of any transaction described in clause (i), (ii) or (iii) of Section
13(a), (A) the Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger, consolidation or for which
they are exchanged in such statutory plan of exchange, or, if there is more than
one such issuer, the issuer of Common Shares that has the highest aggregate
current market price (determined in accordance with Section 11(d)) and (B) if no
securities are so issued, the Person that is the other party to such merger,
consolidation or statutory plan of exchange, or, if there is more than one such
Person, the Person the Common Shares of which has the highest aggregate current
market price (determined in accordance with Section 11(d)); and

     

    (ii)           in
the case of any transaction described in clause (iv) of Section 13(a), the
Person that is the party receiving the largest portion of the assets or earning
power transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the same
portion of the assets or earning power transferred pursuant to such transaction
or transactions or if the Person receiving the largest portion of the assets or
earning power cannot be determined, whichever Person the Common Shares of which
has the highest aggregate current market price (determined in accordance with
Section 11(d));

     

    provided,
however, that in any such case, (A) if the Common Shares of such Person are not
at such time and have not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act (“Registered Common
Shares”), or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person that has Registered Common Shares
outstanding, “Principal Party” shall refer to such other Person; (B) if the
Common Shares of such Person are not Registered Common Shares or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Shares outstanding, “Principal Party” shall refer to the
ultimate parent entity of such first-mentioned Person; (C) if the Common Shares
of such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Shares
outstanding, “Principal Party” shall refer to whichever of such other Persons is
the issuer of the Registered Common Shares having the highest aggregate current
market price (determined in accordance with Section 11(d)); and (D) if the
Common Shares of such Person are not Registered Common Shares or such Person is
not a corporation, and such Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have Registered Common Shares
outstanding, “Principal Party” shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders’ equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.

    
      
         

      

      
        - 18
-

        
          

        

      

      
         

      

    

    (c)           The
Company shall not consummate any such consolidation, merger, statutory plan of
exchange, sale or transfer unless prior thereto the Company and the Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement confirming that (i) such Principal Party shall, upon consummation of
such consolidation, merger, statutory plan of exchange or sale or transfer of
assets or earning power, assume this Agreement in accordance with Section 13,
(ii) all rights of first refusal or preemptive rights in respect of the issuance
of Common Shares of such Principal Party upon exercise of outstanding Rights
have been waived, (iii) any provision of the authorized securities of such
Principal Party or of its charter, bylaws or other instruments governing its
corporate affairs which would obligate such Principal Party to issue in
connection with, or as a consequence of, the consummation of a transaction
referred to in Section 13(a), Common Shares of such Principal Party at less than
the then-current per share market price (determined in accordance with Section
11(d)(i)) or securities exercisable for, or convertible into, such Common Shares
at less than such then-current per share market price (other than to the holders
of Rights pursuant to this Section 13) have been waived or canceled, and (iv)
such transaction shall not result in a default by such Principal Party under
this Agreement and further providing that, as soon as practicable after the date
of any consolidation, merger, statutory plan of exchange or sale or transfer of
assets or earning power referred to in Section 13(a), such Principal Party
will:

     

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

     

    (B)           use
its best efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights or to meet the eligibility
requirements for quotation of the Rights and such securities on Nasdaq or other
system then in use; and

     

    (C)           deliver
to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange Act.

     

    In the
event that at any time after the occurrence of an event described in Section
11(a)(ii) hereof some or all of the Rights shall not have then been exercised at
the time of the occurrence of an event described in Section 13(a) hereof, the
Rights which have not theretofore been exercised shall thereafter be exercisable
in the manner described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).

    
      
         

      

      
        - 19
-

        
          

        

      

      
         

      

    

    (d)           The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

     

    (e)         
  Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in Section
13(a)(i), (ii) or (iii) if:  (i) such transaction is consummated with
a Person or Persons who acquired Common Shares pursuant to a tender offer
described in Section 11(a)(iii) (or with a wholly-owned Subsidiary of any such
Person or Persons), (ii) the price per Common Share offered in such transaction
is not less than the price per Common Share paid to all holders of Common Shares
whose shares were purchased pursuant to such tender or exchange offer, and (iii)
the form of consideration being offered to the remaining holders of Common
Shares pursuant to such transaction is the same as the form of consideration
paid pursuant to such tender offer.  Upon consummation of any such
transaction contemplated by this Section 13(e), all Rights shall
expire.

     

    
      	
              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,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, 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 reported trade 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, or, if in the judgment of the Board of Directors of the Company it
shall not be practicable to obtain such information from such market maker, as
determined in good faith by the Board of Directors. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.

     

    (b)           The
Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depository selected by it;
PROVIDED, that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.

    
      
         

      

      
        - 20
-

        
          

        

      

      
         

      

    

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

     

    
      	
              SECTION
      16.

            	
              AGREEMENT OF RIGHT
      HOLDERS

            

    

     

    Every
holder of a Right, by accepting the same, consents and agrees with the Company
and 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 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.

    
      
         

      

      
        - 21
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              SECTION
      17.

            	
              RIGHT CERTIFICATE
      HOLDER NOT DEEMED A
STOCKHOLDER

            

    

     

    No holder
of any Right Certificate, by reason of being a holder of such Right Certificate,
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, by reason of being a holder of
such Right Certificate, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.

     

    
      	
              SECTION
      18.

            	
              CONCERNING THE RIGHTS
      AGENT

            

    

     

    The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder.  The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, 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, including reasonable attorney fees.  The indemnification
provided for hereunder shall survive the  expiration of the Rights,
the termination of this Agreement and the  resignation or removal of
the Rights Agent.  The costs and expenses of  enforcing this
right of indemnification shall also be paid by the Company.

     

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

    
      
         

      

      
        - 22
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              SECTION
      19.

            	
              MERGER OR
      CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
  AGENT

            

    

     

    Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust 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.

