Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) by
and between SkyPostal, Inc., a Delaware corporation with principal offices
at 7805 NW 15th Street, Miami, Florida 33126, and Clement S. Harary whose address is 7 Mayacoo Lakes Court
Skillman, NJ 08558 (“Employee”) is dated April 15, 2008 (“Effective Date”).
SkyPostal and Employee are sometimes referred to as the Parties.

 

RECITALS

 

SkyPostal
is engaged in the provision of private postal services in the United States and
worldwide;

 

Employee has had substantial experience with
corporate financial activities;

 

SkyPostal desires to employ Employee as its
Chief Financial Officer, and Employee wishes to accept this position with
SkyPostal and perform the responsibilities identified below; and

 

SkyPostal is desirous of protecting its
business relationships, employment and benefit methods, records, customer
lists, intellectual property and other valuable aspects of its business.

 

In consideration of the recitals, the mutual
promises of the Parties, the employment of Employee in a position of trust and
responsibility, and intending to be bound, SkyPostal and Employee agree as
follows:

 

1.                                       Employment.  In consideration of SkyPostal’s
employment of Employee as Chief Financial Officer, Employee agrees to use his
best efforts and to devote his full business time, attention and energy to the
financial activities of SkyPostal.  The
performance of Employee in all respects shall be subject to the direction and
supervision of SkyPostal, all SkyPostal policies and guidelines, and all
applicable federal, state and local laws and regulations.

 

2.                                       Term of Employment.  The
term of employment shall begin on the Effective Date (“Start Date”) and shall
continue for a period of twelve (12) months. 
The term shall automatically renew on the anniversary of the Start Date
for periods of twelve (12) months, unless earlier terminated pursuant to the
provisions of paragraph 16, below.

 

3.                                       Representations and Warranties of Employee. 
Employee represents and warrants that he is not in breach of any
covenant not to compete, non-solicitation agreement or employment contract, nor
is Employee in violation of any agreement to protect the confidential or trade
secret information of SkyPostal or any other party.  Employee further represents and warrants that
no conflict of interest is created by entering this Agreement.

 

4.                                       Devotion of Full Time Employment. 
Employee shall provide his full-time, best efforts in rendering services
for SkyPostal.  Full-time, best efforts
shall include but are not limited to, timely performance of Employee’s
professional services; being present at normal office hours and such other
times as reasonably may be required by SkyPostal.

 

 

5.                                       Employee’s Responsibilities. 
During the term of this agreement, Employee will provide his personal
services, skills, and knowledge to SkyPostal and shall direct and be
responsible for SkyPostal’s financial activities.

 

6.                                       Compensation.

 

a.                                       Subject to customary withholding and other
employment taxes, as required by federal, state and local law, Employee shall
be paid an annual salary of one hundred and fifty thousand dollars ($150,000)
to be paid bi-monthly during the term of the Agreement.

 

b.                                      Employee shall receive 300,000 shares of
common stock in SkyPostal. If, for any reason, this Agreement is terminated
prior to August 1, 2008, employee agrees to return all 300,000 shares to
SkyPostal upon such termination.  If for
any reason, this Agreement is terminated prior to April 1, 2009, employee
agrees to return 200,000 shares to SkyPostal upon such termination.  If for any reason, this Agreement is
terminated prior to April 1, 2010, employee agrees to return 100,000
shares to SkyPostal upon such termination.

 

c.                                       After (6) months of continuous
employment and subject to Employees performance, Employee will receive
performance and monetary evaluation.

 

d.                                      Employee may be eligible for a bonus, payout,
employee stock options or other recognition made from time to time to
management employees of SkyPostal in SkyPostal’s sole discretion.

 

e.                                       Employee understands that he may be expected
to travel to various locations to fully perform his responsibilities on behalf
of SkyPostal.  SkyPostal shall reimburse
Employee for authorized travel and living expenses in accordance with SkyPostal
policy.  Reimbursement shall be
contingent on the submission on a monthly basis of expense reports and related
receipts in the detail normally required by SkyPostal.

 

f.                                         After one (1) year of continuous
employment and subject to Employees performance, Employee shall receive a
monetary evaluation on April 1, 2009 and on each subsequent year the
Employment Agreement is renewed.

 

7.                                       Vacation, Personal Leave and Sick Leave &
Holidays.   Employee shall be entitled to one (1) weeks
paid vacation after 6 months and (2) weeks pay after one (1) year of
continuous employment, and sick leave as SkyPostal provides to each of its
employees.  Vacation and personal leave
may be taken in any increments of time, provided that such vacation and
personal leave is approved in advance by SkyPostal.  Any sick leave time not utilized during the
calendar year shall be lost and shall not carry forward to any future year.

 

8.                                       Benefits.  In addition to the
compensation, vacation and sick leave, SkyPostal shall provide the same benefits,
such as health and dental insurance, long term disability, as SkyPostal offers
to its executive management level employees. 
SkyPostal will also provide Employee with term life insurance.

 

2

 

9.                                       Confidential and Trade Secret Information.

 

a.                                       Employee understands and agrees that he will
acquire and have access to confidential knowledge and other proprietary
information of SkyPostal including, without limitation, financial, marketing,
sales, pricing, technical, customer, vendor, strategy or other information (the
“Confidential and Trade Secret Information”).

 

b.                                      Employee recognizes and acknowledges that the
Confidential and Trade Secret Information are valuable and unique assets of
SkyPostal, and Employee agrees (i) for the period of employment to use the
Confidential and Trade Secret Information solely for the benefit of SkyPostal,
and (ii) following Employee’s employment with SkyPostal, to maintain the
confidentiality of the Confidential and Trade Secret Information and not
disclose it, in whole or in part, to any person, firm, corporation or other
entity for any reason whatever.  It is
understood that such obligations do not apply to information that enters the public
domain without fault of Employee.

 

c.                                       Employee further understands that the
Confidential and Trade Secret Information is and shall remain the property of
SkyPostal and shall not be removed from the offices of SkyPostal unless
authorized by SkyPostal.  All such
information shall be returned to SkyPostal in the event of the non-renewal or
termination of Employee’s employment.

 

10.                                 Inventions and Works. 
Employee will promptly disclose to SkyPostal all inventions, works or
creations of any type, including without limitation, all software, software
code, methods, plans, or concepts, made or conceived by Employee, either alone
or in conjunction with others, during his employment with SkyPostal.  All Inventions and Works shall be deemed
within the scope of Employee’s employment, and such Inventions and Works will
be owned by SkyPostal.  Employee hereby
grants, assigns and transfers all right, title and interest in such Inventions
and Works to SkyPostal and agrees to execute all papers and perform such other
acts as are reasonably necessary to assist SkyPostal to obtain and register any
copyrights, or to secure any patents or other intellectual property rights.

 

11.                                 Covenant Not To Compete. 
During the period of Employee’s association with SKYPOSTAL, in any
capacity, and for a period of six (6) months commencing on the date of
Employee’s termination of employment or other association with SkyPostal, for
any reason, with or without cause, including the individual voluntary decision
of Employee to terminate association with SkyPostal, Employee shall not directly
or indirectly own, operate, join, manage, control, participate in the
ownership, management, operation and/or control, or be paid or employed by, or
otherwise become associated with, or provide assistance to, as an employee,
agent, independent contractor, advisor, officer, director, shareholder, owner
or otherwise, any business or endeavor in the entire United States that
directly or indirectly competes with SkyPostal.

 

12.                                 Covenant Not To Solicit. 
During the period of Employee’s association with SkyPostal, in any
capacity, and for a period of six (6) months commencing on the date of
Employee’s termination of employment or other association with SkyPostal, for
any reason, with or without cause, including the individual voluntary decision
of Employee to terminate association with SkyPostal, Employee shall not for his
benefit, or for the benefit of any other person, professional association,
partnership or corporation, call upon any customer of SkyPostal, wherever
located, for the purpose of soliciting products or services similar to those of
SkyPostal,  or otherwise divert or take
away customers of SkyPostal.  Employee
acknowledges

 

3

 

and
agrees that any promotion, advertisement, mailing or other communication
noticing the formation, establishment, relocation and/or association with a
business that is competitive with the business of SkyPostal, subsequent to the
termination of Employee’s employment, and which targets customers of SkyPostal,
will constitute a solicitation in violation of this section.

 

13.                                 Interference with SKYPOSTAL Employees. 
During the period of Employee’s association with SkyPostal, in any
capacity, and for a period of two (2) years commencing on the date of
Employee’s termination of employment or other association with SkyPostal, for
any reason, with or without cause, including the individual voluntary decision
of Employee to terminate association with SkyPostal, Employee agrees that he
will not, individually or on behalf of persons or entities not party to this
Agreement, solicit or attempt to induce employees of SkyPostal to leave their
employment in order to accept employment with another person or entity.

 

14.                                 Independent Covenants.  The
provisions of this Agreement constitute independent covenants as to each other
and shall be applicable and enforceable regardless of any claim and with
respect to the inducement, making, breach, termination or wrongful termination
of Employee’s employment with SkyPostal and shall survive the termination of
Employee’s employment with SkyPostal and any and all other agreements, written
or oral, by and between the Parties.

 

15.                                 Remedies.  Employee recognizes that the
foregoing restrictive covenants are fair and reasonable and are required for
the protection of the legitimate business interests of SkyPostal.  Employee also understands that SkyPostal will
be irrevocably harmed if the restrictive covenants are not specifically
enforced.  Accordingly, Employee agrees
that the foregoing restrictive covenants shall be enforced by SkyPostal through
temporary and/or permanent injunctive relief, without prejudice to such damage
rights as may exist.  In that regard, if
SkyPostal institutes an action or proceeding to specifically enforce the
provisions of this Agreement, Employee hereby waives any claim or defense that
SkyPostal has an adequate remedy at law.

 

16.                                 Termination of Employment.  This
Agreement may be terminated and the relationship of employer and employee
existing between the Parties shall be deemed severed upon the occurrence of any
of the following:

 

a.                                       By mutual agreement, or by either party at
any time, with or without cause, by giving one (1) months prior written
notice.

 

b.                                      Notwithstanding anything contained herein to
the contrary, immediately upon the occurrence of any one of the following
events at the election of the SkyPostal and upon written notice to Employee:

 

(i)                                     Employee’s personal dishonesty, willful
misconduct, insubordination or willful violation by Employee of any law or
regulation, protocol or policy of SkyPostal;

 

(ii)                                  The acquisition of any interest or
participation in a competing business in violation of this Agreement;

 

4

 

(iii)                               Employee’s dependency on alcohol and/or
drugs, as determined within the reasonable discretion of the SkyPostal and the
inability of Employee to satisfactorily complete treatment and aftercare as
determined by SkyPostal; and

 

(iv)                              The inability of Employee to cure any
material breach of this Agreement within thirty (30) days of the date of
written notice of such breach.

