Document:

ex4_1.htm

    
      

    

    EXHIBIT
      4.1

     

    RIGHTS
      AGREEMENT

     

    Agreement,
      dated as of July 2, 2007 between Bank of Marin Bancorp, a California corporation
      (the "Company"), and Bank of Marin, a California corporation, as Rights Agent
      (the "Rights Agent").

    

    Pursuant
      to this Agreement, the Board of Directors of the Company (the "Board") 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 July 23, 2007 (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).

    

    This
      Agreement is intended to replace that previous “Rights Agreement” executed
      August 11, 2003 between Bank of Marin, a California corporation and Bank of
      Marin, a California corporation, as Rights Agent, which was redeemed effective
      June 14, 2007, as part of a holding company reorganization that resulted in
      Bank
      of Marin Bancorp becoming the bank holding company for Bank of
      Marin.

    

    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 15% 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 15% or more of the
      Common Shares of the Company and therefore accumulates at least 15% 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 15% of the Common Shares of the Company shall
      cease to be a Grandfathered Person, except where such Grandfathered Person's
      ownership percentage becomes less than 15% due solely to the issuance of
      additional securities by the Company and not due in whole or in part to sales,
      gifts or other dispositions of Common Shares by such 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 15% or more of the Common Shares
      of the Company then outstanding; PROVIDED, HOWEVER, that if a Person shall
      become the Beneficial Owner of 15% 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 (except as provided above for
      Grandfathered Persons who may acquire up to the Grandfathered Percentage),
      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 15% 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

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (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 or in the capacity of the trustee of any employee benefit
      plan
      of the Company (including without limitation the Employee 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.

    

    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, no par value, 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 any Employee Stock Ownership Plan, 401(k) Plan or other
      tax-qualified employee benefit plan of the Company or of any Subsidiary of
      the
      Company.

    

    (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 July 23, 2007,
      plus
      fifteen (15) percentage points.

    
      
        
        

      

      
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    (m)
      "Grandfathered Person" shall mean any Person who or which, together with all
      Affiliates and Associates of such Person was, on July 23, 2007, the Beneficial
      Owner of 15% 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 directors deem relevant including, without limitation, prices
      that could reasonably be achieved if 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 shareholders (other than the Person or any
      Affiliates or Associate thereof on whose behalf the offer is being made) taking
      into account all factors that such directors may deem relevant.

    

    (o)
      "Person" shall mean any individual, firm, corporation, limited liability
      company, trust, association, partnership, joint venture 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 Determination 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.

    
      
        
        

      

      
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    (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.

    

    
      	
              SECTION 3.

            	
              ISSUE
                OF RIGHT CERTIFICATES

            

    

    

    (a)
      Until
      the earlier of the close of business on (i) the Shares Acquisition Date, or
      (ii)
      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 15% 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) (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), (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.

    
      
        
        

      

      
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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 Bank of Marin Bancorp and Bank of Marin,
      as Rights Agent, dated as of July 2, 2007 (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 Bank
      of Marin 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. Bank of Marin 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.

    
      
        
        

      

      
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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, its 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
      office designated for such purpose, 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 office of the Rights Agent
      designated for such purpose. 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.

    
      
        
        

      

      
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    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.

    

    
      	
              SECTION 7.

            	
              EXERCISE
                OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
                RIGHTS

            

    

    

    (a)
      The
      registered holder of any Right Certificate may exercise the Rights evidenced
      thereby (except as otherwise provided herein) in whole or in part at any time
      after the Distribution Date upon surrender of the Right Certificate, with the
      form of election to purchase on the reverse side thereof duly executed, to
      the
      Rights Agent at the principal office of the Rights Agent, together with payment
      of the Purchase Price for each 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 July 23, 2017 (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 $125.00, shall be subject to adjustment
      from time to time as provided in Sections 11 and 13 hereof and shall be payable
      at the sole election of the holder of the Right 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 transfer applicable
      tax or charge 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.

    
      
        
        

      

      
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    (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 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.

    

    
      	
              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 tax or charge 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 or charge shall have been paid (any such tax
      or
      charge 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.

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      	
              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
      taxes
      or charges) 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.

    

    
      	
              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,

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    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.

    

    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 null and 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 or any Associate or Affiliate thereof whose Rights would be null and
      void
      pursuant to the preceding sentence; no Right Certificate shall be issued at
      any
      time upon the transfer of any Rights to an Acquiring Person or any Associate
      or
      Affiliate thereof whose Rights would be null and void pursuant to the preceding
      sentence or to any nominee of such Acquiring Person, Associate or Affiliate;
      and
      any Right Certificate delivered to the Rights Agent for transfer to any such
      Acquiring Person, Associate or Affiliate 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 shareholders (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 shareholders, 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 shareholder 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-

        
          

        

      

      
        
        

      

    

    (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-

        
          

        

      

      
        
        

      

    

    (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)
      (i)
      For the purpose of any computation hereunder, the "current per share market
      price" of any security (a "Security" for the purpose of this Section 11(d)(i))
      on any date shall be deemed to be the average of the daily closing prices per
      share of such Security for the 20 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 20 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. 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-

        
          

        

      

      
        
        

      

    

    (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-

        
          

        

      

      
        
        

      

    

    (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.

    

    (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.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    (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 shareholders.

    

    (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-

        
          

        

      

      
        
        

      

    

    
      	
              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.

    

    
      	
              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-

        
          

        

      

      
        
        

      

    

    (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 shareholders' 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)
      if
      the Rights or the securities purchasable upon exercise of the Rights are subject
      to the Securities Act of 1933, as amended, prepare and file a registration
      statement under such act, 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)).

    

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

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    (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. 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-

        
          

        

      

      
        
        

      

    

    
      	
              SECTION 17.

            	
              RIGHT
                CERTIFICATE HOLDER NOT DEEMED A
                SHAREHOLDER

            

    

    

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

     

    
      	
              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 preparation, delivery, amendment, 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, damage, judgment, fine, penalty, claim, demand,
      settlement, cost or expense (including, without limitation, the reasonable
      fees
      and expenses of legal counsel), incurred without negligence, bad faith or
      willful misconduct on the part of the Rights Agent, for any action taken,
      suffered or omitted by the Rights Agent in connection with the acceptance,
      administration, exercise and performance of this Agreement, including the costs
      and expenses of defending against any claim of liability in the premises. The
      Rights Agent shall be authorized and protected and shall incur no liability
      for,
      or in respect of any action taken, suffered or omitted by it in connection
      with,
      its acceptance and administration of this Agreement and the exercise and
      performance of its duties hereunder, 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.

     

    
      	
              SECTION 19.

            	
              MERGER
                OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
                AGENT

            

    

    

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

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    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 to perform only the duties and obligations expressly
      imposed by this Agreement upon the following terms and conditions, by all of
      which the Company and the holders of Right Certificates, by their acceptance
      thereof, shall be bound:

    

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

    

    (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, suffering or omitting any action
      hereunder, such fact or matter (unless other evidence in respect thereof be
      herein specifically prescribed) may be deemed to be conclusively proved and
      established by a certificate signed by any one of the Chairman of the Board,
      the
      Chief Executive Officer, the President, any Executive Vice President, or the
      Secretary of the Company and delivered to the Rights Agent; and such certificate
      shall be full and complete authorization and protection to the Rights Agent
      and
      the Rights Agent shall incur no liability for or in respect of any action taken,
      suffered or omitted in good faith by it under the provisions of this Agreement
      in reliance upon such certificate.