     

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

     

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

    
      
         

      

      
        - 23
-

        
          

        

      

      
         

      

    

    (c)           The
Rights Agent shall be liable hereunder to the Company and any  other
Person only for its own negligence or willful misconduct. Anything
in  this Agreement to the contrary notwithstanding, in no event shall
the Rights  Agent be liable for special, indirect or consequential
loss or damage of any  kind whatsoever (including, but not limited to,
lost profits), even if the  Rights Agent has been advised of the
likelihood of such loss or damage and  regardless of the form of
action.

     

    (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
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.

     

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

     

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

     

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

    
      
         

      

      
        - 24
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    (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.

     

    (j)            No
provision of this Agreement shall require the Rights Agent to  expend
or risk its own funds or otherwise incur any financial liability
in  the performance of any of its duties hereunder or in the exercise
of its  rights if there shall be reasonable grounds for believing that
repayment of  such funds or adequate indemnification against such risk
or liability is not  reasonably assured to it.

     

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

     

    
      	
              SECTION
      21.

            	
              CHANGE OF RIGHTS
      AGENT

            

    

     

    The
Rights Agent or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days’ notice in writing mailed to the
Company and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail.  The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (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 corporation (or an affiliate of a corporation)
organized and doing business under the laws of the United States or any state of
the United States. 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
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

    
      
         

      

      
        - 25
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              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
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 $0.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”); PROVIDED, HOWEVER, that if,
following the occurrence of a Shares Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any event described
in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii) or (iv) of
Section 13(a) hereof, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Shares in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of an
event described in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii)
or (iv) of Section 13(a) hereof such that such Person is thereafter a Beneficial
Owner of less than 10% of the outstanding Common Shares, and (ii) there are no
other Persons, immediately following the occurrence of the event described in
clause (i), who are Acquiring Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section
23.  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.  The Company may,
in its discretion, round up the redemption price to be paid to any holder of
Rights to the nearest whole cent.

     

    (b)           Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice of
any such redemption; PROVIDED, HOWEVER, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption. Within 10
days after such action of the Board of Directors 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.

    
      
         

      

      
        - 26
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              SECTION
      24.

            	
              EXCHANGE

            

    

     

    (a)           The
Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any 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
(including without limitation the Employee Plans) or of any such Subsidiary, or
of any entity holding Common Shares for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.

     

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

     

    (c)           In
any exchange pursuant to this Section 24, the Company, at its option, may
substitute Preferred Shares (or equivalent preferred shares, as such term is
defined in Section 11(b) hereof) for Common Shares exchangeable for Rights, at
the initial rate of one one-hundredth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in lieu of each
Common Share shall have the same voting rights as one Common Share.

     

    (d)           In
the event that there shall not be sufficient Common Shares or Preferred 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 use
its best efforts to cause all such action to be taken as may be necessary to
authorize additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights.

    
      
         

      

      
        - 27
-

        
          

        

      

      
         

      

    

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

     

    
      	
              SECTION
      25.

            	
              NOTICE OF CERTAIN
      EVENTS

            

    

     

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

     

    (b)         
  In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.

    
      
         

      

      
        - 28
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              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:

     

    Farmers
& Merchants Bancorp

    111 W
Pine Street

    Lodi, CA
95240

    Attn:  President
and Chief Executive Officer

     

    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:

     

    Registrar
and Transfer Company

    10
Commerce Drive

    Cranford,
NJ  07016

    Attn:
Daniel Flynn

    

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

     

    
      	
              SECTION
      27.

            	
              SUPPLEMENTS AND
      AMENDMENTS

            

    

     

    The
Company may from time to time supplement or amend this Agreement without the
approval of any holders of Right 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.

            	
              REGISTRATION OF
      SECURITIES

            

    

     

    The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days, the exercisability of the Rights in order to prepare and file, if deemed
necessary by the Company, such registration statements and other filings under
the Securities Act of 1933, as amended, and the securities or “blue sky” laws of
any state, with respect to any securities purchasable upon the exercise of the
Rights, and to permit the same to become effective. Upon 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. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction has
been obtained.

    
      
         

      

      
        - 29
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              SECTION
      29.

            	
              DETERMINATIONS AND
      ACTIONS BY THE BOARD OF
DIRECTORS

            

    

     

    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 a determination to redeem or to 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 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 the Board to
any liability to the holders of the Rights.

     

    
      	
              SECTION
      30.

            	
              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
      31.

            	
              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
      32.

            	
              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
      33.

            	
              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 Delaware 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.

    
      
         

      

      
        - 30
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              SECTION
      34.

            	
              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
      35.

            	
              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.

    

     

    [Remainder of Page Intentionally Left
Blank]

    
      
         

      

      
        - 31
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    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.

     

    
      	 
      	
              FARMERS
      & MERCHANTS BANCORP

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Kent A. Steinwert

            
	 
      	 
      	 	
               

            
	 
      	 
      	
              Kent
      A. Steinwert

            
	 
      	 
      	 
      
	 
      	
              Its:  President
      and Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              RIGHTS
      AGENT

            
	 
      	 
      	 
      
	 
      	
              REGISTRAR
      AND TRANSFER COMPANY

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      William P. Tatler

            
	 
      	 
      	 	
               

            
	 
      	 
      	
              William
      P. Tatler

            
	 
      	 
      	 
      
	 
      	
              Its:  Vice
      President

            

    

    
      
         

      

      
        - 1
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    EXHIBIT
A

    

    

    CERTIFICATE
OF DESIGNATION

     

    SERIES A
JUNIOR PARTICIPATING PREFERRED SHARES

    OF

    FARMERS
& MERCHANTS BANCORP

     

    Pursuant
to Section 151 of the Delaware General Corporation Law:

     

    We, Kent
A. Steinwert, President and Chief Executive Officer, and Stephen W. Haley,
Secretary, of Farmers & Merchants Bancorp, a corporation organized and
existing under the laws of Delaware (hereinafter called the “Corporation”), do
hereby certify as follows:

     

    1.           On
August 5, 2008, the Board of Directors of the Corporation adopted a resolution
designating 200,000 shares of Preferred Stock as Series A Junior Participating
Preferred Stock.