 

c.                                       Upon any termination, or expiration and
non-renewal, of this Agreement, Employee shall be entitled to receive only the
compensation accrued or declared, but unpaid, as of the date of termination.  Employee shall not be eligible to receive any
undeclared bonus.

 

17.                                 Post-Termination Obligations.  It
is the express agreement of Employee that upon termination of this Agreement
for any reason, he shall immediately vacate his office at SkyPostal.

 

18.                                 Assignment.  SkyPostal depends on the
personal services of Employee and the Employee shall have no right to assign
this Agreement, or any rights and duties hereunder, without the express written
consent of SkyPostal.  Any assignment or
delegation by Employee without such written consent shall be void.

 

19.                                 No Waiver.  The failure of any party
hereto to enforce any provision of this Agreement shall in no way be construed
to be a waiver of such provision or to affect the validity of this Agreement or
any part thereof or the right of either party to enforce each and every
provision in accordance with its terms.

 

20.                                 Survival.  The provisions of this
Agreement that by their sense and context are intended to survive the
termination of this Agreement shall so survive.

 

21.                                 Construction of Agreement.  In
the event any provision contained in this Agreement shall for any reason be
held to be invalid, or unenforceable, and such provision cannot be reasonably
modified to render it valid and enforceable, such validity or unenforceability
shall not affect any other provisions, and this Agreement shall be construed as
if such invalid, or unenforceable provision had never been contained herein.

 

22.                                 Governing Law/Venue.  This
Agreement shall be governed in accordance with the laws of the State of
Florida, without reference to its conflict of law principles.  The Parties understand and agree that venue
for any litigation arising from the construction and/or operation of this
Agreement shall be Miami-Dade County, Florida.

 

23.                                 Attorneys Fees and Costs.  In
the event of any legal action by SkyPostal or Employee to enforce any one or
more provisions of this Agreement, whether at law or in equity, the prevailing
party shall be entitled to receive from the other party all enforcement costs
including, without limitation, reasonable attorneys fees and costs whether
incurred before, during and after trial or other litigation including appeal.

 

5

 

24.                                 Entire Agreement.  This
Agreement sets forth all the promises, covenants agreements, conditions and
understandings between the Parties, and supersedes all prior and
contemporaneous agreements, understandings, inducements or conditions,
expressed or implied, oral or written.

 

The
Parties have executed this Agreement as of the day and year first above
written.

 

	
  SKYPOSTAL, INC

  	
   

  	
  Clement S. Harary (Employee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
						

 

6Exhibit 4.1

 

RIGHTS AGREEMENT

 

Dated as of April 17,
2008

 

AMERICAN SCIENCE AND ENGINEERING, INC.

 

and

 

AMERICAN STOCK TRANSFER & TRUST COMPANY

 

as Rights Agent

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
  Certain Definitions

  	
  1

  
	
  2.

  	
  Appointment of Rights Agent

  	
  6

  
	
  3.

  	
  Evidence and Transfer of Rights

  	
  7

  
	
  3.1.

  	
  Prior to Distribution Date

  	
  7

  
	
  3.2.

  	
  After Distribution Date

  	
  7

  
	
  3.3.

  	
  Distribution of Summary of Rights

  	
  7

  
	
  3.4.

  	
  Common Stock Outstanding on the
  Record Date

  	
  7

  
	
  3.5.

  	
  Future Issuances of Common Stock;
  Stock Legends

  	
  8

  
	
  4.

  	
  Rights
  Certificates

  	
  8

  
	
  4.1.

  	
  Form of Rights Certificates

  	
  8

  
	
  4.2.

  	
  Legends

  	
  9

  
	
  5.

  	
  Countersignature and Registration

  	
  9

  
	
  6.

  	
  Replacement of Rights Certificates

  	
  9

  
	
  6.1.

  	
  Transfer, Split-up, Combination and
  Exchange of Rights Certificates

  	
  9

  
	
  6.2.

  	
  Mutilated, Destroyed Lost or Stolen
  Rights Certificates

  	
  10

  
	
  7.

  	
  Exercise of Rights; Purchase Price; Expiration Date
  of Rights

  	
  10

  
	
  7.1.

  	
  Exercise of Rights

  	
  10

  
	
  7.2.

  	
  Purchase Price

  	
  11

  
	
  7.3.

  	
  Duties of Rights Agent Upon
  Exercise

  	
  11

  
	
  7.4.

  	
  Partial Exercise

  	
  12

  
	
  7.5.

  	
  Rights Owned by Acquiring Person or
  Disqualified Transferee Null and Void

  	
  12

  
	
  7.6.

  	
  Proper Exercise Required

  	
  12

  
	
  8.

  	
  Cancellation and Destruction of Rights Certificates

  	
  12

  
	
  9.

  	
  Reservation and Availability of Shares of Preferred
  Stock; Other Covenants

  	
  13

  
	
  9.1.

  	
  Reservation and Availability of
  Preferred Stock

  	
  13

  
	
  9.2.

  	
  Best Efforts to List Shares
  Issuable Upon Exercise

  	
  13

  
	
  9.3.

  	
  Duly Authorized, Fully Paid,
  Nonassessable Shares

  	
  13

  
	
  9.4.

  	
  Transfer Taxes

  	
  13

  
	
  9.5.

  	
  Registration of Securities Issuable
  Upon Exercise of Rights

  	
  13

  
	
  10.

  	
  Issuance of Stock Upon Exchange; No Rights as
  Stockholder Until Exercise

  	
  14

  
	
  11.

  	
  Adjustments to Rights

  	
  14

  
	
  11.1.

  	
  Stock Splits; Flip-in Provisions

  	
  15

  
	
  11.2.

  	
  Issuance of Other Rights to
  Purchase Preferred Stock

  	
  17

  
	
  11.3.

  	
  Distributions of Cash or Other
  Assets

  	
  18

  
	
  11.4.

  	
  Determination of Current Market
  Price and Closing Price

  	
  18

  
	
  11.5.

  	
  Minor Adjustments; Calculation
  Precision; Purchase Price Reductions

  	
  19

  
	
  11.6.

  	
  Comparable Adjustments upon
  Substitution of Securities

  	
  20

  
	
  11.7.

  	
  Status of Rights Certificates After
  a Purchase Price Adjustment

  	
  20

  
	
  11.8.

  	
  Status of Rights Certificates After
  Certain Adjustments

  	
  20

  

 

i

 

	
  11.9.

  	
  Option to Adjust Number of Rights

  	
  20

  
	
  11.10.

  	
  No Obligation to Re-Issue Adjusted
  Right Certificates

  	
  21

  
	
  11.11.

  	
  Adjustments Below Par Value

  	
  21

  
	
  11.12.

  	
  Delay in Issuance of Rights Until
  Occurrence of Adjustment Event

  	
  21

  
	
  11.13.

  	
  Adjustments to Purchase Price for
  Tax Reasons

  	
  21

  
	
  11.14.

  	
  No Prejudice of Rights Through
  Business Combinations

  	
  22

  
	
  11.15.

  	
  No Actions by Subsidiaries that
  Prejudice Rights

  	
  22

  
	
  11.16.

  	
  Adjustment of Rights upon Common
  Stock Dividend, Split or Combination

  	
  22

  
	
  12.

  	
  Certificate of Adjustments

  	
  23

  
	
  13.

  	
  Flip-Over Provisions

  	
  23

  
	
  13.1.

  	
  Flip Over Common Stock Events

  	
  23

  
	
  13.2.

  	
  Consequences of Flip Over Common
  Stock Event

  	
  24

  
	
  13.3.

  	
  Acquiror Requirements

  	
  25

  
	
  13.4.

  	
  Acquiror Rights Plan

  	
  25

  
	
  13.5.

  	
  Future Transactions; Previous
  Flip-In

  	
  25

  
	
  14.

  	
  Fractional Rights and Fractional Shares

  	
  26

  
	
  14.1.

  	
  Cash in Lieu of Fractional Rights

  	
  26

  
	
  14.2.

  	
  Cash in Lieu of Fractional Shares
  Upon Exercise

  	
  26

  
	
  14.3.

  	
  Waiver of Right to Fractions

  	
  26

  
	
  15.

  	
  Rights of Action

  	
  26

  
	
  16.

  	
  Agreement of Rights Holders

  	
  27

  
	
  17.

  	
  Rights Holder Not Deemed a Stockholder

  	
  27

  
	
  18.

  	
  Payment and Indemnification of the Rights Agent

  	
  28

  
	
  19.

  	
  Merger or Consolidation or Change of Name of Rights
  Agent

  	
  28

  
	
  20.

  	
  Rights and Duties of Rights Agent

  	
  29

  
	
  20.1.

  	
  Consultation with Legal Counsel

  	
  29

  
	
  20.2.

  	
  Officer’s Certificate

  	
  29

  
	
  20.3.

  	
  Liability

  	
  29

  
	
  20.4.

  	
  No Liability for Facts or Recitals

  	
  30

  
	
  20.5.

  	
  Limitations on Responsibility

  	
  30

  
	
  20.6.

  	
  Further Assurances by the Company

  	
  30

  
	
  20.7.

  	
  Authorization to Rely upon
  Instructions

  	
  30

  
	
  20.8.

  	
  Transactions with the Company

  	
  31

  
	
  20.9.

  	
  No Liability for Acts of Agents

  	
  31

  
	
  20.10.

  	
  No Financial Risk

  	
  31

  
	
  20.11.

  	
  Acting on Void Rights

  	
  31

  
	
  20.12.

  	
  No Liability to Third Parties

  	
  31

  
	
  21.

  	
  Change of Rights Agent

  	
  31

  
	
  22.

  	
  Issuance of New Rights Certificates

  	
  32

  
	
  23.

  	
  Redemption and Termination

  	
  33

  
	
  24.

  	
  Exchange

  	
  33

  
	
  24.1.

  	
  Exchange Option

  	
  33

  

 

ii

 

	
  24.2.

  	
  Termination of Right to Exercise;
  Notices

  	
  33

  
	
  24.3.

  	
  Substitution for Common Stock

  	
  34

  
	
  24.4.

  	
  Authorization of Additional Shares

  	
  34

  
	
  24.5.

  	
  No Fractions

  	
  34

  
	
  25.

  	
  Notice of Proposed Actions

  	
  34

  
	
  26.

  	
  Notices

  	
  36

  
	
  27.

  	
  Supplements and Amendments

  	
  36

  
	
  28.

  	
  Successors

  	
  37

  
	
  29.