    

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

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    (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
      null and 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 instructions in connection with its duties, and
      it
      shall not be liable for any action taken, suffered or omitted by it in good
      faith in accordance with the instructions of any such officer or for any delay
      in acting while waiting for those instructions.

    

    (h)
      The
      Rights Agent and any shareholder, director, officer or employee of the Rights
      Agent may buy, sell or deal in 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 or any such shareholder,
      director, officer or employee from acting in any other capacity for the Company
      or for any other Person.

    

    (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 (through its directors,
      officers, or employees) 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.

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    
      	
              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 Person (or an affiliate of a Person) organized and
      doing business under the laws of the United States or any state of the United
      States so long as such Person is authorized to do business as a banking
      institution in the State of New York, is authorized under such laws to exercise
      corporate trust or stock transfer powers, is in good standing, and is subject
      to
      supervision or examination by federal or state authority, and has at the time
      of
      its appointment as Rights Agent a combined capital and surplus of at least
      $50
      million. After appointment, the successor Rights Agent shall be vested with
      the
      same powers, rights, duties and responsibilities as if it had been originally
      named as Rights Agent without further act or deed; but the predecessor Rights
      Agent shall deliver and transfer to the successor Rights Agent any property
      at
      the time held by it hereunder, and execute 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.

     

    
      	
              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.

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    
      	
              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 15% 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.

     

    
      	
              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.

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    (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 null and 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.

    

    (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.

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    (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.

     

    
      	
              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:

    

    

    Bank
      of
      Marin Bank

    504
      Redwood Boulevard, Suite 100

    Novato,
      California  94947

    Attn:  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:

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    Bank
      of
      Marin Bancorp

    504
      Redwood Boulevard, Suite 100

    Novato,
      California  94947

    Attn:  Corporate
      Secretary

    

    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. Without limiting the foregoing, the Company may at any time prior to
      such time as any Person becomes an Acquiring Person amend this Agreement to
      raise or lower the thresholds set forth in Sections l(a) and 3(a), provided
      the
      threshold may not be lowered to less than the greater of (i) any percentage
      greater than the largest percentage of the outstanding Common Shares then known
      by the Company to be beneficially owned by any Person (other than the Company,
      any Subsidiary of the Company, any employee benefit plan of the Company or
      of
      any Subsidiary of the Company or any entity holding Common Shares for or
      pursuant to the terms of any such plan or a person excluded from the definition
      of "Acquiring Person" by the provision such definition) and (ii)
      15%.

    

    
      	
              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-

        
          

        

      

      
        
        

      

    

    
      	
              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 California and for all purposes
      shall be governed by and construed in accordance with the laws of such State
      applicable to contracts to be made and performed entirely within such
      State.

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    
      	
              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.

    

    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.

    

    
      
        
          	 	
                  BANK
                    OF MARIN BANCORP

                
	 	 	 
	 	
                  By:

                	
                   /s/  RUSSELL
                    A. COLOMBO

                
	 	 	
                  Russell
                    A. Colombo,

                  President
                    and Chief Executive Officer

                
	 	 	 
	 	 	 
	 	
                  BANK
                    OF MARIN as
                    Rights Agent

                
	 	 	 
	 	
                  By:

                	
                   /s/  NANCY
                    RINALDI BOATRIGHT

                
	 	 	
                  Nancy
                    Rinaldi Boatright,

                  Corporate
                    Secretary

                

        

      

    

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    BANK
      OF
      MARIN BANCORP

    

    

    AND

    

    

    BANK
      OF
      MARIN,

    

    RIGHTS
      AGENT

    

    

    RIGHTS
      AGREEMENT

    

    

    DATED
      AS
      OF JULY 2, 2007

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      
        
          	
                   

                	 	
                  PAGE

                
	
                  Section
                    1.

                	
                  Certain
                    Definitions

                	
                  8

                
	
                  Section
                    2.

                	
                  Appointment
                    Of Rights Agent

                	
                  12

                
	
                  Section
                    3.

                	
                  Issue
                    Of Right Certificates

                	
                  12

                
	
                  Section
                    4.

                	
                  Form
                    Of Right Certificates

                	
                  13

                
	
                  Section
                    5.

                	
                  Countersignature
                    And Registration

                	
                  14

                
	
                  Section
                    6.

                	
                  Transfer,
                    Split Up, Combination And Exchange Of Right Certificates; Mutilated,
                    Destroyed, Lost Or Stolen Right Certificates

                	
                  14

                
	
                  Section
                    7.

                	
                  Exercise
                    Of Rights; Purchase Price; Expiration Date Of Rights

                	
                  15

                
	
                  Section
                    8.

                	
                  Cancellation
                    And Destruction Of Right Certificates

                	
                  16

                
	
                  Section
                    9.

                	
                  Availability
                    Of Preferred Shares

                	
                  16

                
	
                  Section
                    10.

                	
                  Preferred
                    Shares Record Date

                	
                  17

                
	
                  Section
                    11.

                	
                  Adjustment
                    Of Purchase Price, Number Of Shares Or Number Of Rights

                	
                  17

                
	
                  Section
                    12.

                	
                  Certificate
                    Of Adjusted Purchase Price Or Number Of Shares

                	
                  24

                
	
                  Section
                    13.

                	
                  Consolidation,
                    Merger Or Sale Or Transfer Of Assets Or Earning Power

                	
                  24

                
	
                  Section
                    14.

                	
                  Fractional
                    Rights And Fractional Shares

                	
                  27

                
	
                  Section
                    15.

                	
                  Rights
                    Of Action

                	
                  28

                
	
                  Section
                    16.

                	
                  Agreement
                    Of Right Holders

                	
                  28

                
	
                  Section
                    17.

                	
                  Right
                    Certificate Holder Not Deemed A Shareholder

                	
                  29

                
	
                  Section
                    18.

                	
                  Concerning
                    The Rights Agent

                	
                  29

                
	
                  Section
                    19.

                	
                  Merger
                    Or Consolidation Or Change Of Name Of Rights Agent

                	
                  29

                
	
                  Section
                    20.

                	
                  Duties
                    Of Rights Agent

                	
                  30

                
	
                  Section
                    21.

                	
                  Change
                    Of Rights Agent

                	
                  32

                
	
                  Section
                    22.

                	
                  Issuance
                    Of New Right Certificates

                	
                  32

                
	
                  Section
                    23.

                	
                  Redemption

                	
                  33

                
	
                  Section
                    24.

                	
                  Exchange

                	
                  33

                
	
                  Section
                    25.

                	
                  Notice
                    Of Certain Events

                	
                  34

                
	
                  Section
                    26.

                	
                  Notices

                	
                  35

                
	
                  Section
                    27.