     

    2.           No
shares of Series A Junior Participating Preferred Stock have been
issued.

     

    3.           Pursuant
to the authority conferred upon the Board of Directors by the Amended and
Restated Certificate of Incorporation of the Corporation, the following
resolution was duly adopted by the Board of Directors on August 5, 2008 creating
the series of Preferred Stock designated as Series A Junior Participating
Preferred Stock:

     

    RESOLVED
FURTHER, That the Board of Directors, to implement the Rights, pursuant to the
authority vested in the Board of Directors of this Corporation in accordance
with the provisions of its Amended and Restated Certificate of Incorporation, a
series of Preferred Stock of the Corporation be and hereby is created, and that
the designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:

     

    “SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK:

     

    Paragraph
1.     DESIGNATION AND AMOUNT.  The shares of such
series shall be designated as “Series A Junior Participating Preferred Stock”
(the “Series A Preferred Stock”) and the number of shares constituting the
Series A Preferred Stock shall be 200,000.  Such number of shares may
be increased or decreased by resolution of the Board of Directors; PROVIDED,
that no decrease shall reduce the number of shares of Series A Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

    Paragraph
2.     DIVIDENDS AND DISTRIBUTIONS.

     

    (A)        Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $0.01
per share (the “Common Stock”), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
dividends payable in cash (each payment date determined by the Board of
Directors being referred to herein as a “Dividend Payment Date”),
commencing on the first Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an amount per
share (subject to the provision for adjustment hereinafter set forth) equal
to 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of the Common
Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Dividend Payment Date or, with respect to
the first Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.

     

    (B)        The
Corporation shall declare a dividend or distribution on the Series A Preferred
Stock as provided in paragraph (A) of this Paragraph 2 immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).

     

    (C)        The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.

     

    Paragraph
3.     VOTING RIGHTS.  The holders of shares
of Series A Preferred Stock shall have the following voting rights:

     

    (A)        Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation.  In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such an event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

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

     

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

     

    Paragraph
4.     CERTAIN RESTRICTIONS.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

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

     

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

     

    Paragraph
6.     LIQUIDATION, DISSOLUTION OR WINDING
UP.  Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received a minimum of $100.00
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up.  In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

     

    Paragraph
7.     CONSOLIDATION, MERGER, ETC.  In case
the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock into a greater or lesser number of shares of Common Stock), then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    Paragraph
8.     NO REDEMPTION.  The shares of Series A
Preferred Stock shall not be redeemable.

     

    Paragraph
9.     RANK.  The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the distribution of
assets, junior to all other series of the Corporation’s Preferred
Stock.

     

    Paragraph
10.   AMENDMENT.  The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without, in addition to any other vote of
stockholders required by law, the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A Preferred Stock, voting together
as a single class.

     

    Paragraph
11.   FRACTIONAL SHARES.  The Series A Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder’s fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of the Series A Preferred Stock.”

     

    4.  We
further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.

     

    Executed
on August 5, 2008, at Lodi, California.

     

    
      	 
      	
              /s/
      Kent A. Steinwert

            	 
	 
      	 
      	 
	 
      	
              Kent
      A. Steinwert

            	 
	 
      	
              President
      and Chief Executive Officer

            	 
	 
      	 
      	 
	 
      	
              /s/
      Stephen W. Haley

            	 
	 
      	 
      	 
	 
      	
              Stephen
      W. Haley

            	 
	 
      	
              Secretary

            	 

    

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

     

    FORM OF
RIGHT CERTIFICATE

     

    Certificate
No. R- ________ Rights

     

    NOT
EXERCISABLE AFTER AUGUST 5, 2018 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS.  THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

     

    RIGHT
CERTIFICATE

     

    FARMERS
& MERCHANTS BANCORP

     

    This
certifies that ___________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 5, 2008 (the “Rights Agreement”), between Farmers
& Merchants Bancorp, a Delaware corporation (the “Company”), and Registrar
and Transfer Company, a New Jersey corporation (the “Rights Agent”), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., San Francisco time, on
August 5, 2018 at the principal office of the Rights Agent, or at the office of
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock (the “Preferred Shares”),
of the Company, at a purchase price of $1,200 per one one-hundredth of a
Preferred Share (the “Purchase Price”), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly
executed.  The number of Rights evidenced by this Right Certificate
(and the number of one one-hundredths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of August 5, 2008, based on
the Preferred Shares as constituted at such date.  As provided in the
Rights Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

     

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

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate (i) may be redeemed by the Company at a redemption price of $.001
per Right or (ii) may be exchanged in whole or in part for Preferred Shares or
shares of the Company’s Common Stock, par value $0.01 per share.

     

    No
fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the 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 Preferred Shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the 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 __________, ______.

     

    
      	
              ATTEST:

            	 
      	
              FARMERS
      & MERCHANTS BANCORP

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Countersigned:

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              REGISTRAR
      AND TRANSFER COMPANY

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By

            	 
      	 
      	 
      	 
      
	 
      	
              Authorized
      Signature

            	 
      	 
      	 
      

    

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    Form of
Reverse Side of Right Certificate

     

     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Right Certificate.)

     

    
      	 
      	
              FOR
      VALUE RECEIVED

            	 
      
	
              hereby
      sells, assigns and transfers unto

            	 
      
	 
      	 
      
	 
      	
              (Please
      print name and address of transferee)

            
	 
      	 
      
	 
      

    

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

     

    Dated:  ____________,
___.

     

    
      	 
      	 
      	 
      
	 
      	
              Signature

            	 
      

    

     

    Signature
Guaranteed:

     

    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

            	 
      

    

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    Form of
Reverse Side of Right Certificate -- Continued

     

     

    FORM OF
ELECTION TO PURCHASE

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Right Certificate.)