  	
  Determinations and Actions by the Board; Etc

  	
  37

  
	
  30.

  	
  Benefits of this Agreement

  	
  37

  
	
  31.

  	
  Severability

  	
  37

  
	
  32.

  	
  Governing Law

  	
  37

  
	
  33.

  	
  Counterparts

  	
  38

  
	
  34.

  	
  Descriptive Headings

  	
  38

  

 

EXHIBITS

 

	
  Exhibit A:

  	
  Certificate of Designation of Series A
  Preferred Stock

  
	
  Exhibit B:

  	
  Form of Rights Certificate

  
	
  Exhibit C:

  	
  Summary of Rights

  

 

iii

 

RIGHTS
AGREEMENT

 

This Rights Agreement dated as of April 17, 2008
(the “Agreement”) is between American Science and Engineering, Inc.,
a Massachusetts corporation (the “Company”), and American Stock Transfer &
Trust Company, a New York corporation, as rights agent (the “Rights Agent”).

 

R E C I T
A L S:

 

WHEREAS,
the Company and Rights Agent have previously entered into a Shareholder Rights
Agreement, dated as of April 17, 1998, which expired in accordance with
its terms on April 16, 2008;

 

WHEREAS,
on  April 16, 2008,  the Board of Directors of the Company (the “Board”)
authorized the issuance of rights (collectively, the “Rights,” and
individually a “Right”), each Right being a right to purchase, on the
terms and subject to the provisions of this Agreement, one one-thousandth of a
share of the Company’s Preferred Stock (as hereinafter defined); and

 

WHEREAS,
on April 16, 2008  (the “Declaration
Date”) the Board (a) authorized and declared a dividend distribution
of one Right for every share of Common Stock, $0.66 2/3  par
value per share, of the Company outstanding at the Close of Business (as
hereinafter defined) on April 16, 2008  (the “Dividend
Record Date”) and (b) authorized the issuance of, and agreed to issue,
one Right (as such number may be adjusted in accordance with Section 11.9 or 11.16 hereof)
for every share of Common Stock of the Company issued between the Dividend
Record Date and the earliest of (x) the Distribution Date (as hereinafter
defined), (y) the Expiration Date (as hereinafter defined) and (z) the
redemption of the Rights.

 

AGREEMENT

 

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

 

1.     Certain Definitions.

 

For purposes of this Agreement, the following terms
have the meanings indicated:

 

“Acquiring Person” shall mean any Person who or
which, together with all Affiliates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, but shall
not include

 

(a)           the Company,

 

(b)           any Subsidiary of the Company,

 

(c)           any employee benefit plan of the
Company or of any Subsidiary of the Company,

 

 

(d)           any Person organized, appointed, or
established by the Company or a Subsidiary of the Company pursuant to the terms
of any plan described in clause (c) above, or

 

(e)           any Person who

 

(i)        has reported or is required to report
such ownership on Schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or any
comparable or successor report) which Schedule 13D does not state any intention
to or reserve the right to control or influence the management or policies of
the Company or engage in any of the actions specified in Item 4 of such
Schedule (other than the disposition of the Common Stock),

 

(ii)       within 10 Business Days of being
requested by the Company to advise it regarding the same, certifies to the Company
that such Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the Rights; provided,
however, that if the Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10 Business Day period,

 

(iii)      together with all of such Person’s
Affiliates, thereafter does not acquire additional shares of Common Stock while
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, and

 

(iv)     if requested to do so by the Company,
within a specified number of Business Days (to be specified by the Company, but
in no case fewer than 10 Business Days) following such request from the Company
to such Person, reduces its Beneficial Ownership of Common Shares to below  15% of the Common Stock then outstanding; provided, however,
that if the Person requested to so reduce its Beneficial Ownership fails to do
so within such specified number of Business Days, then such Person shall become
an Acquiring Person immediately after such specified number of Business Days.

 

“Act”
shall mean the Securities Act of 1933 (or any successor act), as amended and as
may from time to time be in effect.

 

“Affiliate,”
with respect to any Person, shall mean any other Person who is, or who would be
deemed to be, an “affiliate” or an “associate” of such Person within the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as such Rule is in effect on the
Declaration Date.

 

A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own” or have “Beneficial Ownership” of, any
securities:

 

(f)            which such Person or any of such
Person’s Affiliates has “beneficial ownership” of within the meaning of Rule 13d-3
of the General Rules and 

 

2

 

Regulations under the Exchange Act, as such Rule is
in effect on the Declaration Date;

 

(g)           which such Person or any of such
Person’s Affiliates has, directly or indirectly, the right to acquire (whether
such right is exercisable immediately or after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion, exchange or other rights, warrants or options, or
otherwise;

 

(h)           which such Person or any of such
Person’s Affiliates has, directly or indirectly, the right to vote or dispose
of, including pursuant to any agreement, arrangement or understanding (whether
or not in writing); provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own,” any security for
purposes of part (c) of this definition as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding:

 

(i)        arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act, or

 

(ii)       is made in connection with, or is to
otherwise participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act,

 

in
either case described in clause (i) or (ii) above, whether or not
such agreement, arrangement or understanding is also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

 

(i)            which are beneficially owned,
directly or indirectly, by any other Person or any Affiliate thereof with which
such Person or any of such Person’s Affiliates has any agreement, arrangement
or understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy or in connection with a
proxy or consent solicitation described in clause (i) or (ii) of the
proviso to part (c) of this definition) or disposing of any securities of
the Company;

 

provided, however, that for
purposes of this definition a Person shall not be deemed the “Beneficial Owner”
of, or to “beneficially own,”

 

(j)            securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person’s Affiliates
until such tendered securities are accepted for purchase or exchange,

 

(k)           securities issuable upon exercise of
Rights at any time prior to the occurrence of a Common Stock Event, or

 

3

 

(l)            securities issuable upon exercise of
Rights which were held by a Person or its Affiliates prior to the Distribution
Date as long as such Person is not responsible for the occurrence of the Common
Stock Event giving rise to the Distribution Date;

 

and provided, further, however, that nothing in
this definition shall cause a Person engaged in business as an underwriter of
securities to be the “Beneficial Owner” of, or to “beneficially own,” any
securities acquired through such Person’s participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition.

 

“Board”
shall have the meaning set forth in the preamble to this Agreement.

 

“Business
Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the Commonwealth of Massachusetts or the city in which
the principal office of the Rights Agent is located are authorized or obligated
by law or executive order to close.

 

“Close
of Business” on any given date shall mean 5:00 p.m. Boston,
Massachusetts time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., Boston, Massachusetts
time, on the next succeeding Business Day.

 

“Closing
Price” shall have the meaning set forth in Section 11.4
hereof.

 

“Common
Stock” shall mean the Common Stock, $0.66 2/3 par value per share, of the
Company, except that “Common Stock” when used with respect to any Person other
than the Company shall mean either (a) the common stock (or other capital
stock or shares of beneficial interest) of such Person with the greatest voting
power, or (b) the equity securities or other equity interests having power
to control or direct the management and affairs of such Person, or if such
Person is a Subsidiary of another Person, the Person (x) who ultimately
controls such Person that is the Subsidiary and (y) which has outstanding
such common stock (or such other capital stock, equity securities or
interests).

 

“Common
Stock Equivalents” shall have the meaning set forth in Section 11.1.3(d)(iii) hereof.

 

“Common
Stock Event” shall mean the occurrence of any event described in Section 11.1.2 or Section 13.1
hereof.

 

“Company”
shall have the meaning set forth in the preamble to this Agreement.

 

“Current
Market Price” shall have the meaning set forth in Section 11.4
hereof.

 

“Current
Value” shall have the meaning set forth in Section 11.1.3(c) hereof.

 

“Declaration
Date” shall have the meaning set forth in the preamble to this Agreement.

 

“Directors”
shall mean the members of the Board.

 

4

 

“Disqualified
Transferee” shall mean any Person who is a direct or indirect transferee of
any Right from an Acquiring Person or an Affiliate of an Acquiring Person and
who became such a transferee (a) after the occurrence of a Common Stock
Event or (b) prior to or concurrently with the Acquiring Person becoming
such and received such Right pursuant to a transfer (whether or not for value) (x) from
the Acquiring Person to holders of its Common Stock or other equity securities
or to any Person with whom the Acquiring Person has any continuing agreement,
arrangement, or understanding (whether or not in writing) regarding the
transferred Right, or (y) which a majority of the Board reasonably
determines is part of a plan, arrangement, or understanding (whether or not in
writing) which has as a primary purpose or effect, the avoidance of Section 7.5 hereof.

 

“Distribution
Date” shall mean the date which is the later of (a) the earlier of (i) the
10th Business Day following the Stock Acquisition Date or (ii) the 10th
Business Day following the Offer Commencement Date or (b) such specified
or unspecified date thereafter which is on or after the Dividend Record Date,
as may be determined by a majority of the Board.

 

“Dividend
Record Date” shall have the meaning set forth in the preamble to this
Agreement.

 

“Equivalent
Preferred Stock” shall have the meaning set forth in Section 11.2
hereof.

 

“Excess
Amount” shall have the meaning set forth in Section 11.1.3(d) hereof.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934 (or any successor act),
as in effect on the Declaration Date.

 

“Exchange
Ratio” shall have the meaning set forth in Section 24.1
hereof.

 

“Expiration
Date” shall have the meaning set forth in Section 7.1
hereof.

 

“Offer
Commencement Date” shall mean the date of the commencement by any Person,
other than (a) the Company, (b) a Subsidiary of the Company, (c) any
employee benefit plan of the Company or of any Subsidiary of the Company or (d) any
Person organized, appointed, or established by the Company or such Subsidiary
pursuant to the terms of any such plan, of a tender or exchange offer
(including when such offer is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act) if upon consummation thereof such Person and Affiliates
thereof would be the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights on the Dividend Record Date
or thereafter).

 

“Officers’
Certificate” has the meaning set forth in Section 20.2
hereof.

 

“Other
Consideration” has the meaning set forth in Section 6.1
hereof.

 

“Person”
shall mean a company, corporation, association, partnership, joint venture,
limited liability company, trust, estate, organization, business, entity or
individual, and shall include any successor (by merger or otherwise) of any
such entity.

 

5

 

“Preferred
Stock” shall mean the Series A Preferred Stock, $0.00  par value per share, of the Company, having the rights and
preferences set forth in the form of Certificate of Designation attached hereto
as Exhibit A.

 

“Purchase
Price” shall have the meaning set forth in Section 7.2
hereof.

 

“Redemption
Price” shall have the meaning set forth in Section 23
hereof.

 

“Rights”
shall have the meaning set forth in the preamble to this Agreement.