                	
                  Supplements
                    And Amendments

                	
                  36

                
	
                  Section
                    28.

                	
                  Registration
                    Of Securities

                	
                  36

                
	
                  Section
                    29.

                	
                  Determinations
                    And Actions By The Board Of Directors

                	
                  37

                
	
                  Section
                    30.

                	
                  Successors

                	
                  37

                
	
                  Section
                    31.

                	
                  Benefits
                    Of This Agreement

                	
                  37

                
	
                  Section
                    32.

                	
                  Severability

                	
                  37

                
	
                  Section
                    33.

                	
                  Governing
                    Law

                	
                  37

                
	
                  Section
                    34.

                	
                  Counterparts

                	
                  38

                
	
                  Section
                    35.

                	
                  Descriptive
                    Headings

                	
                  38

                

        

      

    

    
      

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

      

       

    

    
      EXHIBIT
        A

    

    
      

    

    
      CERTIFICATE
        OF DETERMINATION

    

    
      

    

    
      SERIES
        A
        JUNIOR PARTICIPATING PREFERRED SHARES

    

    
      OF

    

    
      BANK
        OF
        MARIN BANCORP

    

    
      

    

    
      Pursuant
        to Section 401 of the Corporations Code of the State of
        California:

    

    
      

    

    
      We,
        Russell A. Colombo, President and Chief Executive Officer, Nancy Boatright,
        Corporate Secretary, of Bank of Marin Bancorp, a corporation organized and
        existing under the laws of California (hereinafter called the "Corporation"),
        do
        hereby certify as follows:

    

    
      

    

    
      1.        On
        June 14, 2007, the Board of Directors of the Corporation adopted a resolution
        designating 1,000,000 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 Articles
        of Incorporation of the Corporation, the following resolution was duly adopted
        by the Board
        of
        Directors on June 14, 2007 creating the series of Preferred Stock designated
        as
        Series A Junior
        Participating Preferred Stock:

    

    
      

    

    
      RESOLVED
        FURTHER, That in order to implement the Rights, a series of Preferred Stock
        of
        the Corporation be and hereby is created, and that the determination of the
        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
        1,000,000 Such number of shares may be increased or decreased by resolution
        of
        the Board of Directors; PROVIDED, that no decrease shall reduce the number
        of
        shares of Series A Preferred Stock to a number less than the number of shares
        then outstanding plus the number of shares reserved for issuance upon the
        exercise of outstanding options, rights or warrants or upon the conversion
        of
        any outstanding securities issued by the Corporation convertible into Series
        A
        Preferred Stock.

    

    
      

    

    
      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, no par value (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 Directorsout 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.

    

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
      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).

    

    
      

    

    
      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 shareholders 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.

    

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    
      (B)           Except
        as otherwise provided herein, in any other Certificate ofAmendment to the
        Articles of Incorporation or Certificate of Determination 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 shareholders
        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 such parity stock on which dividends
        are
        payable or in arrears in proportion to the total amounts to which the holders
        of
        all such shares are then entitled;

    

    
      

    

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

    

    
      

    

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

    

    
      
        
        

      

      
        A-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 except in
        connection with funding of any employee benefit plan of the Corporation or
        any
        such subsidiary.

    

    
      

    

    
      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 Articles
        of
        Incorporation, or in any other Certificate of Amendment to the Articles of
        Incorporation or Certificate of Determination 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, 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 adjustmenthereinafter 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.

    

    
      
        
        

      

      
        A-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 Articles of Incorporation 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 shareholders 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 July 2, 2007 at Novato, California

    

    
      

    

    
      
        
          	 	
                   

                	
                   

                
	 	 	
                  Russell
                    A. Colombo

                
	 	 	
                  President
                    and Chief Executive Officer

                
	 	 	 
	 	 	 
	 	
                   

                	
                   

                
	 	 	
                  Nancy
                    Rinaldi Boatright

                
	 	 	
                  Corporate
                    Secretary

                

        

      

    

    
      

        
          
            
            

          

          
            A-5

            
              

            

          

          
            
            

          

        

      

    

    
       

      EXHIBIT
        B

       

      FORM
        OF
        RIGHT CERTIFICATE

    

    
      

    

    
      Certificate
        No. R-_______Rights

    

    
      

    

    
      NOT
        EXERCISABLE AFTER JULY 23, 2017 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

    

    
      

    

    
      BANK
        OF
        MARIN

    

    
      

    

    
      BANCORP

    

    
      

    

    
      This
        certifies
        that                                                                          ,
        or registered assigns, is theregistered 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 July 2, 2007
        (the
        "Rights Agreement"), between Bank of Marin Bancorp, a California corporation
        (the "Company"), and Bank of Marin, a California corporation, as Rights Agent
        (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 July 23, 2017 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 $125.00 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
        July 23, 2007, 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.

    

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    
      

    

    
      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.

    

    
      

    

    
      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, no par value.

    

    
      

    

    
      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 shareholder of the Company
        or
        any right to vote for the election of directors or upon any matter submitted
        to
        shareholders at any meeting thereof, or to give or withhold consent to any
        corporate action, or to receive notice of meetings or other actions affecting
        shareholders (except as provided in the Rights Agreement), or to receive
        dividends 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:

                	 	
                  BANK
                    OF MARIN BANCORP

                
	 	 	 	 
	 	 	
                  By

                	 

        

      

    

    

    Countersigned:

    

    
      
        
          	 	 
	
                  By

                	 	 
	 	
                  Authorized
                    Signature

                	 

        

      

    

     

    
      
        
        

      

      
        B-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

                

        

      

    

     

    
      
        
        

      

      
        B-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 exercise the
        Right
        Certificate.)

    

    
      

    

    
      To
        Bank
        of Marin 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 of transferee)

                
	 
	 

        

      

    

    
      

    

    
      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 of transferee)

                
	 
	 

        

      

    

    

    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

                

        

      

    

    
      
        
        

      

      
        B-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.

    

    
      
        
        

      

      
        B-5

        
          

        

      

      
        
        

      

    

    
      EXHIBIT
        C

    

    

    SUMMARY
      OF RIGHTS TO PURCHASE PREFERRED SHARES

    
      

    

    
      

    

    
      On
        June
        14, 2007 the Board of Directors of Bank of Marin Bancorp (the "Company")
        declared a dividend of one preferred share purchase right (a "Right") for
        each
        outstanding share of common stock, no par value (the "Common Shares"), of
        the
        Company. The dividend was declared subject to certain conditions that have
        since
        been satisfied. The dividend is payable on July 23, 2007 (the "Record Date")
        to
        the shareholders 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 $125.00 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 July 2, 2007 (the
        "Rights
        Agreement") between the Company and Bank of Marin, as Rights Agent (the "Rights
        Agent").

    

    
      

    

    
      Initially,
        the Rights will be evidenced by the 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) a public announcement that a person
        or
        group of affiliated or associated persons have acquired beneficial ownership
        of
        15% or more of the outstanding Common Shares (an "Acquiring Person"); provided,
        however, a person or group holding 15% or more of the outstanding shares
        as of
        July 23, 2007 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 exceeding an additional 15% of the outstanding Common
        Shares; or (ii) 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 15% or more of such outstanding
        Common Shares (unless the Company's Board of Directors has approved the offer)
        (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).