     

    To
Farmers & Merchants Bancorp:

     

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

     

    Please
insert social security or other identifying number

    

    
      	 
      
	
              (Please
      print name and address)

            
	 
      

    

     

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

     

    Please
insert social security or other identifying number

     

    
      	 
      
	
              (Please
      print name and address)

            
	 
      

    

     

    Dated:  ____________,
____.

     

    
      	 
      	 
      	 
      
	 
      	
              Signature

            	 
      

    

     

    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

            	 
      

    

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    NOTICE

     

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

     

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

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

     

    SUMMARY
OF RIGHTS TO PURCHASE PREFERRED SHARES

     

    On August
5, 2008, the Board of Directors of Farmers & Merchants Bancorp (the
“Company”) declared a dividend of one preferred 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
15, 2008 (the “Record Date”) to the stockholders of record on that
date.  Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock, no par value (the “Preferred Shares”), of the Company at a price of
$1,200 per one one-hundredth of a Preferred Share (the “Purchase Price”),
subject to adjustment.  The description and terms of the Rights are
set forth in a Rights Agreement dated as of August 5, 2008 (the “Rights
Agreement”) between the Company and Registrar and Transfer Company, as Rights
agent (the “Rights Agent”).

     

    Initially,
the Rights will be attached to all certificates representing Common Shares then
outstanding, regardless of whether any such certificate has a copy of this
Summary of Rights attached thereto, and no separate Right Certificates will be
distributed.  The Rights will separate from the Common Shares and a
Distribution Date will occur upon the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 10% or more of the outstanding Common Shares
(an “Acquiring Person”); provided, however, a person or group holding 10% or
more of the outstanding shares as of August 5, 2008 will become a “Grandfathered
Person” and such Grandfathered Person will be treated as an Acquiring Person
upon public announcement or knowledge by the Company’s Board of Directors that
such Grandfathered Person has acquired beneficial ownership of an additional 5%
of the outstanding Common Shares; or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 10% or more of such outstanding Common Shares (unless the Company’s
Board of Directors has approved the offer).

     

    The
Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares.  Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference.  Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date, even without
such notation 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.

    
      
         

      

      
        C -
1

        
          

        

      

      
         

      

    

    The
Rights are not exercisable until the Distribution Date.  The Rights
will expire on August 5, 2018 (the “Final Expiration Date”), unless the Rights
are earlier redeemed or exchanged by the Company, in each case as described
below.

     

    The
Purchase Price payable, and the number of Preferred 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 Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or warrants to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the then current market
price of the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Preferred Shares) or of subscription rights or warrants (other than
those referred to above).

     

    The
number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or a subdivision, consolidation or combination
of the Common Shares occurring, in any such case, prior to the Distribution
Date.

     

    Preferred
Shares purchasable upon exercise of the Rights will not be
redeemable.  Each Preferred Share will be entitled to a minimum
preferential dividend payment of 100 times the dividend declared per Common
Share.  In the event of liquidation, the holders of the Preferred
Shares will be entitled to a minimum preferential liquidation payment of $100.00
per share but will be entitled to an aggregate payment of 100 times the payment
made per Common Share. Each Preferred Share will have 100 votes, voting together
with the Common Shares.  Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
Common Share.  These rights are protected by customary antidilution
provisions.

     

    Because
of the nature of the Preferred Shares’ dividend, liquidation and voting rights,
the value of the one one-hundredth interest in a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common
Share.

     

    In the
event that (i) any person or group of affiliated or associated persons becomes
an Acquiring Person, or (ii) during such time as there is an Acquiring Person,
there shall be a reclassification of securities or a recapitalization or
reorganization of the Company or other transaction or series of transactions
involving the Company which has the effect of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its subsidiaries beneficially owned by the Acquiring
Person (each a “flip-in” event), proper provision shall be made so that 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 that number of Common Shares (or, in the event that there are
insufficient authorized Common Shares, substitute consideration such as cash,
property, or other securities of the Company, such as Preferred Stock) having a
market value of two times the exercise price of the Right.  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 (a “flip-over event”), 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 exercise price
of the Right, 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
exercise price of the Right.

    
      
         

      

      
        C -
2

        
          

        

      

      
         

      

    

    At any
time after the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 10% or more of the outstanding Common Shares
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 have become
void), in whole or in part, at an exchange ratio of one Common Share, or one
one-hundredth of a Preferred Share (or of a share of a class or series of the
Company’s preferred stock having equivalent rights, preferences and privileges),
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.  No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.

     

    At any
time before a person becomes an Acquiring Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $0.001
per Right (the “Redemption Price”).  After the redemption period has
expired, the Company’s rights of redemption may be reinstated if, prior to
completion of certain recapitalizations, mergers or other business combinations,
an Acquiring Person reduces its beneficial ownership to less than 10% of the
outstanding Common Shares in a transaction or series of transactions not
involving the Company.  The redemption of the rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.  Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.

     

    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 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 of a Right will not, by reason of being such a
holder, have rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.

     

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

     

    
C - 3ex10_38.htm

    
      

    

    Exhibit
10.38

     

    

      

      

      CONSULTING
AND INDEPENDENT CONTRACTOR SERVICES AGREEMENT

      

      This Agreement (“Agreement”)
is between Symyx Technologies, Inc., a Delaware corporation and its successors
or assignees (“Symyx”)
and the undersigned David
Hill (“Consultant”).

       

      1.    Engagement
of Services; Symyx Person Responsible.  Symyx may issue Work
Order(s) from time to time in the form attached hereto as Exhibit A
(“Work
Order(s)”).  Consultant will, to the best of its ability,
render the services set forth in Work Order(s) its accepts (the “Services”)
by the stated completion dates.  Consultant will exercise the highest
degree of professionalism and utilize its expertise and creative talents in
completing the Services.   The Symyx employee responsible for
Symyx’s relationship with Consultant is:  Howard
Turner.