 

“Rights
Agent” shall have the meaning set forth in the preamble of this Agreement
subject to the appointment of a successor Rights Agent pursuant to Section 21 hereof.

 

“Rights
Certificates” shall have the meaning set forth in Section 3.2
hereof.

 

“Stock
Acquisition Date” shall mean the later of (a) the date of the first
public announcement by an Acquiring Person or the Company that an Acquiring
Person has become such (including the first date on which any filing with any
governmental authority disclosing that an Acquiring Person has become such
becomes available to the public) or (b) the date on which a majority of
the Directors have actual knowledge that an Acquiring Person has become such.

 

“Subsidiary”
shall mean, as of any date, any Person of which the Company (or other specified
Person) owns directly, or indirectly through a Subsidiary or Subsidiaries, at
least a majority of the outstanding capital stock (or other shares of
beneficial interest) entitled to vote generally, or holds directly, or indirectly
through a Subsidiary or Subsidiaries, at least a majority of partnership or
similar interests, or is a general partner, or of which the Company (or other
specified Person) owns voting securities sufficient to elect at least a
majority of the directors of such Person.

 

“Substitution
Period” shall have the meaning set forth in Section 11.1.4
hereof.

 

“Summary
of Rights” shall have the meaning set forth in Section 3.3
hereof.

 

“Trading
Day” shall mean a day on which the principal national securities exchange
or the Nasdaq Global Select Market or comparable system which such security is
listed or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national securities
exchange or the Nasdaq Global Select Market or comparable system, a day which
is a Business Day.

 

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, upon 10 days’
prior written notice to the Rights Agent. 
The Rights Agent shall have no duty to supervise, and in no event be
liable for, the acts or omissions of any such Co-Rights Agent.

 

6

 

3.          Evidence and Transfer
of Rights.

 

3.1.          Prior to Distribution Date.  Until the Distribution Date, (a) the
Rights will be evidenced (subject to the provisions of Section 3.4
hereof) by the certificates representing shares of Common Stock registered in
the names of the holders of the Common Stock (which certificates shall be
deemed also to be certificates for the associated Rights) and not by separate
rights certificates and (b) the Rights will be transferable only in
connection with the transfer of the associated shares of Common Stock.

 

3.2.          After Distribution Date.  As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date and
provided the Rights Agent with all necessary information (and if the Rights
Agent is not also the transfer agent and registrar of Common Stock, provided
the Rights Agent with the names and addresses of all record holders of Common
Stock), the Rights Agent will send by first class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the stock
transfer records of the Company, one or more rights certificates, in
substantially the form of Exhibit B hereto (the “Rights Certificates”),
evidencing in the aggregate that number of Rights to which such holder is
entitled in accordance with the provisions of this Agreement.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.  The Rights are exercisable only in accordance
with the provisions of Section 7 hereof
and are redeemable only in accordance with Section 23
hereof.

 

3.3.          Distribution of Summary of Rights.  As soon as practicable after the Dividend
Record Date, the Company will cause a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the “Summary of
Rights”), to be sent by first class, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Dividend Record
Date, at the address of such holder shown on the stock transfer records of the
Company.

 

3.4.          Common Stock Outstanding on the
Record Date.  With respect to
certificates for the Common Stock outstanding as of the Dividend Record Date,
until the Distribution Date, the Rights associated with the shares of Common
Stock represented by such certificates will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights.  Until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates representing shares of the Common Stock
outstanding on the Dividend Record Date, with or without a copy of the Summary
of Rights, shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.

 

3.5.          Future Issuances of Common Stock;
Stock Legends.  Rights shall be
issued in respect of all shares of Common Stock issued (whether originally
issued or delivered from the Company’s treasury) after the Dividend Record Date
but prior to the earliest of (a) the Distribution Date, (b) the
Expiration Date or (c) the redemption of the Rights.  Certificates representing such shares of
Common Stock and certificates issued on transfer of such shares of Common
Stock, with or without a copy of the Summary of Rights, prior to the
Distribution Date (or earlier expiration or redemption of the Rights) shall be
deemed also to be certificates for the associated Rights, and commencing as
soon as reasonably practicable 

 

7

 

following the Dividend Record Date shall bear the
following legend (or a legend substantially in the form thereof):

 

“This certificate also evidences and entitles the holder to Rights set
forth in a Rights Agreement between the issuer and American Stock Transfer &
Trust Company, as Rights Agent (the “Rights Agent”), dated as of April 17,
2008 (the “Rights Agreement”), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal offices of both the
issuer and the Rights Agent.  The Rights
Agent will mail to the registered holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge upon
written request.  Under certain
circumstances set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate.  Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by any Person who
is, was or becomes, or acquires shares from, an Acquiring Person or any
Affiliate of an Acquiring Person (as each such term is defined in the Rights
Agreement and generally relating to the ownership or purchase of large
shareholdings), whether currently held by or on behalf of such Person or
Affiliate or by certain subsequent holders, may become null and void.

 

Until the Distribution Date or the earlier redemption, expiration or
termination of the Rights, the Rights associated with the Common Stock shall be
evidenced by the Common Stock certificates alone and the registered holders of
Common Stock shall also be the registered holders of the associated Rights, and
the surrender for transfer of any of such certificates shall also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.”

 

4.          Rights
Certificates.

 

4.1.          Form of Rights Certificates.  The Rights Certificates (and the form of
assignment and the form of exercise notice and certificate to be printed on the
reverse thereof) shall each be substantially in the form set forth in 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 (but which do not affect the duties or responsibilities of the
Rights Agent) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed or traded,
or to conform to usage.  Subject to the
provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Dividend Record Date (or, if the shares pursuant to
which the Rights are attached are issued thereafter, such date of issuance),
shall include the date of countersignature and on their face shall entitle the
holders thereof to purchase such number of one one-thousandths of a share of
Preferred Stock as shall be set forth therein at the Purchase Price (as
hereinafter defined), but the amount and type of securities issuable upon the
exercise of each Right and the Purchase Price shall be subject to adjustment as
provided herein.

 

4.2.          Legends.  Any Rights Certificate issued pursuant to Section 3.2 or 22 hereof that
represents Rights beneficially owned by (a) any Acquiring Person or any
Affiliate of an Acquiring Person, or (b) any Disqualified Transferee, and
any other Rights Certificate issued 

 

8

 

pursuant to Section 6
or 11 hereof upon the transfer, exchange,
replacement, or adjustment of any such Rights Certificate, shall contain (to
the extent feasible) the following legend:

 

“The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate (which includes both affiliates and associates) of an Acquiring
Person (as each such term is defined in the Rights Agreement between the issuer
and American Stock Transfer & Trust Company, as Rights Agent, dated as
of April 17, 2008 (the “Rights Agreement”)).  Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7.5 of the Rights
Agreement.  The Rights Agent will mail to
the registered holder of this certificate a copy of the Rights Agreement, as in
effect on the date of such mailing, without charge upon written request.”

 

5.          Countersignature
and Registration.  The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, President, or any Senior Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company’s seal or facsimile
thereof which shall be attested by the Treasurer or an Assistant Treasurer of
the Company, either manually or by facsimile signature.  The Rights Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned.  In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, issued, and delivered with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company. 
Any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.  Following the
Distribution Date, the Rights Agent shall keep or cause to be kept, at the
office of the Rights Agent designated for such purpose, books for registration
and transfer of the Rights Certificates issued hereunder.  Such books shall show the names and addresses
of the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, and the date of
countersignature thereof by the Rights Agent.

 

6.          Replacement
of Rights Certificates.

 

6.1.          Transfer, Split-up, Combination and
Exchange of Rights Certificates. 
Subject to the provisions of Sections 4.2, 7.5,
and 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the earlier of the
Close of Business on the Expiration Date or the redemption of the Rights, any
Rights Certificate may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one  one-thousandths
of a share of Preferred Stock (or, following a Common Stock Event, Common Stock
and/or such other securities, cash, or other assets as shall be issuable in
respect of the Rights in accordance with the terms of this Agreement (such
other securities, cash or other assets being referred to herein as “Other
Consideration”)) as the Rights Certificate surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase.  Any registered holder desiring to 

 

9

 

transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate to be transferred, split up,
combined, or exchanged at the office of the Rights Agent designated for such
purpose, accompanied by a signature guarantee and such other documentation as
the Rights Agent may reasonably request. 
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner from whom the Rights evidenced by such
Rights Certificate are to be transferred (or the Beneficial Owner to whom such
Rights are to be transferred) or Affiliates thereof as the Company or the
Rights Agent shall reasonably request. 
Thereupon, subject to Sections 4.2, 7.5 and 14 hereof, the Company shall execute and the Rights Agent
shall countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.  The Company may require payment by the
holders of Rights of a sum sufficient to cover any tax or charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates which the Company is not required to pay in accordance with
Section 9.4 hereof.  The Rights Agent shall have no duty or
obligation under this Section unless and until it is satisfied that all
such taxes and/or charges have been paid.

 

6.2.          Mutilated, Destroyed Lost or Stolen
Rights Certificates.  Upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, the receipt of indemnity or security
satisfactory to them, and upon 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 Rights Certificate, if mutilated,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed, or mutilated.

 

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

 

7.1.          Exercise of Rights.  Except as otherwise provided herein, the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby in whole or in part at any time from and after the Distribution Date
and at or prior to the Close of Business on April 16, 2018 (the “Expiration
Date”).  Immediately after the Close
of Business on the Expiration Date (or the earlier redemption of the Rights),
all Rights shall be extinguished and all Rights Certificates shall become null
and void.  To exercise Rights, the
registered holder of the Rights Certificate evidencing such Rights shall surrender
such Rights Certificate, with the form of election to purchase on the reverse
side thereof and the certificate contained therein duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, together with payment in cash, only if by
electronic or wire transfer, or by certified check or bank check, of the
Purchase Price with respect to the total number of one one-thousandths  of a share of Preferred Stock (or, after a Common Stock 

 

10

 

Event, shares and/or similar units of Common Stock or
Other Consideration) as to which the Rights are exercised (which payment shall
include any additional amount payable by such Person in accordance with Section 9.4 hereof). 
The Rights Agent shall promptly deliver to the Company all payments of
the Purchase Price received in respect of Rights Certificates accepted for
exercise.

 

7.2.          Purchase
Price.  The purchase price for each
one  one-thousandth  of
a share of Preferred Stock issuable pursuant to the exercise of a Right (the “Purchase
Price”) shall initially be $250.00, shall be subject to adjustment as
provided in Section 11 hereof, and shall
be payable in lawful money of the United States of America.