    

    
      

    

    
      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, The Rights
        are
        not exercisable until the Distribution Date. The Rights will expire on July
        23,
        2017 (the "Final Expiration Date"), unless the Rights are earlier redeemed
        or
        exchanged by the Company, in each case as described
        below.

    

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    
      The
        Purchase Price payable, and the number of Preferred Shares or othersecurities
        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 15% 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 15% 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, including an amendment to lower
        certain thresholds described above to not less than the greater of (i) any
        percentage greater than the largest percentage of the outstanding Common
        Shares
        then known to the Company to be beneficially owned by any person or group
        of
        affiliated or associated persons (unless such person or group is excluded
        from
        the effect of such reduction) and (ii) 15%, 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 shareholder of the Company, including, without
        limitation, the right to vote or to receive dividends.

    

    
      

    

    
      A
        copy of
        the Rights Agreement has been filed with the Securities and Exchange Commission
        as an Exhibit to a Registration Statement on Form 8-A. 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-3CSMG
      TECHNOLOGIES, INC.

    2003
      STOCK OPTION PLAN

     

    1.
      Purposes of the Plan. The purposes of this 2003 Stock Option Plan are to attract
      and retain the best available personnel for positions of substantial
      responsibility, to provide additional incentive to Employees and Consultants
      of
      the Company and its Subsidiaries and to promote the success of the Company’s
      business. Options granted under this Plan may be incentive stock options (as
      defined under Section 422 of the Code) or nonqualified stock options, as
      determined by the Option Committee at the time of grant of an option and subject
      to the applicable provisions of Section 422 of the Code, as amended, and the
      regulations promulgated thereunder.

     

    2.
      Definitions. As used herein, the following definitions shall apply:

     

    2.1
      “Option Committee” means the Board or any of its committees, as applicable, that
      is administering the Plan pursuant to Section 4 of the Plan.

     

    2.2
      “Board” means the Board of Directors of the Company.

     

    2.3
      “Code” means the Internal Revenue Code of 1986, as amended.

     

    2.4
      “Company” means CSMG Technologies, Inc., a Texas corporation.

     

    2.5
      “Consultant” means any consultant or advisor to the Company or any Parent or
      Subsidiary and any director of the Company whether compensated for such services
      or not, but not including any Employee.

     

    2.6
      “Continuous Status as an Employee” means the absence of any interruption or
      termination of the employment relationship by the Company or any Subsidiary.
      Continuous Status as an Employee shall not be considered interrupted in the
      case
      of: (i) any leave of absence approved by the Board, including sick leave,
      military leave, or any other personal leave; provided, however, that for
      purposes of Incentive Stock Options, such leave is for a period of not more
      than
      90 days, unless reemployment upon the expiration of such leave is guaranteed
      by
      contract or statute, or unless provided otherwise pursuant to Company policy
      adopted from time to time; or (ii) in the case of transfers between locations
      of
      the Company or between the Company, its Subsidiaries or its
      successors.

     

    2.7
      “Employee” means any person, including officers and directors, employed by the
      Company or any Parent or Subsidiary of the Company. The payment of a director’s
      fee by the Company shall not be sufficient to constitute “employment” by the
      Company.

     

    2.8
      “Exchange Act” means the Securities Exchange Act of 1934, as
      amended.

     

    2.9
“Fair
      Market Value” means, as of any date, the value of Stock determined as
      follows:

     

    2.9.1
      If
      the Stock is listed on any established stock exchange or a national market
      system including without limitation the National Market System of the National
      Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System,
      its Fair Market Value shall be the closing sales price for such stock (or the
      closing bid, if no sales were reported, as quoted on such system or exchange
      or
      the exchange with the greatest volume of trading in Stock for the last market
      trading day prior to the time of determination) as reported in the Wall Street
      Journal or such other source as the Option Committee deems
      reliable;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.9.2
      If
      the Stock is quoted on the NASDAQ System (but not on the National Market System
      thereof) or regularly quoted by a recognized securities dealer but selling
      prices are not reported, its Fair Market Value shall be the mean between the
      high and low asked prices for the Stock; or

     

    2.9.3
      In
      the absence of an established market for the Stock, the Fair Market Value
      thereof shall be determined in good faith by the Option Committee.

     

    2.10
      “Incentive Stock Option” means an Option intended to qualify as an incentive
      stock option within the meaning of Section 422 of the Code.

     

    2.11
      “Nonqualified Stock Option” means an Option not intended to qualify as an
      Incentive Stock Option.

     

    2.12
      “Option” means a stock option granted pursuant to the Plan.

     

    2.13
      “Optioned Stock” means the Stock subject to an Option.

     

    2.14
      “Optionee” means an Employee or Consultant who receives an Option.

     

    2.15
      “Parent” means a “parent corporation,” whether now or hereafter existing, as
      defined in Section 424(e) of the Code.

     

    2.16
      “Plan” means this 2003 Stock Option Plan.

     

    2.17
      “Share” means a share of the Stock, as adjusted in accordance with Section 13 of
      the Plan.

     

    2.18
      “Stock” means the Common Stock, par value $.001 per share, of the
      Company.

     

    2.19
      “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
      existing, as defined in Section 424(f) of the Code.

     

    3.
      Stock
      Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the
      maximum number of shares of Stock which may be optioned and sold under the
      Plan
      is 3,300,000 shares. The shares may be authorized, but unissued, or reacquired
      Stock. If an Option should expire or become unexercisable for any reason without
      having been exercised in full, the unpurchased Shares which were subject thereto
      shall, unless the Plan shall have been terminated, become available for future
      grant under the Plan.

     

    4.
      Administration of the Plan.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4.1
      Administration By Board or Committee. The Plan shall be administered by (a)
      the
      Board or (b) a committee designated by the Board to administer the Plan, which
      committee shall be constituted in such a manner as to permit the Plan to comply
      with Rule 16b-3 promulgated under the Exchange Act or any successor thereto
      (“Rule 16b-3”) with respect to a plan intended to qualify thereunder as a
      discretionary plan. Once appointed, such committee shall continue to serve
      in
      its designated capacity until otherwise directed by the Board. From time to
      time
      the Board may increase the size of the committee and appoint additional members
      thereof, remove members (with or without cause) and appoint new members in
      substitution therefor, fill vacancies, however caused, and remove all members
      of
      the committee and thereafter directly administer the Plan, all to the extent
      permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder
      as
      a discretionary plan.

     

    4.2
      Limitation on Administration by Board. Notwithstanding the foregoing, the Plan
      shall not be administered by the Board if (a) the Company and its officers
      and
      directors are then subject to the requirements of Section 16 of the Exchange
      Act
      and (b) the Board’s administration of the Plan would prevent the Plan from
      complying with Rule 16b-3.

     

    4.3
      Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan may be
      administered by different bodies with respect to directors, non-director
      officers and Employees who are neither directors nor officers.