       

      2.    Compensation.
Each Work Order will specify the applicable fee arrangement. Within
forty-five (45) days of receipt of a proper invoice, Symyx will pay undisputed
amounts for Services rendered and accepted.  Except as otherwise set
forth in a Work Order, Consultant is responsible for its own costs and
expenses.  If Symyx agrees to reimburse expenses, they must be
pre-approved and consistent with Symyx’s travel and other
policies.  Consultant must provide all supporting documentation, and
may not in any event exceed the total amounts specified on a Work Order without
prior written authorization.

       

      3.    Independent
Contractor. Consultant is an independent contractor; nothing in this
Agreement is intended or will be construed as creating an agency, partnership,
joint venture or employment relationship.  Consultant has sole
discretion and control over the manner and means by which it completes the
Services.  Except as specified in a Work Order, Consultant will
provide its own equipment and materials, at its own
expense.  Consultant will complete the Services at a location,
place and time that Consultant deems appropriate. Consultant may not make any
representation or commitment on Symyx’s behalf. Consultant is not entitled to
benefits Symyx provides to its employees.  Consultant is responsible
for all tax returns and payments required by any authority relating to
Consultant’s performance of Services. Symyx will not withhold or make
contributions for social security, unemployment or disability insurance.
Consultant will indemnify and hold Symyx harmless against such taxes or
contributions, including penalties and interest.

       

      4.    Reports and
Records.  Consultant will regularly advise Symyx on its
progress in performing Services, and to the extent Symyx requests, will do so via
written reports.  Consultant will meet with Symyx personnel as
requested to review the progress of the Services. Consultant will maintain
reason­ably detailed records related to its performance of the Services,
including the expenditure of time per person, materials and other
costs.  Symyx has the right during the Term and for three (3) years
thereafter to examine Consultant’s books and records relating to this
Agreement.

       

      5.    Confidentiality.  If
the parties have previously entered into a non-disclosure agreement encompassing
the disclosure of Symyx’s confidential and proprietary information to
Consultant, then the terms in that agreement will apply to disclosures hereunder
and be deemed a part hereof (regardless of whether that agreement terminates
prior to the end of the Term), and the following provisions will not apply.
Otherwise, the following provisions apply.

       

      5.1    “Confidential
Information” means Symyx’s non-public information disclosed (directly or
indirectly) to Consultant, or to which Consultant may gain access, in any form.
Confidential Information includes, for example, know-how and trade secrets;
patents, patent applications, innovations and inventions (whether patentable or
not); works of authorship, including software programs and related materials;
technical information, such as algorithms, methods, designs, formulae,
processes, research and development, specifications and configuration
information; financial and pricing information; information about suppliers,
customers, prospects, investors, employees and business relationships;
forecasts, strategies, and other information related to Symyx’s current, future,
and proposed products, services, and business; and information Symyx provides
regarding or belonging to third parties. Information need not be labeled or
marked “confidential” or “proprietary” to be deemed Confidential
Information.  As between the parties, all Confidential Information is
Symyx’s property.

      
        
           

        

        
          1 of
8

          
            

          

        

        
           

        

      

      5.2    Third-Party Information.
Consultant recognizes that Confidential Information includes confidential
or proprietary information Symyx has received from third parties, subject to a
duty to maintain its confidentiality and to use it for certain limited
purposes.  Consultant agrees it owes Symyx and such third parties a
duty to hold all such third-party information in the strictest confidence and
not to disclose it to any party or to use it except as necessary to perform
Services, consistent with the Symyx's agreement with the owner.

       

      5.3    Duties. At all times, and
notwithstanding the termination of this Agreement, Consultant will use
Confidential Information only as necessary to provide Services and will use the
Confidential Information only for Symyx’s benefit.  Consultant will
hold Confidential Information in strict confidence, and will use the same care
and precautions to avoid publication, dissemination, or other disclosure of
Confidential Information as it uses with its own most confidential information
(and in no case less than reasonable care).  Consultant will not
disclose Confidential Information to any third party, and will limit
dissemination of Confidential Information within Consultant (if Consultant is
not a natural person) to Consultant’s employees who (a) have a need to know such
information to perform the Services; and (b) are bound by written obligations of
confidentiality for Symyx’s benefit that are at least as restrictive as this
Agreement. Except as specifically agreed in a Work Order, Consultant will not
reverse engineer, disassemble or decompile any software, prototypes, materials
or other tangible objects, or reproduce Confidential Information except as
necessary to provide the Services.

       

      5.4    Exceptions. Consultant’s
obligations in this Section 5 will not apply to an item of the Confidential
Information when Consultant can document that such item (a) is or becomes
generally available to the public through no fault of Consultant; (b) was
publicly known prior to disclosure, or was already in Consultant’s possession,
as shown by its pre-existing records, without violating, and free of, any
obligation of confidence; (c) was rightfully disclosed to Consultant by a third
party without violating any obligation of confidence; or (d) was independently
developed by Consultant without any reference to or use of Symyx Confidential
Information.

       

      5.5    Outside Information.
Consultant will not disclose to Symyx, bring onto
Symyx’s
premises, or induce Symyx to use, any
confidential or proprietary information that belongs to anyone other than Symyx or
Consultant.

       

      6.    Ownership.

       

      6.1    Definitions.

       

      (a)           “Work
Product” means deliverables, know-how, trade secrets, ideas, designs,
trademarks, formulae, algorithms, processes, improvements, discoveries,
manufacturing techniques, artwork, software, software source documents, other
works of authorship, miscellaneous work product (such as memoranda, notes, and
letters) and other works, whether or not patentable, copyrightable or subject to
other forms of protection (“Inventions”)
that are solely or jointly conceived, developed, written, created, made, learned
or first reduced to practice in the course of any work performed by Consultant
under any Work Order, together with all IP Rights therein.