 

7.3.          Duties
of Rights Agent Upon Exercise.  Upon
receipt of a Rights Certificate representing the Rights, with the form of
election to purchase set forth on the reverse side thereof and the certificate
contained therein duly executed, accompanied by payment of the Purchase Price,
with respect to each Right so exercised, the Rights Agent, subject to Sections 7.5, 11.1.3 and 20.11
hereof, shall thereupon promptly:

 

(a)        requisition from any transfer agent of
the Preferred Stock (or Common Stock, as the case may be) (or from the Company
if there shall be no such transfer agent, or make available if the Rights Agent
is such transfer agent) certificates for the total number of one
one-thousandths of a share of Preferred Stock (or Common Stock, as the case may
be) to be purchased, and the Company hereby irrevocably authorizes such
transfer agent to comply with any such request,

 

(b)        after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
in writing by such holder, and

 

(c)        when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of a fractional share
in accordance with Section 14
hereof and after receipt promptly deliver such cash to or upon the order of the
registered holder of such Rights Certificate.

 

After the occurrence of a
Common Stock Event, the Company shall make all necessary arrangements so that
any Other Consideration then deliverable in respect of the Rights is available
for distribution by the Rights Agent. 
For purposes of this Section 7,
the Rights Agent shall be entitled to rely, and shall be protected in relying,
on an Officers’ Certificate from the Company to the effect that the
Distribution Date has occurred.

 

7.4.          Partial
Exercise.  Subject to Sections 4.2, and 14 hereof, in
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be executed and delivered
by the Company to the Rights Agent and countersigned and delivered by the
Rights Agent to the registered holder of such Rights Certificate or to such
holder’s duly authorized assigns.

 

11

 

7.5.          Rights
Owned by Acquiring Person or Disqualified Transferee Null and Void.  Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Common Stock Event, any
Rights beneficially owned by (a) an Acquiring Person or an Affiliate of an
Acquiring Person or (b) a Disqualified Transferee shall become null and
void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise.  The Company
shall use all reasonable efforts to ensure that the provisions of this Section 7.5 and Section 4.2
hereof are complied with, but the Company shall have no liability to any holder
of Rights Certificates or other Person, and none of the terms of this Agreement
or the Rights shall be deemed to be waived with respect to such holder or other
Person, as a result of any failure by the Company to make any determinations
with respect to an Acquiring Person or any Affiliate of an Acquiring Person or
Disqualified Transferees hereunder or any failure to have a legend placed on
any Rights Certificate in accordance with Section 4.2
hereof or on any Common Stock certificate in accordance with Section 3.5 hereof.

 

7.6.          Proper
Exercise Required.  Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a holder of
any Rights Certificate upon the occurrence of any purported exercise thereof
unless such holder shall have (a) properly completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise and (b) provided
such additional evidence of the identity of the Beneficial Owner from whom the
Rights evidenced by such Rights Certificate are to be transferred (or the
Beneficial Owner to whom such Rights are to be transferred) or Affiliates
thereof as the Company or the Rights Agent shall reasonably request.

 

8.          Cancellation
and Destruction of Rights Certificates. 
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), 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 Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.  The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificates purchased or retired by the Company
otherwise than upon the exercise thereof. 
The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or may, at the written request of the Company, but shall not be
required to, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

 

9.          Reservation
and Availability of Shares of Preferred Stock; Other Covenants.

 

9.1.          Reservation and Availability of
Preferred Stock.  The Company
covenants and agrees that on and after the Distribution Date, it shall use
reasonable efforts to cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock (or, following the occurrence
of a Common Stock Event, out of its authorized and unissued shares of Common
Stock and/or Other Consideration, or out of its authorized and issued 

 

12

 

shares held in its treasury), the number of shares of
Preferred Stock (or, following a Common Stock Event, shares of Common Stock
and/or Other Consideration) that, except as provided in Section 11.1.3
hereof, would then be sufficient to permit the exercise in full of all
outstanding Rights; provided, however, that the reservation of
such shares shall be subject and subordinate to any other reservation of such
shares made by the Company at any time for any lawful purpose; provided,
further, however, that in no event shall such failure to so
reserve shares affect the rights of any holder of Rights hereunder.

 

9.2.          Best Efforts to List Shares
Issuable Upon Exercise.  The Company
covenants and agrees that on and after the Distribution Date so long as the
Preferred Stock (or, following a Common Stock Event, shares and/or similar
units of Common Stock and/or Other Consideration) issuable upon the exercise of
Rights may be listed on any national securities exchange or quoted on the
Nasdaq Global Select Market or comparable system, the Company shall use its
best efforts to cause all shares (or similar units) reserved for such issuance
to be listed on such exchange or quoted on the Nasdaq Global Select Market or
comparable system upon official notice of issuance upon such exercise.

 

9.3.          Duly Authorized, Fully Paid,
Nonassessable Shares.  The Company
covenants and agrees that it shall take all such action as may be necessary to
ensure that each one one-thousandth  of a share of
Preferred Stock (or, following a Common Stock Event, each share and/or similar
unit of Common Stock or Other Consideration) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (or units),
subject to payment in full of the Purchase Price, be duly and validly
authorized and issued and fully paid and nonassessable.

 

9.4.          Transfer Taxes.  The Company covenants and agrees that it
shall pay when due and payable any and all taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock (or, following the occurrence of a Common Stock
Event, each share and/or similar unit of Common Stock or Other Consideration)
upon the exercise of Rights; provided, however, that the Company
shall not be required to pay any tax or charge which may be payable in respect
of any transfer involved in the transfer or delivery of Rights Certificates or
in the issuance or delivery of certificates for any shares of Preferred Stock
(or, following the occurrence of a Common Stock Event, each share and/or
similar unit of Common Stock or Other Consideration) in a name other than that
of the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for any shares
of Preferred Stock (and, following the occurrence of a Common Stock Event, any
shares and/or similar units of Common Stock or Other Consideration) 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 Rights Certificate at
the time of surrender thereof) or until it has been established to the Company’s
satisfaction that no such tax or charge is due.

 

9.5.          Registration of Securities Issuable
Upon Exercise of Rights.  The Company
shall use its best efforts (a) to file, as soon as practicable following
the earliest date after the first occurrence of a Common Stock Event on which
the consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with this Agreement, or as soon as is
required by law following the Distribution Date, as the case may 

 

13

 

be, a registration statement under the Act, with
respect to the securities issuable upon exercise of the Rights on an
appropriate form, (b) to cause such registration statement to become
effective as soon as practicable after such filing and (c) to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (i) the date as
of which the Rights are no longer exercisable for such securities, or (ii) the
Expiration Date or earlier redemption of the Rights.  The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states of the United States in connection with the
exercisability of the Rights.  The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days after the date set forth in clause (a) of this Section 9.5,
the exercisability of the Rights in order to prepare and file such registration
statement or to permit it 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.  The Company shall thereafter
issue a public announcement at such time as the suspension is no longer in
effect.  The Company shall notify the
Rights Agent whenever it makes a public announcement pursuant to this Section 9.5 and give the Rights Agent a copy of such
announcement.  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 shall have been obtained.

 

10.        Issuance
of Stock Upon Exchange; No Rights as Stockholder Until Exercise.  Each Person in whose name any certificate for
any shares of Preferred Stock (or, following the occurrence of a Common Stock
Event, shares and/or similar units of Common Stock or Other Consideration) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such shares of Preferred Stock (or such shares
and similar units of Common Stock and/or Other Consideration, as the case may
be) represented thereby, and such certificate shall be dated the date which is
the later of (a) the date upon which the Rights Certificate evidencing
such Rights was duly surrendered, or (b) the date upon which payment of
the Purchase Price (and any applicable taxes or charges) in respect thereof was
made; provided, however, that if such date is a date upon which the relevant
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (or Other Consideration) on, and such
certificate shall be dated, the next succeeding Business Day on which such
transfer books of the Company are open; provided, further, that the Company
covenants and agrees that it shall not close such transfer books for a period
exceeding ten consecutive days.  Prior to
the exercise of the Rights evidenced thereby (which shall be deemed to have
occurred on the date such certificate for shares and/or similar units of
Preferred Stock, Common Stock or Other Consideration shall be dated in
accordance with this Section 10),
the holder of a Rights Certificate, as such, shall not be entitled to any
rights of a security holder of the Company with respect to the shares of
Preferred Stock or Common Stock (and/or such shares or similar units of Common
Stock or Other Consideration) 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 expressly
provided herein.

 

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

 

14

 

11.1.        Stock Splits; Flip-in Provisions.

 

11.1.1           Stock
Splits and Other Adjustments to Preferred Stock.  In the event that the Company shall at any
time after the Declaration Date (a) declare and pay a dividend on the
Preferred Stock payable in shares of Preferred Stock, (b) subdivide the
outstanding Preferred Stock, (c) combine the outstanding Preferred Stock
into a smaller number of shares or (d) issue, change, or alter any of its
shares of capital stock in a reclassification or recapitalization (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving Person), except as otherwise
provided in this Section 11.1.1 and Section 7.5 hereof, then, and in each such case, the
Purchase Price in effect at the time of the record date for such dividend or
the effective time of such subdivision, combination, reclassification or
recapitalization, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such time, 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 Preferred Stock or other
capital stock which, if such Right had been exercised immediately prior to such
time at the Purchase Price then in effect and at a time when the transfer books
for the Preferred Stock (or other capital stock) of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, reclassification or recapitalization.  If an event occurs which would require an
adjustment under both this Section 11.1.1
and Section 11.1.2 hereof, the
adjustment provided in this Section 11.1.1
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11.1.2 hereof.

 

11.1.2           Flip-in
Provisions.  In the event that any
Person shall at any time after the Declaration Date become an Acquiring Person
(a Common Stock Event), then, upon the Close of Business 10 Business Days after
the occurrence of such event, proper provision shall be made so that each
holder of a Right, except as provided in Section 7.5
hereof, shall thereafter have the right to receive, upon exercise thereof at
the Purchase Price in effect at the time of exercise in accordance with the
terms of this Agreement, in lieu of a number of one one-thousandths of a share
of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying an amount equal to the
then current Purchase Price by an amount equal to the number of one
one-thousandths of a share of Preferred Stock for which a Right was or would
have been exercisable immediately prior to the first occurrence of any such
event whether or not such Right was then exercisable and (y) dividing that
product by 50% of the Current Market Price per share of the Common Stock of the
Company (as defined in Section 11.4
hereof) determined as of the date of such first occurrence.