     

    4.4
      Powers of the Option Committee. Subject to the provisions of the Plan and in,
      the case of a committee, the specific duties delegated by the Board to such
      committee, the Option Committee shall have the authority, in its
      discretion:

     

    4.4.1
      to
      determine whether and to what extent Options shall be granted
      hereunder;

     

    4.4.2
      to
      select the officers, Consultants and Employees to whom Options may from time
      to
      time be granted hereunder;

     

    4.4.3
      to
      determine the number of shares of Stock to be covered by each such award granted
      hereunder;

     

    4.4.4
      to
      determine the Fair Market Value of the Stock, in accordance with Section 2.9
      of
      the Plan;

     

    4.4.5
      to
      approve forms of agreement for use under the Plan;

     

    4.4.6
      to
      determine the terms and conditions, not inconsistent with the terms of the
      Plan,
      of any award granted hereunder (including, but not limited to, the per share
      exercise price for the Shares to be issued pursuant to the exercise of an Option
      and any restriction or limitation, or any vesting, acceleration or waiver of
      forfeiture restrictions regarding any Option or other award and/or the shares
      of
      Stock relating thereto, based in each case on such factors as the Option
      Committee shall determine, in its sole discretion);

     

    4.4.7
      to
      determine whether and under what circumstances an Option may be bought-out
      for
      cash under subsection 10.4;

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.4.8
      to
      determine whether, to what extent and under what circumstances Stock and other
      amounts payable with respect to an award under this Plan shall be deferred
      either automatically or at the election of the participant (including providing
      for and determining the amount, if any, of any deemed earnings on any deferred
      amount during any deferral period); and

     

    4.4.9
      to
      reduce the exercise price of any Option to the then current Fair Market Value
      if
      the Fair Market Value of the Stock covered by such Option shall have declined
      since the date the Option was granted.

     

    4.5
      Effect of Option Committee’s Decision. All decisions, determinations and
      interpretations of the Option Committee shall be final and binding on all
      Optionees and any other holders of any Options. Neither the Board, the
      Committee, nor any member thereof shall be liable for any act, omission,
      interpretation, construction or determination made in connection with the Plan
      in good faith, and the members of the Board and of the Committee shall be
      entitled to indemnification and reimbursement by the Company in respect of
      any
      claim, loss, damage or expense (including counsel fees) arising therefrom to
      the
      full extent permitted by law.

     

    5.
      Eligibility.

     

    5.1
      Nonqualified Stock Options may be granted to Employees and Consultants.
      Incentive Stock Options may be granted only to Employees. An Employee or
      Consultant who has been granted an Option may, if he is otherwise eligible,
      be
      granted an additional Option or Options.

     

    5.2
      Each
      Option shall be designated in the written option agreement as either an
      Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding
      such designations to the extent that the aggregate Fair Market Value of the
      Shares with respect to which Options designated as Incentive Stock Options
      are
      exercisable for the first time by any Optionee during any calendar year (under
      all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
      excess Options shall be treated as Nonqualified Stock Options. For this purpose,
      Incentive Stock Options shall be taken into account in the order in which they
      were granted, and the Fair Market Value of the Shares shall be determined as
      of
      the time the Option with respect to such Shares is granted.

     

    5.3
      The
      Plan shall not confer upon any Optionee any right with respect to continuation
      of employment or consulting relationship with the Company, nor shall it
      interfere in any way with his right or the Company’s right to terminate his
      employment or consulting relationship at any time, with or without cause, unless
      otherwise agreed in writing by the Company and such Optionee.

     

    6.
      Term
      of Plan. The Plan shall become effective upon its adoption by the Board of
      Directors subject only to approval by the holders of a majority of the
      outstanding Shares within 12 months after such date. Should the Plan not be
      approved by a vote of shareholders as specified above, the Plan shall terminate
      12 months after the effective date, all options issued prior to that termination
      date shall continue in effect but without the benefits that would accrue under
      the Code or the Act from such shareholder approval. Otherwise, it shall continue
      in effect until ten years from the effective date, unless extended by the Board
      or sooner terminated under Section 15 of the Plan. No grants of Options will
      be
      made pursuant to the Plan after termination of the Plan.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    7.
      Term
      of Option. The term of each Option shall be the term stated in the Option
      Agreement; provided, however, that in the case of an Incentive Stock Option,
      the
      terms shall be no more than 10 years from the date of grant thereof or such
      shorter term as may be provided in the Option Agreement. However, in the case
      of
      an Option granted to an Optionee who, at the time the Option is granted, owns
      Stock representing more than 10% of the voting power of all classes of stock
      of
      the Company or any Parent or Subsidiary, the term of the Option shall be five
      years from the date of grant thereof or such shorter term as may be provided
      in
      the Option Agreement.

     

    8.
      Option
      Exercise Price and Consideration.

     

    8.1
      The
      per share exercise price for the Shares to be issued pursuant to exercise of
      an
      Option shall be such price as is determined by the Option Committee; provided,
      however, that as to an Incentive Option:

     

    8.1.1
      granted to an Employee who, at the time of the grant of such Incentive Stock
      Option, owns stock representing more than 10% of the voting power of all classes
      of stock of the Company or any Parent or Subsidiary, the per Share exercise
      price shall be no less than 110% of the Fair Market Value per Share on the
      date
      of grant.

     

    8.1.2
      granted to any Employee, the per Share exercise price shall be no less than
      100%
      of the Fair Market Value per Share on the date of grant.

     

    8.2
      The
      consideration to be paid for the Shares to be issued upon exercise of an Option
      may be paid by certified or cashier’s check. In the discretion of the Option
      Committee as set forth in the Option Agreement or, except for Incentive Options,
      determined at the time of exercise, payment may also be made by any or all
      of
      the following:

     

    8.2.1
      check,

     

    8.2.2
      promissory note,

     

    8.2.3
      other shares of the Company’s capital stock which (a) in the case of shares of
      the Company’s capital stock acquired upon exercise of an Option either have been
      owned by the Optionee for more than six months on the date of surrender or
      were
      not acquired, directly or indirectly, from the Company, and (b) have a Fair
      Market Value on the date of surrender equal to the aggregate exercise price
      of
      the Shares to which said Option shall be exercised,

     

    8.2.4
      authorization for the Company to retain from the total number of Shares as
      to
      which the Option is exercised that number of Shares having a Fair Market Value
      on the date of exercise equal to the exercise price for the total number of
      Shares as to which the Option is exercised,

     

    8.2.5
      delivery of a properly executed exercise notice together with irrevocable
      instructions to a broker to promptly deliver to the Company the amount of sale
      or loan proceeds required to pay the exercise price, or

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    8.2.6
      such other consideration and method of payment for the issuance of Shares to
      the
      extent permitted under applicable laws.

     

    9.
      Limitation on Exercise. The following limitations on exercise of Options shall
      apply to all Incentive Options and, except to the extent waived by the Option
      Committee and stated in the Option Agreement, to all other Options.