       

      (b)           “Background
Technology” means Inventions owned by Consultant, and that either (i)
existed prior to the execution of this Agreement; or (ii) are developed outside
the scope of any Services independently from and without the use of Confidential
Information.

      
        
           

        

        
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      6.2    Ownership;
Disclosure.  Consultant agrees that all Work Product is Symyx’s
sole and exclusive property. If Consultant is not a natural person, then
Consultant represents and warrants that before assigning any personnel to
perform any Services, such individual will have executed an instrument that
validly assigns all Work Product to Symyx (to the extent permitted under
applicable law). Consultant will promptly disclose all Work Product to
Symyx.

       

      6.3    Assignment of Work
Product.  Consultant hereby irrevocably assigns to Symyx all of
the right, title and interest worldwide in and to Work Product (including all
intellectual property rights embodied therein and related thereto (“IP
Rights”)), in perpetuity (or for the longest period of time otherwise
permitted by law).  Consultant retains no rights to use Work Product
and will not challenge Symyx’s ownership in Work Product. Consultant agrees to
make and maintain written records of all Work Product and IP Rights, and will
promptly submit such records, and supplemental oral or written disclosures, to
designated representatives of Symyx. On request, Consultant will execute,
acknowledge and deliver assignments of IP Rights to Symyx or its
designee.

       

      6.4    Waiver and License. If
Consultant retains any rights in Work Product that cannot be assigned
to Symyx, Consultant unconditionally and irrevocably waives enforcement of such
rights, and all claims and causes of action of any kind against Symyx with
respect thereto. If Consultant has any right to Work Product that cannot be
assigned to Symyx or waived by Consultant, then Consultant hereby
unconditionally and irrevocably grants to Symyx during the term of such rights,
an exclusive, irrevocable, worldwide, perpetual (or the longest period of time
permitted by law, if less),  royalty-free and fully paid license, with
rights to sublicense through multiple tiers of sublicensees, to fully use and
exploit all such rights in any manner whatsoever, by all means now known or
hereafter developed. Consultant hereby waives and quitclaims to Symyx any and
all claims, of any nature whatsoever, that Consultant now or may hereafter have
for infringement of any rights in Work Product or Background Technology in Work
Product.

       

      6.5    Background Technology. Consultant hereby
grants to Symyx an exclusive, irrevocable, worldwide, perpetual (or if less, the
longest period of time permitted by law), assignable, royalty-free and fully
paid license, with rights to sublicense through multiple tiers of sublicensees,
to fully use and exploit any Background Technology used in or incorporated into
Work Product in connection with the use and exploitation of Work Product by
Symyx, its customers, affiliates, successors and assigns, in any manner
whatsoever, by all means now known or hereafter developed.

       

      6.6    Assistance.  Consultant
will cooperate with Symyx or its designee(s), both during and after the Term, to
procure and maintain Symyx’s rights in Work Product, and to execute and deliver,
when requested, documents Symyx deems necessary or advisable to carry out the
purposes of this Agreement.  In particular, Consultant will assist
Symyx in obtaining, perfecting, maintaining and enforcing Symyx’s rights in Work
Product in any jurisdiction, including executing, acknowledging and delivering
such documents and performing such other acts as Symyx may reasonably
request.  Consultant agrees, at Symyx’s request and expense, to
consent to and join in any action to enforce rights in Work Product. Consultant
hereby irrevocably designates and appoints Symyx and its duly authorized
officers and agents as its agent and attorney in fact (with full power of
substitution), which appointment is coupled with an interest, to act for and in
its behalf, if Symyx cannot secure Consultant’s signature or assistance after
reasonable effort, to execute, acknowledge and file any documents and to do all
other lawfully permitted acts to further the purposes of this Section 6 with the
same legal force and effect as if executed by Consultant.

       

      6.7    California Labor Code Section
2870.  This Section does not require the assignment of any
materials in contravention of Section 2870 of the California Labor
Code.

      
        
           

        

        
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      7.    Representations
and Warranties.  Consultant represents and warrants that (a)
all Work Product will be Consultant’s original work, or, to the extent it is not
an original work of Consultant, any third parties with an interest therein will
have executed assignment of rights reasonably acceptable to Symyx; (b) neither
the Work Product nor any element thereof, nor the use or exploitation thereof by
Symyx, will infringe or misappropriate the intellectual property rights of any
third party; (c) neither the Work Product nor any element thereof will be
subject to any restrictions, mortgages, liens, pledges, security interests,
encumbrances or encroachments; (d) any deliverables will comply and conform to
the applicable specifications therefor; and (e) any computer code provided by
Consultant will not contain copy protection mechanisms, or viruses or other
harmful code. Consultant also represents and warrants that (a) it will perform
all Services in a professional and workmanlike manner using the best practices
of the industry; (b) it will not grant any rights whatsoever in the Work Product
to any third party; (c) it has full right and power to enter into this Agreement
perform Services without the consent of any third party; (d) Consultant has no
contract or duty inconsistent with this Agreement, unless a copy of such
contract or a description of such duty is attached to this Agreement as Exhibit B;
(e) Consultant will take all necessary precautions to prevent injury to any
persons and damage to property during the Term; and (f) Consultant will comply
with all applicable laws, regulations and orders of any governmental authority
of competent jurisdiction in performing Services and its other obligations under
this Agreement, including, for example, export control. Consultant agrees during
the Term not to accept work or enter into a contract or accept an obligation,
inconsistent or incompatible with Consultant’s obligations under this Agreement.
Consultant will, in all things and in good faith, protect Symyx’s
goodwill.

      

      8.    Indemnity.  Consultant
will indemnify and hold harmless Symyx, its officers, directors, employees,
sublicensees, customers and agents from any and all claims, losses, liabilities,
damages, expenses and costs (including attorneys’ fees and court costs) that
result from a breach or alleged breach of any representation or warranty of
Consultant (a “Claim”) set forth in Section 7, or from a breach of
Consultant’s obligations in Sections 5.2, 5.3 or 5.5, provided that Symyx gives
Consultant written notice of any such Claim.  From the date of written
notice from Symyx to Consultant of any such Claim, Symyx will have the right to
withhold from any payments due Consultant under this Agreement the amount of any
costs or expenses incurred by Symyx.