 

11.1.3           Substitution
of Securities or Assets Issued Upon Exercise.  In the event that:

 

(a)        the number of shares of Preferred Stock
(or Common Stock) which are authorized by the Company’s charter but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with Section 7.3 hereof, or

 

15

 

(b)       a majority of the Board determines that
it would be appropriate and not contrary to the interests of the holders of
Rights (other than any Acquiring Person or Disqualified Transferee or any
Affiliate of the Acquiring Person or Disqualified Transferee), then,

 

in
lieu of issuing whole or fractional shares of Preferred Stock (or Common Stock)
in accordance with Section 7.3
hereof, the Company shall:

 

(c)        determine an amount, if any, (the “Excess
Amount”) equal to the excess of (i) the value (the “Current Value”)
of the whole or fractional shares of Preferred Stock (or Common Stock) issuable
upon the exercise of a Right in accordance with Section 7.3
hereof, over (ii) the Purchase Price, and

 

(d)       with respect to each Right, (subject to Section 14 hereof) make adequate provision to
substitute for such whole or fractional shares of Preferred Stock (or Common
Stock), upon payment of the applicable Purchase Price,

 

(i)         cash,

 

(ii)        a reduction in the Purchase Price,

 

(iii)       Common Stock or other equity securities
of the Company (including, without limitation, shares or units of Preferred
Stock or preferred stock which the Board has deemed in good faith to have the
same value as a share of Common Stock (such shares of preferred stock being
referred to herein as “Common Stock Equivalents”)),

 

(iv)       debt securities of the Company,

 

(v)        other assets, or

 

(vi)       any combination of the foregoing (which
would include the additional consideration provided to any holder by reducing
the Purchase Price) having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board;

 

provided,
however, subject to the provisions of Section 9.5
hereof, that if the Company shall not have made adequate provision to deliver
value pursuant to clause (z) above within 30 days following the Close of
Business 10 Business Days after the first occurrence of a Common Stock Event
described in Section 11.1.2 hereof, then
the Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, whole or fractional
shares of Preferred Stock (or Common Stock) (to the extent available) and then,
if necessary, cash, securities, and/or assets which in the aggregate are equal
to the Excess Amount.

 

11.1.4           Substitution Period; Suspension of
Exercisability.  If the Board shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock

 

16

 

or Common Stock Equivalents could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth in Section 11.1.3 may be extended to the extent necessary,
but not more than 90 days following the Close of Business 10 Business Days
after the first occurrence of such a Common Stock Event (such 30 day
period as it may be extended to 90 days, is referred to herein as the “Substitution
Period”).  To the extent that the
Company determines that some action is to be taken pursuant to Section 11.1.3 and the preceding provision of this Section 11.1.4, the Company (a) shall provide,
subject to Section 7.5 hereof, that
(except as to the form of consideration which shall be determined as
appropriate by a majority of the Board) such action shall apply uniformly to
all outstanding Rights which shall not have become null and void and (b) 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 provisions 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. 
The Company shall thereafter issue a public announcement at such time as
the suspension is no longer in effect. 
The Company shall notify the Rights Agent whenever it makes a public
announcement pursuant to this Section 11.1.4,
and give the Rights Agent a copy of such announcement.  For purposes of Section 11.1.3
and this Section 11.1.4 the value of the
Common Stock issuable upon exercise of a Right in accordance with Section 7.3 hereof shall be the Current Market Price
per share of the Common Stock (as determined pursuant to Section 11.4
hereof) on the Close of Business 10 Business Days after the date of the first
occurrence of such a Common Stock Event and the value of any Common Stock
Equivalent shall be deemed to be equal to the Current Market Price per share of
the Common Stock on such date.

 

11.2.        Issuance of Other Rights to Purchase
Preferred Stock.  In the event the
Company shall, after the Dividend Record Date, fix a record date for the
issuance of any options, warrants, or other rights to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase (a) Preferred Stock or (b) shares
having the same rights, privileges and preferences as the shares of any number
of one one-thousandths of a share of Preferred Stock (“Equivalent Preferred
Stock”) or (c) securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share of Preferred
Stock or Equivalent Preferred Stock, if a security is convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock (determined in accordance with Section 11.4 hereof) determined as of 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 shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock and/or Equivalent Preferred Stock which the aggregate minimum
offering price of the total number of shares of one one-thousandths of a share
of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or
the aggregate minimum conversion price of such convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the maximum number of additional shares of Preferred Stock
and/or Equivalent Preferred Stock to be

 

17

 

offered for subscription or purchase (or the maximum
number of shares into which such convertible securities so to be offered are
convertible).  In case such subscription
price may be paid by delivery of consideration part or all of which shall be in
a form other than cash, for purposes of this Section 11.2
the value of such consideration shall be the fair market value thereof as
determined in good faith by the Board (which determination shall be described
in an Officers’ Certificate filed with the Rights Agent).  Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation.  Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such options, warrants or other rights 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 (subject, however, to such
other adjustments as are provided herein).

 

11.3.        Distributions of Cash or Other Assets.  In the event that the Company shall, after
the Dividend Record Date, fix a record date for the making of a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
or continuing Person) of evidences of indebtedness, cash (other than cash
dividends paid out of the earnings or retained earnings of the Company and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied), other property (other
than a dividend payable in a number of one one-thousandths  of
a share of Preferred Stock, but including any dividend payable in capital stock
other than Preferred Stock), or subscription rights or warrants (excluding
those referred to in Section 11.2
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, of which the numerator shall be (a) the
Current Market Price per share of Preferred Stock (as defined in Section 11.4 hereof) determined as of such record date,
less (b) the sum of (i) that portion of cash plus (ii) the
fair market value, as determined in good faith by the Board (which
determination shall be described in an Officers’ Certificate filed with the
Rights Agent) of that portion of such evidences of indebtedness, such other
property, and/or such subscription rights or warrants applicable to one share
of Preferred Stock and of which the denominator shall be such Current Market
Price per share of the Preferred Stock. 
Such adjustments shall be made successively whenever such a record date
is fixed; and in the event 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 (subject, however, to such other
adjustments as are provided herein).

 

11.4.        Determination of Current Market Price
and Closing Price.  For purposes of
any computation pursuant to Section 11.1.3
hereof, the “Current Market Price” per share (or unit) of any security
on any date shall be deemed to be the average of the daily Closing Prices of
such security for the 10 consecutive Trading Days immediately after such date,
and for the purpose of any other computation hereunder, the “Current Market
Price” per share (or unit) of any security on any date shall be deemed to
be the average of the daily Closing Prices of such security for the 20
consecutive Trading Days immediately prior to such date; provided, however,
that in the event that the Current Market Price per share of such 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 (or units) of such security or

 

18

 

securities convertible into shares (or units) of such
security, or (b) any subdivision, combination or reclassification of such
security, and prior to the expiration of such 10 Trading Days or 20 Trading
Days after (x) the ex-dividend date for such dividend or distribution or (y) the
record or effective date for such subdivision, combination or reclassification,
as the case may be, then, and in each such case, the “Current Market Price”
shall be the Closing Price of such security on the last day of such respective
10 Trading Day or 20 Trading Day period.

 

For
purposes of this Agreement, the “Closing Price” of any security on any
day shall be the last sale price, regular way, with respect to shares (or
units) of such security, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect to such
security, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the NASDAQ Stock Market; or, if such security is not listed or admitted to
trading on the NASDAQ Stock Market, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such security is listed or admitted to
trading; or, if such security is not so listed or admitted to trading, the last
quoted sale price with respect to shares (or units) of such security, or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market with respect to shares (or units) of such security, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or such other similar system then in use; or, if on any such
date such security is not quoted by any such organization, the average of the
closing bid and asked prices with respect to shares (or units) of such
security, as furnished by a professional market maker making a market in such
security selected by the Board; or, if no such market maker is available, the
fair market value of shares (or units) of such security as of such day as
determined in good faith by the Board (which determination shall be described
in an Officers’ Certificate filed with the Rights Agent); provided, however, that the “Closing Price” of one one-thousandth  of a share of Preferred Stock as of any Trading Day shall
be equal to the Closing Price of a whole share of Preferred Stock on such
Trading Day divided by 1,000  provided,
further, that if the Closing Price of such a share of Preferred Stock as
of any Trading Day cannot be reasonably determined by the foregoing provisions,
the “Closing Price” of one one-thousandth of a share of Preferred Stock
on such Trading Date shall be the Closing Price of a share of Common Stock on
such Trading Day.

 

11.5.        Minor Adjustments; Calculation
Precision; Purchase Price Reductions. 
No adjustment in the Purchase Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11.5 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 (a) ten-thousandth of a share (or similar unit) of Common Stock or
securities other than Preferred Stock or Equivalent Preferred Stock or (b) ten-millionth
of a share of Preferred Stock or Equivalent Preferred Stock.  Notwithstanding the first sentence of this Section 11.5, any adjustment required by this Section 11 shall be made no later than the earlier of (x) three
years from the date of the transaction which mandates the adjustment or (y) the
Expiration Date.  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 required by this Section , as it in its discretion shall

 

19

 

determine to be advisable in order that any dividends,
subdivision of shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the Company to its
stockholders shall not be taxable.

 

11.6.        Comparable Adjustments upon
Substitution of Securities.  In the
event that at any time, as a result of an adjustment made in respect of a
Common Stock Event, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
shares of Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof 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 such other shares
contained in Sections 11.1, 11.2, 11.3, 11.5, 11.7, 11.8,
11.9, 11.10, 11.11, 11.13 and 11.16, and the
provisions of Sections 7, 9, 10, 11.4, and 14 hereof with respect to the shares of Preferred Stock
shall apply on like terms to any such other shares.

 

11.7.        Status of Rights Certificates After a
Purchase Price Adjustment.  All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights represented thereby, all subject to further adjustment as provided
herein.

 

11.8.        Status of Rights Certificates After
Certain Adjustments.  Unless the
Company shall have exercised its election as provided in Section 11.9
hereof, upon each adjustment of the Purchase Price as a result of the
calculations made pursuant to Sections 11.2
and 11.3 hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest ten-millionth of a share) obtained by (a) multiplying (i) the
number of one one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment, by (ii) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (b) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

 

11.9.        Option to Adjust Number of Rights.  Assuming that no other adjustment pursuant to
this Section 11 has been made, the
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights in substitution for any adjustment in the number
of one one-thousandths  of a share of
Preferred Stock purchasable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths  of a share of Preferred Stock 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 ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price by the Purchase Price in effect immediately
after such adjustment of the Purchase Price. 
The Company shall make a public announcement (with prompt written notice
thereof to the

 

20

 

Rights Agent) 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 Rights Certificates have been issued, shall
be at least 10 days later than the date of the public announcement.  If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11.9
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
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
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates so to be
distributed shall be issued, executed, and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

 

11.10.      No Obligation to Re-Issue Adjusted
Right Certificates.  Irrespective of
any adjustment or change in the Purchase Price or the number of whole or
fractional shares of Preferred Stock issuable upon exercise of such Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per share and the number of one one-thousandths of a share
of Preferred Stock which were expressed in the initial Rights Certificates
issued hereunder.