     

    9.1
      Termination of Employment. In the event of termination of an Optionee’s
      relationship as a Consultant (unless such termination is for purposes of
      becoming an Employee of the Company) or on termination of an Optionee’s
      Continuous Status as an Employee with the Company (as the case may be), such
      Optionee may, but only within 90 days (or, as to Options other than Incentive
      Options, such longer period of time as is determined by the Option Committee)
      after the date of such termination, but in no event later than the expiration
      date of the term of such Option as set forth in the Option Agreement, exercise
      his Option to the extent that Optionee was entitled to exercise it at the date
      of such termination. To the extent that Optionee was not entitled to exercise
      the Option at the date of such termination, or if Optionee does not exercise
      such Option to the extent so entitled within the time specified herein, the
      Option shall terminate.

     

    9.2
      Disability of Optionee. Notwithstanding the provisions of Section 9.1 above,
      in
      the event of termination of an Optionee’s relationship as a Consultant or
      Continuous Status as an Employee as a result of his total and permanent
      disability (as defined in Section 22(e)(3) of the Code), Optionee may, but
      only
      within 12 months from the date of such termination and in no event later than
      the expiration date of the term of such Option as set forth in the Option
      Agreement, exercise the Option to the extent otherwise entitled to exercise
      it
      at the date of such termination. To the extent that Optionee was not entitled
      to
      exercise the Option at the date of termination, or if Optionee does not exercise
      such Option to the extent so entitled within the time specified herein, the
      Option shall terminate.

     

    9.3
      Death
      of Optionee. In the event of the death of an Optionee, the Option may be
      exercised, at any time within 12 months following the date of death (but in
      no
      event later than the expiration date of the term of such Option as set forth
      in
      the Option Agreement), by the Optionee’s estate or by a person who acquired the
      right to exercise the Option by bequest or inheritance, but only to the extent
      the Optionee was entitled to exercise the Option at the date of death. To the
      extent that the Optionee was not entitled to exercise the Option at the date
      of
      termination, or if the Optionee’s estate (or such other person who acquired the
      right to exercise the Option) does not exercise such Option to the extent so
      entitled within the time specified herein, the Option shall
      terminate.

     

    10.
      Exercise of Option.

     

    10.1
      Procedure for Exercise; Rights as a Stockholder. An Option shall be deemed
      to be
      exercised, and the Optionee deemed to be a stockholder of the Shares being
      purchased upon exercise, when written notice of such exercise has been given
      to
      the Company in accordance with the terms of the Option by the person entitled
      to
      exercise the Option and full payment for the Shares with respect to which the
      Option is exercised has been received by the Company. Full payment may, as
      authorized by the Board, consist of any consideration and method of payment
      allowable under Section 8.2 of the Plan. An Option may not be exercised for
      a
      fraction of a Share.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    10.2
      Effect on Number of Shares. Exercise of an Option in any manner shall result
      in
      a decrease in the number of shares which thereafter may be available, both
      for
      purposes of the Plan and for sale under the Option, by the number of Shares
      as
      to which the Option is exercised.

     

    10.3
      Rule
      16b-3. Options granted to persons subject to Section 16(b) of the Exchange
      Act
      must comply with the Rule 16b-3 and shall contain such additional conditions
      or
      restrictions as may be required thereunder to qualify for the maximum exemption
      from Section 16 of the Exchange Act with respect to Plan
      transactions.

     

    10.4
      Buyout Provisions. The Option Committee may at any time offer to buy out for
      a
      payment in cash or Shares, an Option previously granted, based on such terms
      and
      conditions as the Option Committee shall establish and communicate to the
      Optionee at the time that such offer is made.

     

    11.
      Non-Transferability of Options. The Options may not be sold, pledged, assigned,
      hypothecated, transferred, or disposed of in any manner other than by will
      or by
      the laws of descent or distribution and may be exercised, during the lifetime
      of
      the Optionee, only by the Optionee.

     

    12.
      Stock
      Withholding to Satisfy Withholding Tax Obligations.

     

    12.1
      At
      the discretion of the Option Committee, Optionees may satisfy withholding tax
      obligations as provided in this paragraph. When an Optionee incurs tax liability
      in connection with an Option, which tax liability is subject to tax withholding
      under applicable tax laws, and the Optionee is obligated to pay the Company
      an
      amount required to be withheld under applicable tax laws, the Optionee may
      satisfy the withholding tax obligation by electing to have the Company withhold
      from the Shares to be issued upon exercise of the Option, that number of Shares
      having a Fair Market Value equal to the amount required to be withheld. The
      Fair
      Market Value of the Shares to be withheld shall be determined on the date that
      the amount of tax to be withheld is to be determined (the “Tax
      Date”).

     

    12.2
      All
      elections by an Optionee to have Shares withheld for this purpose shall be
      made
      in writing in a form acceptable to the Option Committee and shall be subject
      to
      the following restrictions:

     

    12.2.1
      the election must be made on or prior to the applicable Tax Date;

     

    12.2.2
      once made, the election shall be irrevocable as to the particular Shares of
      the
      Option as to which the election is made;

     

    12.2.3
      all elections shall be subject to the consent or disapproval of the Option
      Committee; and

     

    12.2.4
      if
      the Optionee is subject to Rule 16b-3, the election must comply with the
      applicable provisions of Rule 16b-3 and shall be subject to such additional
      conditions or restrictions as may be required thereunder to qualify for the
      maximum exemption from Section 16 of the Exchange Act with respect to Plan
      transactions.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    12.3
      In
      the event the election to have Shares withheld is made by an Optionee, the
      Tax
      Date is deferred under Section 83 of the Code and no election is filed under
      Section 83(b) of the Code, the Optionee shall receive the full number of Shares
      with respect to which the Option is exercised but such Optionee shall be
      unconditionally obligated to tender back to the Company the proper number of
      Shares on the Tax Date.

     

    13.
      Changes in the Company’s Capital Structure. The existence of outstanding Options
      shall not affect in any way the right or power of the Company or its
      stockholders to make or authorize any or all adjustments, recapitalizations,
      reorganizations or other changes in the Company’s capital structure or its
      business, or any merger or consolidation of the Company, or any issue of bond,
      debentures, preferred or prior preference stock ahead of or affecting the Stock
      or the rights thereof, or the dissolution or liquidation of the Company, or
      any
      sale or transfer of all or any part of its assets or business, or any other
      corporate act or proceeding, whether of a similar character or otherwise;
      subject to the following:

     

    13.1
      If
      the Company shall effect a subdivision or consolidation of shares or other
      capital readjustment, the payment of a stock dividend, or other increase or
      reduction of the number of shares of the Stock outstanding, without receiving
      compensation therefor in money, services or property, then (a) the number,
      class, and per share price of shares of Stock subject to outstanding Options
      hereunder shall be appropriately adjusted in such a manner as to entitle an
      Optionee to receive upon exercise of an Option, for the same aggregate cash
      consideration, the same total number and class of shares as he would have
      received had he exercised his Option; (b) the number and class of shares of
      Stock then reserved for issuance under the Plan shall be adjusted by
      substituting for the total number and class of shares of Stock then reserved
      that number and class of shares of stock that would have been received by the
      owner of an equal number of outstanding shares of each class of Stock as the
      result of the event requiring the adjustment.