      

      
         
9.    Term
and Termination.

      

       

      9.1    Term.  This
Agreement begins on the Effective Date and will continue until terminated (the
“Term”).

       

      9.2    Termination.  Symyx
may terminate this Agreement or any Work Order
for any reason or no reason upon seven (7) days notice to
Consultant.  Symyx may also terminate this Agreement immediately in
its sole discretion upon Consultant’s breach of any provision of this
Agreement. Consultant may terminate this
Agreement if there is no outstanding and uncompleted Work Order upon
fifteen (15) days’ notice to Symyx.

       

      9.3    Effect.  Immediately
upon any termination, Consultant will cease performing all Services (unless the
termination notice directs otherwise).  Symyx will pay Consultant for
completed and accepted Services performed prior to the date of notice of
termination within forty-five (45) days.  Symyx will not incur
obligations for any work performed after the date of notice of termination, or
for any anticipated profit on unperformed work.  If Symyx terminates
this Agreement or any Work Order for Consultant’s default, Symyx may take over
and arrange for completion of the Services and proceed with all available
remedies.  Sections 3-6 and 8 through 10 will survive termination of
this Agreement.

       

      9.4    Non-interference.  During
the Term and for two (2) years thereafter, Consultant will not solicit or
induce any Symyx employee or contractor to terminate or breach any employment or
contractual relationship with Symyx.

       

      9.5    Return of
Property.  Upon termination of the Agreement, or earlier if
Symyx requests, Consultant will deliver to Symyx all notes, memoranda,
specifications, drawing, devices and documents, (and all copies and extracts),
and any other material containing or disclosing any Work Product or Confidential
Information.  Consultant agrees that Symyx may inspect Symyx property
(including storage media) at any time, without prior notice.

      
        
           

        

        
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        10.    General
Provisions.

      

       

      10.1    Law.  The laws of
the State of California will govern this Agreement, without giving effect to
conflict of laws principles that would apply the law of another
jurisdiction.  Consultant expressly consents to the personal
jurisdiction and venue in, and service of process by, courts with jurisdiction
over Santa Clara County, California for any claim or dispute arising from or
relating to this Agreement. A breach of this
Agreement may result in irreparable and continuing damage for which there may be
no adequate remedy at law, and the parties may seek injunctive relief as well as
other relief as appropriate. Except as limited herein, all remedies are
cumulative. The prevailing party in any dispute arising out of or relating to
this Agreement will be entitled to recover its reasonable costs, expenses and
attorneys’ fees, in addition to any other relief it may be awarded.

       

      10.2    Liability.  Symyx’s
liability arising out of or relating to this Agreement or any Work Order will be
limited to the fees payable to Consultant in accordance with Section 2 and the
applicable Work Order.  In no event will Symyx be liable for any
consequential, incidental, indirect or special damages, under any legal theory,
even if Symyx has been advised of the possibility of such damages, and
notwithstanding the failure of essential purpose of any limited
remedy.

       

      10.3    Publicity.  Consultant
may not disclose the existence or terms of this Agreement to any third
party.

       

      10.4    Insurance. Consultant will
maintain appropriate insurance coverages, at its sole cost and
expense.  Consultant will deliver to Symyx a Certificate of
Insurance upon request.

       

      10.5    Subcontracts/Assignment.
Consultant may not subcontract or otherwise delegate its obligations without
Symyx's consent. Consultant may not assign this Agreement without Symyx’s
consent. Any such attempts will be void.

       

      10.6    Notices.  All
notices must be in writing and sent to the addressee at the address or facsimile
number set forth below (or as may be provided subsequently in accordance with
this provision).  Notice will be deemed received and effective: (i)
upon delivery if delivered personally; (ii) five days following deposit into the
United States mail (certified mail, return receipt requested); (iii) upon
receipt of notice of successful electronic delivery, if sent via facsimile; or
(iv) one day after deposit with a nationally recognized overnight
courier.

       

      10.7    Modification;
Waiver; Severability. Only a
mutually executed written instrument may modify, amend or supplement this
Agreement. All
waivers must be in writing, and signed by the Party against which it is sought
to be enforced. No failure or delay in enforcing any right will be deemed a
waiver.  If a court of competent jurisdiction declares or
adjudges a provision to be illegal, unenforceable or void, this Agreement will
continue in force to the fullest extent permitted by law without the
provision.

       

      10.8    Entire
Agreement.  This Agreement is the final, complete and exclusive
agreement of the parties with respect to the subject matter hereof and
supersedes and merges the parties’ prior understandings and discussions. These
terms will govern all Work Orders.  If there is a conflict between
this Agreement and a Work Order, the Work Order will control with respect
to the Services set forth therein.

      
        
           

        

        
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      In Witness
Whereof, each party has caused this Agreement to be executed by its duly
authorized representative. This Agreement may be executed in
counterparts.

       

      
        
          	
                  CONSULTANT–
      DAVID HILL

                	 
      	
                  SYMYX
      TECHNOLOGIES, INC.