 

11.11.      Adjustments Below Par Value.  Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
number of one one-thousandths of a share of Preferred Stock 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 such number of fully paid and nonassessable one
one-thousandths of a share of Preferred Stock at such adjusted Purchase Price.

 

11.12.      Delay in Issuance of Rights Until Occurrence
of Adjustment Event.  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 number of one one-thousandths of a share of Preferred Stock or other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
or 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 securities upon the occurrence of the event requiring
such adjustment.

 

11.13.      Adjustments to Purchase Price for Tax
Reasons.  Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the 

 

21

 

Purchase Price, in addition to those adjustments
expressly required by this Section 11,
as and to the extent that it, by means of a resolution of the Board acting in
good faith, shall determine to be advisable in order that any consolidation or
subdivision of the Common Stock, issuance wholly for cash of any Common Stock
at less than the Current Market Price thereof, issuance wholly for cash of
Common Stock (or other securities which by their terms are convertible into or
exchangeable for Common Stock), dividends payable in shares of Common Stock or
other capital stock or shares of beneficial interest, or issuance of rights,
options, or warrants referred to hereinabove in this Section 11,
hereafter made or declared by the Company to the holders of its Common Stock,
shall not be taxable to such holders.

 

11.14.      No Prejudice of Rights Through Business
Combinations.  The Company covenants
and agrees that it shall not, at any time after the Distribution Date, (a) consolidate
with any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11.15
hereof), (b) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11.15
hereof), or (c) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or a series of related transactions, more than
25% of (i) the assets (taken at net asset value as stated on the books of
the Company and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (ii) the earning
power of the Company and its Subsidiaries (determined on a consolidated basis
in accordance with generally accepted accounting principles consistently
applied) to any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with Section 11.15 hereof), if (x) 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 (whether
or not in writing) in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of such other Person shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates.

 

11.15.      No Actions by Subsidiaries that
Prejudice Rights.  The Company
covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23 or 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.

 

11.16.      Adjustment of Rights upon Common Stock
Dividend, Split or Combination. 
Anything in this Agreement to the contrary notwithstanding, in the event
that the Company shall at any time after the Declaration Date and prior to the
Distribution Date (a) declare or pay a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock or (b) effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or smaller number of shares, then in any such case, (x) the
number of one one-thousandths of a share of Preferred Stock purchasable after
such event upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a share of Preferred Stock so
purchasable immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock

 

22

 

outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such event;
and (y) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
share of Common Stock outstanding immediately prior to such event had issued
with respect to it.  The adjustments
provided for in this Section 11.16
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.

 

12.        Certificate
of Adjustments.  Whenever an
adjustment (including without limitation, an event which causes Rights to
become null and void) is made as provided in Section 11
or Section 12 hereof, the Company
shall (a) promptly prepare an Officers’ Certificate setting forth such
adjustment, including any adjustment in Purchase Price, the number of shares or
Other Consideration payable, and a brief statement of the facts, computation
and methodology accounting for such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Preferred Stock and Common
Stock a copy of such Officers’ Certificate, and (c) mail a brief summary
thereof to each registered holder of a Rights Certificate in accordance with Section 26 hereof. 
The Rights Agent shall be fully protected in relying on any such
Officers’ Certificate and on any adjustment therein contained, and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have
received such an Officers’ Certificate.

 

13.        Flip-Over
Provisions.

 

13.1.        Flip
Over Common Stock Events.  Any of the
following shall constitute a Common Stock Event, should the event occur,
directly or indirectly, following the Stock Acquisition Date:

 

(a)        the Company consolidates with, or merges
with and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11.15
hereof), and the Company is not the continuing or surviving Person of such
consolidation or merger,

 

(b)        any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11.15
hereof) consolidates with, or merges with and into, the Company, the Company is
the continuing or surviving Person of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common Stock
of the Company is changed or otherwise transformed into other stock or other
securities of any other Person or the Company or cash or any other property, or

 

(c)        the Company sells or otherwise transfers
(or one or more of its Subsidiaries sells or otherwise transfers), in one
transaction or a series of related transactions, more than 25% of:

 

(i)         the assets (taken at net asset value as
stated on the books of the Company and determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied),
or

 

23

 

(ii)        the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied)

 

to any Person (other than
the Company or any Subsidiary of the Company in one or more transactions each
of which complies with Section 11.15
hereof).

 

13.2.        Consequences
of Flip Over Common Stock Event. 
From and after any Common Stock Event described in Section 13.1,
proper provision shall be made so that:

 

(a)        each holder of a Right, except as
provided in Section 7.5 hereof, shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price in effect at the time of such exercise in accordance with the terms of
this Agreement, such number of whole or fractional shares of validly authorized
and issued, fully paid, non-assessable, and freely tradable Common Stock of
such other Person (or in the case of a transaction or series of
transactions described in Section 13.1(c),
the Person receiving the greatest amount of the assets or earning power of the
Company, or if the Common Stock of such other Person is not and has not
been continuously registered under Section 12
of the Exchange Act for the preceding 12-month period and such Person is a
direct or indirect Subsidiary of another Person, that other Person, or
if such other Person is a direct or indirect Subsidiary of more than one other
Person, the Common Stock of two or more of which are and have been so
registered, such other Person whose outstanding Common Stock has the greatest
aggregate value), free and clear of any liens, encumbrances, rights of first
refusal, or other adverse claims, as shall be equal to the result obtained by (i) multiplying
the Purchase Price in effect immediately prior to the first occurrence of any
Common Stock Event described in Section 13.1
by the number of one one-thousandths of a share of Preferred Stock for which a
Right is exercisable immediately prior to such first occurrence (and without
taking into account any prior adjustment made pursuant to 11.1.2) and (ii) dividing
that product by 50% of the Current Market Price per share (as defined in Section 11.4 hereof) of the Common Stock of such other
Person determined as of the date of consummation of such consolidation, merger,
sale, or transfer;

 

(b)        the issuer of such Common Stock 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, for all purposes of this Agreement, to refer to such issuer, it being
specifically intended that the provisions of Section 11.1
hereof (other than Section 11.1.2
hereof) shall apply only to such issuer following the first occurrence of a
Common Stock Event described in Section 13.1;

 

(d)        such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) 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 whole or

 

24

 

fractional shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; and

 

(e)        the provisions of Section 11.1.2
hereof shall be of no effect following the first occurrence of any Common Stock
Event described in Section 13.1.

 

13.3.        Acquiror
Requirements.  The Company shall not
consummate any transaction described in Section 13.1
unless:

 

(a)        such Person shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance as will permit the exercise in full of the Rights in
accordance with this Section 13.3,
and

 

(b)        prior thereto the Company and such
Person shall have executed and delivered to the Rights Agent a supplemental
agreement so providing and further providing that as soon as practicable after
the date of any Common Stock Event described in Section 13.1,
such Person shall:

 

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

 

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

 

13.4.        Acquiror
Rights Plan.  In case the Person
which is to be party to a transaction referred to in Section 13.1
has any provision in any of its authorized securities or in its charter or
by-laws or other agreement or instrument governing its affairs, which provision
would have the effect of causing such Person to issue, in connection with, or
as a consequence of, the consummation of a Common Stock Event described in Section 13.1, whole or fractional shares of Common
Stock of such Person at less than the then Current Market Price per share
thereof (as defined in Section 11.4
hereof), or to issue securities exercisable for, or convertible into, Common
Stock of such Person at less than such then Current Market Price, then, in such
event, the Company hereby agrees with each holder of the Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Person shall have executed and delivered to the Rights Agent a supplemental
agreement providing that such provision in question shall have been canceled,
waived, or amended so that it will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

 

13.5.        Future
Transactions; Previous Flip-In.  The
provisions of this Section 13.5
shall similarly apply to successive mergers or consolidations or sales or other
transfers.  In the event that a Common
Stock Event described in Section 13.1
shall occur at any time after the occurrence of a Common Stock Event described
in Section 11.1.2 hereof, the Rights
which

 

25

 

have not theretofore been exercised shall thereafter
become exercisable, except as provided in Section 7.5
hereof, in the manner described in this Section 13.5.

 

14.        Fractional
Rights and Fractional Shares.

 

14.1.        Cash in Lieu of Fractional Rights.  The Company shall not be required to issue
fractions of Rights or to distribute fractions of Rights, except prior to the
Distribution Date as provided in Section 11.9
hereof, or to distribute Rights Certificates which evidence fractional
Rights.  In lieu of issuing such
fractional Rights, at the election of the Company, there shall be paid to the
registered holders of the Rights 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 14.1,
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.

 

14.2.        Cash in Lieu of Fractional Shares
Upon Exercise.  The Company shall not
be required to issue fractions of shares of its capital stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares
(other than, in each case with respect to Preferred Stock or Equivalent
Preferred Stock, fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock or Equivalent Preferred Stock, as the case may
be).  Fractions of shares of Preferred Stock
or Equivalent Preferred Stock, as the case may be, in integral multiples of one
one-thousandth of a share of Preferred Stock or Equivalent Preferred Stock may,
at the election of the Company, be evidenced by depositary 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
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Stock or the
Equivalent Preferred Stock represented by such depositary receipts.  In lieu of fractional shares, at the election
of the Company, there shall be paid to the registered holders of Rights 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 a share of such capital
stock.  For purposes of this Section 14.2, the current market value of a share of
such capital stock shall be the Closing Price of such capital stock for the
Trading Day immediately prior to the date of such exercise.

 

14.3.        Waiver of Right to Fractions.  The holder of a Right, by the acceptance of
the Right, expressly waives such holder’s right to receive any fractional
Rights or (except as provided in Section 14.2
hereof) any fractional share upon exercise of a Right.  The Rights Agent shall have no duty or
obligation with respect to Section 14.2
and Section 24 below unless and until
it has received specific instructions (and sufficient cash, if required) from
the Company with respect to its duties or obligations under such Sections.

 

15.        Rights
of Action.  Excepting the rights of
action given the Rights Agent under Section 18
hereof and except as set forth in Section 20.12
hereof, all rights of action in respect of this Agreement are vested in the
registered holder of each Right; and any registered holder of any Right,
without the consent of the Rights Agent or of the holder of any other Right,
may, in its own behalf and for its own benefit, enforce, and may institute and
maintain any suit, action, or 

 

26

 

proceeding against the Company to enforce, or otherwise act in respect
of, such registered holder’s right to exercise the rights evidenced by such
Right in the manner provided in such Rights Certificate and in this Agreement,
and the Company hereby agrees to reimburse such registered holder for all
expenses (including reasonable attorneys’ fees) incurred by such registered
holder in connection therewith.  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 the obligations hereunder, and shall
be entitled to injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.