     

    13.2
      Unless otherwise expressly provided in an Option Agreement, upon a Corporate
      Change (as defined below), notwithstanding any other term of this Plan, any
      and
      all outstanding Options not fully vested and exercisable shall vest in full
      and
      be immediately exercisable, and any other restrictions on such Options
      including, without limitation, requirements concerning the achievement of
      specific goals shall terminate. The foregoing shall apply to Incentive Options,
      unless stated to the contrary in the Option Agreement, even though the effect
      may be to convert part of the Option to a Nonqualified Option.

     

    13.3
      As
      used in this Plan, a “Corporate Change” shall be deemed to have occurred upon,
      and shall mean (a) the acquisition by any individual, entity or group (within
      the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”),
      of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
      the
      Exchange Act) of 80% or more of either (i) the then outstanding shares of Stock
      of the Company (the “Outstanding Company Common Stock”) or (ii) the combined
      voting power of the then outstanding voting securities of the Company entitled
      to vote generally in the election of directors (the “Outstanding Company Voting
      Securities”); provided, however, that the following transactions shall not
      constitute a Corporate Change: (u) any acquisition by virtue of the conversion
      of preferred stock of the Company outstanding on the effective date hereof;
      (v)
      customary transactions with and between underwriters and selling group members
      with respect to a bona fide public offering of securities, (w) any acquisition
      directly from the Company (excluding an acquisition by virtue of the exercise
      of
      a conversion privilege), (x) any acquisition by the Company, (y) any acquisition
      by any employee benefit plan(s) (or related trust(s)) sponsored or maintained
      by
      the Company or any corporation controlled by the Company or (z) any acquisition
      by any entity pursuant to a reorganization, merger or consolidation, if,
      immediately following such reorganization, merger or consolidation the
      conditions described in clauses (i), (ii) and (iii) of clause (b) of this
      paragraph are satisfied; or (b) the approval by the stockholders of the Company
      of a reorganization, merger or consolidation, in each case, unless immediately
      following such reorganization, merger or consolidation (i) more than 60% of,
      respectively, the then outstanding shares of common stock (or other

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    equivalent
      securities) of the entity resulting from such reorganization, merger or
      consolidation and the combined voting power of the then outstanding voting
      securities of such entity entitled to vote generally in the election of
      directors (or other similar governing body) is then beneficially owned, directly
      or indirectly, by all or substantially all of the individuals and entities
      who
      were the beneficial owners, respectively, of the Company Common Stock and
      Outstanding Company Voting Securities immediately prior to such reorganization,
      merger or consolidation in substantially the same proportions as their
      ownership, immediately prior to such reorganization, merger or consolidation
      of
      the Outstanding Company Common Stock and Outstanding Company Voting Securities,
      as the case may be, (ii) no Person (excluding the Company, any employee benefit
      plan(s) (or related trust(s)) of the Company and/or its subsidiaries or such
      entity resulting from such reorganization, merger or consolidation and any
      Person beneficially owning, immediately prior to such reorganization, merger
      or
      consolidation, directly or indirectly, 80% or more of the Outstanding Company
      Common Stock or Outstanding Company Voting Securities, as the case may be)
      beneficially owns, directly or indirectly, 80% or more of, respectively, the
      then outstanding shares of common stock (or other equivalent securities) of the
      entity resulting from such reorganization, merger or consolidation or the
      combined voting power of the then outstanding voting securities of such entity
      entitled to vote generally in the election of directors (or other similar
      governing body) and (iii) at least a majority of the members of the board of
      directors (or other similar governing body) of the entity resulting from such
      reorganization, merger or consolidation were members of the Incumbent Board
      (as
      defined below) at the time of the execution of the initial agreement providing
      for such reorganization, merger on consolidation. The “Incumbent Board” shall
      mean individuals who as of the effective date hereof constitute the Company’s
      Board of Directors; provided, however, that any individual becoming a director
      subsequent to such date whose election, or nomination for election by the
      Company’s stockholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board, but excluding, for this
      purpose, any such individual whose initial assumption of office occurs as a
      result of either (i) an actual or threatened election contest (as such terms
      are
      used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act),
      or an
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Company’s Board of Directors or (ii) a plan or agreement
      to replace a majority of the members of the Board of Directors then comprising
      the Incumbent Board.

     

    13.4
      The
      Company intends that this Section shall comply with the requirements of Rule
      16b-3 and any future rules promulgated in substitution therefor under the
      Exchange Act during the term of the Plan. Should any provision of this Section
      not be necessary to comply with the requirements of Rule 16b-3 or should any
      additional provisions be necessary for this Section to comply with the
      requirements of Rule 16b-3, the Board of Directors may amend the Plan to add
      to
      or modify the provisions of the Plan accordingly.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    13.5
      Except as hereinbefore expressly provided, the issue by the Company of shares
      of
      stock of any class, or securities convertible into shares of stock of any class,
      for cash or property, or for labor or services either upon direct sale or upon
      the exercise of rights or warrants to subscribe therefor, or upon conversion
      of
      shares or obligations of the Company convertible into such shares or other
      securities, shall not affect, and no adjustment by reason thereof shall be
      made
      with respect to, the number, class, or price of shares of Stock then subject
      to
      outstanding Options.

     

    14.
      Time
      of Granting Options. The date of grant of an Option shall, for all purposes,
      be
      the date on which the Option Committee makes the determination granting such
      Option, or such other date as is determined by the Option Committee. Notice
      of
      the determination shall be given to each Employee or Consultant to whom an
      Option is so granted within a reasonable time after the date of such
      grant.

     

    15.
      Amendment and Termination of the Plan.

     

    15.1
      Amendment and Termination. The Board may at any time amend, alter, suspend
      or
      discontinue the Plan, but no amendment, alteration, suspension or
      discontinuation shall be made which would impair the rights of any Optionee
      under any grant theretofore made, without his or her consent. In addition,
      to
      the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
      Act or with Section 422 of the Code (or any other applicable law or regulation,
      including the applicable requirements of the NASD or an established stock
      exchange), the Company shall obtain stockholder approval of any Plan amendment
      in such a manner and to such a degree as required.

     

    15.2
      Effect of Amendment or Termination. Any such amendment or termination of the
      Plan shall not affect Options already granted and such Options shall remain
      in
      full force and effect as if this Plan had not been amended or terminated, unless
      mutually agreed otherwise between the Optionee and the Board, which agreement
      must be in writing and signed by the Optionee and the Company.

     

    16.
      Conditions Upon Issuance of Shares.

     

    16.1
      Shares shall not be issued pursuant to the exercise of an Option unless the
      exercise of such Option and the issuance and delivery of such Shares pursuant
      thereto shall comply with all relevant provisions of law, including without
      limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
      and regulations promulgated thereunder, and the requirements of any stock
      exchange upon which the Shares may then be listed, and shall be further subject
      to the approval of counsel for the Company with respect to such
      compliance.