                
	 	 	 	 	 
	
                  By:

                	
                  /s/ David C. Hill

                	 
      	
                  By:

                	
                  /s/ Rex S. Jackson

                
	 	 	 	 	 
	
                  Name:

                	
                  David C. Hill

                	 
      	
                  Name:

                	
                   Rex S. Jackson

                
	 	 	 	 	 
	
                  Title:

                	 
      	 
      	
                  Title:

                	
                  EVP & CFO

                
	 	 	 	 	 
	
                  Date:

                	
                  2/8/2008

                	 
      	
                  Date:

                	
                  2/6/2008

                
	 	 	 	 	 
	
                  Address:

                	 
      	 
      	
                  Address:

                	
                    
      415 Oakmead Parkway

                
	
                  C/O
      Symyx Technologies

                	 
      	 
      	
                    
      Sunnyvale, CA 94085

                
	
                  415
      Oakmead Parkway

                	 
      	 
      	
                    
      Attn:    General
      Counsel

                
	
                  Sunnyvale,
      CA  94085

                	 
      	 
      	 
      

        

      

      
        
           

        

        
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      Exhibit
A

      Work
Order #1

       

      This Work
Order #1 (“Work
Order”) is entered into by and between Symyx Technologies, Inc.
(“Symyx”)
and David Hill (“Consultant”)
as of __2/6/08__and is
incorporated into the Consulting and Independent Contractor Services Agreement
between the parties, effective as of __1/30/08__ If any item
in this Work Order is inconsistent with that Agreement, the terms of this Work
Order will govern, but only with respect to the services set forth
herein.  Capitalized terms used but not defined, herein, are defined
in the Agreement.

      

      

      
        	
                I.

              	
                detailed
      description of services (and
milestones)

              

      

      

      The
consultant shall support Symyx business development activities in the refining,
petrochemcials, polymer, energy and electronic materials sector, primarily by:
(a) suggesting and evaluating potential strategic partnerships, (b) assisting in
the creation and review of Symyx business plans and those of potential partners,
and (c) recommending commercial structures to maximize the value of the Symyx
intellectual property portfolio, including but not limited to venture capital
and joint development or joint venture structures, and parties that might be
interested in such proposals.

      

      
        	
                II.

              	
                Project
      Schedule

              

      

      

      Period of
consultation: One year, effective from the last date of signature under this
Agreement.

       

      
        	
                III.

              	
                 FINANCIAL
      TERMS

              

      

      

      Daily
rate: $2000/day (Maximum no. of days: Ten)

      

      Travel
and Expenses to be paid by SYMYX: not to exceed $1500

      

      Maximum
cost of Consultant: $21,500

      

      

      By
signatures below, the duly authorized representatives of the parties hereto have
agreed to this Work Order.

      

      
        
          	
                  CONSULTANT–
      DAVID HILL

                	 
      	
                  SYMYX
      TECHNOLOGIES, INC.

                
	 	 	 
	
                  By:

                	
                  /s/ David C. Hill

                	 
      	
                  By:

                	
                  /s/ Rex S. Jackson

                
	 	 	 	 	 
	
                  Name:

                	
                  David C. Hill

                	 
      	
                  Name:

                	
                   Rex S. Jackson

                
	 	 	 	 	 
	
                  Title:

                	 
      	 
      	
                  Title:

                	
                  EVP & CFO

                
	 	 	 	 	 
	
                  Date:

                	
                  2/6/08

                	 
      	
                  Date:

                	
                  2/6/08

                
	 	 	 	 	 
	
                  Address:

                	 
      	 
      	
                  Address:

                	
                    
      415 Oakmead Parkway

                
	
                  C/O
      Symyx Technologies, Inc.

                	 
      	 
      	
                    
      Sunnyvale, CA 94085

                
	
                  415
      Oakmead Parkway

                	 
      	 
      	
                    
      Attn:    General
      Counsel

                
	
                  Sunnyvale,
      CA  94085

                	 
      	 
      	 
      

        

      

       

      
        
           

        

        
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      EXHIBIT
A

      Work
Order #2

      This Work
Order #2 ("Work Order") is entered into by and between Symyx Technologies, Inc.
("Symyx') and David Hill ("Consultant") as of June 16, 2008 and is incorporated
into the Consulting and Independent Contractor Services Agreement between the
parties, effective as of February 8, 2008. If any item in this Work Order is
inconsistent with that Agreement, the terms of this Work Order will govern, but
only with respect to the services set forth herein. Capitalized terms used but
not defined, herein, are defined in the Agreement.

      

      I.             
DETAILED DESCRIPTION OF SERVICES (AND MILESTONES)

       

      The
consultant shall provide leadership to Symyx Biorenewables, Inc.

      

      II.           
 PROJECT SCHEDULE

      

      Consultant
shall work on a half-time basis. Period of consultation shall be from June 23,
2008
until the earlier of: (a) Symyx informing Consultant that his services are no
longer needed, or (b) the cost cap described below has been met.

      

      
        III.    FINANCIAL
TERMS

      

      

      Monthly
rate: $16,667/month in fees. Consultant to be paid twice a month.

      

      Travel
and expenses to be paid by Symyx.

      

      Maximum
cost of Consultant under this Work Order #2 shall not exceed
$70,000.

      

      Invoices
shall be sent by Consultant to Richard Boehner.

      

      

      

      By
signatures below, the duly authorized representatives of the parties hereto have
agreed to this Work Order.­

      

      
        	
                CONSULTANT

              	 
      	
                SYMYX
      TECHNOLOGIES, Inc.

              
	
                By:

              	
                /s/ David C. Hill

              	 
      	
                By:

              	
                /s/ Rex S. Jackson

              
	 	 	 	 	 
	
                Name:
      

              	David
      C. Hill	 
      	
                Name:

              	
                Rex
      S. Jackson

              
	 	 	 	 	 
	
                Title:

              	 
      	 
      	
                Title:

              	
                EVP
      & CFO

              
	 	 	 	 	 
	
                Date:

              	
                6/24/08

              	 
      	
                Date:

              	
                6-23-08

              
	 	 	 	 	 
	
                Address:C/O.

              	
                Symyx
      Technologies, Inc

              	 
      	
                Address:

              	
                  
      415 Oakmead Parkway

              
	 
      	
                415
      Oakmead Parkway

              	 
      	 
      	
                  
      Sunnyvale, CA 94085

              
	 
      	
                Sunnyvale,
      CA 94085

              	 
      	 
      	
                  
      Attn: General Counsel

              

      

       

       

      
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