     

    16.2
      As a
      condition to the exercise of an Option, the Company may require the person
      exercising such Option to represent and warrant at the time of any such exercise
      that the Shares are being purchased only for investment and without any present
      intention to sell or distribute such Shares if, in the opinion of counsel for
      the Company, such a representation is required by any of the aforementioned
      relevant provisions of law.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    17.
      Reservation of Shares. The Company, during the term of this Plan, will at all
      times reserve and keep available such number of Shares as shall be sufficient
      to
      satisfy the requirements of the Plan.

     

    18.
      Information to Optionees. The Company shall provide to each Optionee, during
      the
      period for which such Optionee has one or more Options outstanding, copies
      of
      all annual reports and other information which are generally provided to all
      stockholders of the Company. The Company shall not be required to provide such
      information to persons whose duties in connection with the Company assure their
      access to equivalent information.

     

    19.
      Governing Law; Construction. All rights and obligations under the Plan shall
      be
      governed by, and the Plan shall be construed in accordance with, the laws of
      the
      State of Texas without regard to the principals of conflicts of laws. Titles
      and
      headings to Sections herein are for purposes of reference only, and shall in
      no
      way limit, define or otherwise affect the meaning or interpretation of any
      provisions of the Plan.

     

    ADOPTED
      by the Directors on May 8, 2003.

     

    APPROVED
      by the Shareholders on December 16, 2003.

     

    AMENDED
      on January 3, 2007.

     

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    CSMG
      TECHNOLOGIES, INC.

    STOCK
      OPTION AGREEMENT

     

    THIS
      STOCK OPTION AGREEMENT (the “Agreement”) is made this ____ day of [___________],
      [200__] (the “Date of Grant”), between CSMG TECHNOLOGIES, INC., a Texas
      corporation (the “Company”), and [________________________________________], a
      resident of ______________ (the “Optionee”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      under the terms and conditions of the Company’s 2003 Stock Option Plan (the
“Plan”), a copy of which is attached hereto, Optionee has been granted,
      effective the Date of Grant, an option to purchase shares of the Company’s
      Common Stock, $0.001 par value (“Common Stock”);

     

    WHEREAS,
      the Company considers that its interests will be served by granting Optionee
      an
      option to purchase shares of Common Stock as an inducement for Optionee’s
      continued and effective performance of services to the Company;

     

    NOW,
      THEREFORE, in consideration of the covenants and agreements herein contained,
      the parties hereto hereby agree as follows:

     

    1.
      Subject to the terms and conditions set forth in this Agreement and in the
      Plan,
      which is hereby incorporated herein by reference, the Company hereby grants
      to
      Optionee the option (the “Option”) to purchase up to, but not exceeding in the
      aggregate, [______________] shares of Common Stock at a price of $[______]
      per
      share (the “Option Price”), subject to adjustment as provided in Section 13 of
      the Plan.

     

    2.
      The
      type of Option and term are as indicated below:

     

    
      	 	 _____	 	
              This
                Option is intended to be an “incentive stock option” within the meaning of
                Section 422A of the Internal Revenue Code of 1986, as amended, is
                issued
                to Optionee as an Employee and shall extend for a maximum term of
                10 years
                from the Date of Grant.

            

    

     

    
      	 	 _____	 	
              This
                Option is not intended to be an “incentive stock option” within the
                meaning of Section 422A of the Internal Revenue Code of 1986, as
                amended,
                is issued to Optionee as an:

            

    

     

    
      	 	_____ 	 	
              Employee

            

    

     

    
      	 	_____ 	 	
              Consultant
                providing services as _________

            

    

     

    3.
      The
      Option may be exercised in whole or in part as follows:

     

    3.1
      The
      Option may be exercised on [_______________ Date] with respect to [________]
      of
      the aggregate number of shares subject to the Option;

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    3.2
      After
      the expiration of each annual anniversary of the date set forth in paragraph
      3.1, the Option may be exercised with respect to an additional [_________]
      of
      the aggregate number of shares subject to the Option, so that after the
      expiration of the [______] anniversary of the date set forth in paragraph 3.1,
      the Option shall be exercisable in full;

     

    3.3
      To
      the extent not exercised, installments shall be cumulative and may be exercised
      in whole or in part until the Option expires.

     

    4.
      Exercise of the Option by Optionee shall be made pursuant to the terms of
      Section 10 of the Plan.

     

    5.
      Upon
      severance of the affiliation of Optionee with the Company, including due to
      death, the Option shall terminate in accordance with Section 9 of the
      Plan.

     

    6.
      As
      indicated below, this option is or is not subject to additional terms set forth
      on Exhibit A hereto, which terms shall supersede any contrary provision of
      the
      Agreement but shall not supersede any mandatory provision of the
      Plan:

     

    
      	 	______	 	
              Exhibit
                A attached.

            

    

     

    
      	 	______	 	
              No
                Exhibit A.

            

    

     

    7.
      The
      Option shall not be transferable by Optionee otherwise than by will or under
      the
      laws of descent and distribution or pursuant to a qualified domestic relations
      order, and shall be exercisable during Optionee’s lifetime only by
      Optionee.

     

    8.
      The
      Option shall not be exercisable until compliance with all applicable
      laws.

     

    9.
      This
      Agreement may not be modified or terminated except by an agreement in writing
      signed by the party against whom enforcement of any such modification or
      termination is sought.

     

    10.
      The
      grant of the Option imposes no obligation on the Company to be affiliated with
      or continue to be affiliated with Optionee; and the right of the Company to
      terminate the affiliation of Optionee shall not be diminished or affected by
      reason of the fact that the Option has been granted to Optionee.

     

    11.
      Optionee shall not have any rights as a stockholder with respect to any shares
      covered by the Option until the date of issuance of a stock certificate or
      certificates to Optionee for such shares following Optionee’s exercise of the
      Option, in whole or in part, pursuant to its terms and conditions and payment
      for the shares.

     

    12.
      In
      the event of any difference of opinion between Optionee and the Company
      concerning the meaning or effect of the Plan, such difference shall be resolved
      by the Board of Directors of the Company.

     

    13.
      The
      validity, construction and performance of this Agreement shall be governed
      by
      and construed in accordance with the laws of the State of Texas. The invalidity
      of any provision of this Agreement shall not affect the validity of any other
      provision.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    14.
      All
      offers, notices, demands, requests, acceptances or other communications
      hereunder shall be in writing to the following addresses or such other address
      as either party may hereafter designate in writing to the other:

     

    If
      to the
      Company:

     

    CSMG
      Technologies

    501
      North
      Shoreline Drive, Suite 701 North

    Corpus
      Christi, TX 78471

     

    If
      to the
      Optionee:

     

         
________________________

         
      ________________________

         
________________________

     

    15.
      This
      Agreement shall, except as herein stated to the contrary, inure to the benefit
      of and be binding upon the legal representatives, successors and assigns of
      the
      parties hereto.

     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
      the
      day and year first above written.

     

     

    
      	CSMG TECHNOLOGIES, INC.	OPTIONEE:
	 	 
	 	 
	By: _________________________	Signature:
              _________________________________
	
              Donald
                S. Robbins

            	 
	
              President

            	 

    

       

     

     

    
      
         

      

      
        14

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