 

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

 

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

 

(b)        from and after the Distribution Date,
the Rights Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of transfer
with a form of assignment and certificate set forth on the reverse side thereof
duly executed, accompanied by a signature guarantee and such other
documentation as the Rights Agent may reasonably request;

 

(c)        subject to Sections 6.1
and 7.6 hereof, the Company and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificate or, prior to the Distribution Date, the associated Common Stock
certificate, made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary; and

 

(d)        notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company agrees to use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.

 

17.        Rights
Holder Not Deemed a Stockholder.  No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends, or otherwise be deemed for any purpose the holder of any securities
of the Company which may be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed 

 

27

 

to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote in the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any action by the Company, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to
receive dividends or preemptive rights, or otherwise, until the time specified
in Section 10 hereof.

 

18.        Payment
and Indemnification of the Rights Agent. 
The Company agrees to pay to the Rights Agent such reasonable
compensation as shall be agreed to in writing between the Company and the
Rights Agent 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
disbursements 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 and all loss, liability, damages, judgments, fines, penalties,
claims, demands, settlements, costs or expenses (including, without limitation,
the reasonable fees and expenses of legal counsel), incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(which gross negligence, bad faith or willful misconduct must be determined by
a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction), 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 for any of the foregoing.  The costs and expenses incurred in enforcing
this right of indemnification shall be paid by the Company.  The provisions of this Section 18
and 20 below shall survive the termination
of this Agreement, the exercise or expiration of the Rights and the resignation
or removal of the Rights Agent.  The
Rights Agent shall be fully 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 Rights Certificate or
certificate for any number of one one-thousandths of a share of Preferred
Stock, or for shares of Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper Person or Persons, and verified or
acknowledged as required by this Agreement, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.

 

19.        Merger
or Consolidation or Change of Name of Rights Agent.  Any Person into which the 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 shall be a party, or any
Person succeeding to the shareholder services business of the 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, however, that such Person 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 and any of the Rights 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 Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such 

 

28

 

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

 

20.        Rights
and Duties of Rights Agent.  The
Rights Agent undertakes to perform only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.  The Rights Agent shall perform its duties and
obligations hereunder upon the following terms and conditions:

 

20.1.        Consultation with Legal Counsel.  The Rights Agent may consult with legal
counsel of its selection (who may be legal counsel to the Company or legal
counsel to 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 to any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.

 

20.2.        Officer’s Certificate.  Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person) be proved or established by the Company prior to taking,
suffering or omitting to take 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 (an “Officers’
Certificate”) signed by a person believed by the Rights Agent to be the
Chairman of the Board, the President or any Senior Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such Officers’
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
to any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such Officers’ Certificate.

 

20.3.        Liability.  The Rights Agent shall be liable hereunder
only for its own gross negligence, bad faith, or willful misconduct (which
gross negligence, bad faith, or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).  Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental 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.  Any liability of the Rights Agent under
this  Agreement will be limited to the
amount of fees paid by the Company to the Rights Agent.

 

29

 

20.4.        No Liability for Facts or Recitals.  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 Rights Certificates (except its countersignature on such
Rights Certificate) 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.

 

20.5.        Limitations on Responsibility.  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 Rights 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
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11
hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12
hereof, describing any such adjustment or procedures); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Stock, Common Stock or other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock, or any shares or similar units of
other securities, will, when issued, be validly authorized and issued, fully
paid, and nonassessable.

 

20.6.        Further Assurances by the Company.  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.

 

20.7.        Authorization to Rely upon
Instructions.  The Rights Agent is
hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any person believed by the Rights Agent
to be the Chairman of the Board, the President or any Senior Vice President or
the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instruction shall be full
and complete authorization and protection to the Rights Agent and it shall not
be liable for or in respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with instructions of any such
officer.  Any application by the Rights
Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent with respect to its duties or obligations under
this Agreement and the date on and/or after which such action shall be taken,
suffered or omitted and the Rights Agent shall not be liable for or in respect
to any action taken, suffered or omitted in accordance with a proposal included
in any such application on or after the date specified therein (which date
shall not be less than three Business Days after the date any such officer
actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking, suffering or
omitting any such action, the Rights Agent has received written instructions
from 

 

30

 

the Company in response to such application specifying
the action to be taken, suffered or omitted.

 

20.8.        Transactions with the Company.  The Rights Agent and any stockholder,
director, officer, Affiliate 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 stockholder, director, Affiliate, officer, or employee from acting
in any other capacity for the Company or for any other Person.

 

20.9.        No Liability for Acts of Agents.  The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct absent gross
negligence, bad faith, or willful misconduct in the selection and continued
employment thereof (which gross negligence, bad faith, or willful misconduct must
be determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction).

 

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

 

20.11.      Acting on Void Rights.  If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certification
appearing on the reverse side thereof following the form of election to purchase
has either not been properly completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.

 

20.12.      No Liability to Third Parties.  The provisions of this Section 20
are solely for the benefit of the Rights Agent or the Company and any failure
or omission under this Section 20
shall not affect the rights of the Company under this Agreement and neither the
Rights Agent nor the Company shall have any liability to any holder of Rights
or other Person on account of such failure or omission.

 

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 Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Rights 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, to each transfer agent of the Common Stock
by registered or certified mail, and, subsequent to the Distribution Date, to
the holders of the Rights Certificates by first class mail.  If the Rights Agent shall resign or be
removed or shall otherwise 

 

31

 

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
Rights Certificate (who shall, with such notice, submit such holder’s Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent.  Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be:

 

(a)        a Person organized and doing business
under the laws of the United States, the State of New York or the Commonwealth
of Massachusetts (or of any other 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 or the Commonwealth of Massachusetts), in good standing, having an
office designated for such purpose in the State of New York or the Commonwealth
of Massachusetts, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000, or

 

(b)        an Affiliate of a Person described in
clause (a) of this sentence.

 

After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose; and, except as the context
herein otherwise requires, such successor Rights Agent shall be deemed to be
the “Rights Agent” for all purposes of this Agreement.  Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail
a notice thereof in writing to the registered holders of the Rights
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.

 

22.        Issuance
of New Rights Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement.  In addition, in connection with the issuance
or sale by the Company of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a) shall,
with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or
appropriate by 

 

32

 

the Board, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (x) no such Rights evidenced by a Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences
to the Company or the Person to whom such Rights would be issued, and (y) no
such Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.

 

23.        Redemption
and Termination.  The Board, by
majority vote, may, at its option, at any time prior to the earlier of (a) the
Distribution Date or (b) the Close of Business on the Expiration Date,
redeem all (but not less than all) of the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend, combination of shares, or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”). 
Immediately upon the taking of such action ordering the redemption of
all of the Rights, evidence of which shall have been filed with the Rights
Agent, and without any further action and without any notice, the right to
exercise the Rights so redeemed will terminate and the only right thereafter of
the holders of such Rights so redeemed shall be to receive the Redemption Price
(without the payment of any interest thereon). 
The Company may, at its option, pay the Redemption Price in cash, shares
of Common Stock (based on the Current Market Price of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by
the Board.  Within 10 days after such
action ordering the redemption of all of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders 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 Stock.  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
shall state the method by which the payment of the Redemption Price shall be
made.

 

24.        Exchange.

 

24.1.        Exchange Option.  The Board, by majority vote, 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 for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio, as the same
may be so adjusted from time to time, being hereinafter referred to as the “Exchange
Ratio”).  Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time after any
Person (other than (a) the Company, (b) any Subsidiary of the
Company, (c) any employee benefit plan of the Company or of any such
Subsidiary or (d) any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Stock then outstanding.

 

24.2.        Termination of Right to Exercise;
Notices.  Immediately upon the action
of the Board ordering the exchange of any Rights pursuant to Section 24.1 and without any further action and without
any notice, the right to exercise such Rights shall terminate, and the only 

 

33

 

right thereafter of a holder of such Rights shall be
to receive that number of shares of Common Stock 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 the Rights Agent and 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 shall state the method by which the exchange of the
Common Stock for Rights shall be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7.5
hereof) held by each holder of Rights.

 

24.3.        Substitution for Common Stock.  In any exchange pursuant to this Section 24, the Company, at its option, may substitute
shares of Preferred Stock (or shares of Equivalent Preferred Stock) for shares
of Common Stock exchangeable for Rights, at the initial rate of one one-thousandth of a share of Preferred Stock (or share of
Equivalent Preferred Stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of shares of Preferred
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.

 

24.4.        Authorization of Additional Shares.  In the event that there shall not be
sufficient shares of Common Stock or Preferred Stock authorized but unissued or
issued but not outstanding to permit any exchange of Rights as contemplated in
accordance with this Section 24,
the Company shall take all such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights.

 

24.5.        No Fractions.  The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. 
In lieu of such fractional shares of Common Stock, the Company shall pay
to each registered holder of a Rights Certificate with regard to which a
fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock.  For the purposes of this Section 24.5, the current market value of a whole share
of Common Stock shall be the Closing Price of a share of Common Stock (as
determined pursuant to Section 11.4
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.

 

25.        Notice
of Proposed Actions.  In case the
Company shall after the Distribution Date propose:

 

(a)        to pay any dividend payable in stock of
any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a cash dividend
out of earnings or the retained earnings of the Company), or

 

34

 

(b)        to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock, Common Stock or shares of stock of any other class or any
other securities, rights, or options, or

 

(c)        to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock), or

 

(d)        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 transaction
or a series of related transactions, of more than 25% of:

 

(i)         the assets of the Company and its
Subsidiaries (taken at net asset value as stated on the books of the Company
and determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied), or

 

(ii)        the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons, or

 

(e)        to effect the liquidation, dissolution
or winding up of the Company,

 

then,
in each such case, the Company shall give to the Rights Agent and each holder
of a Right, 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, 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 Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (a) or (b) above at least 20 days prior to the record date
for determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock whichever shall be the earlier.  The failure to give notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.  In case any Common Stock
Event described in Section 11.1.2
hereof shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Rights
Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such Common Stock Event, which shall
specify such event and the consequences of the event to holders of Rights under
Section 11.1.2 hereof.  Notwithstanding anything in this Agreement to
the contrary, prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of
this Agreement and no other notice need be given.

 

35

 

26.                        Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to 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:

 

American Science and Engineering, Inc.

829 Middlesex Turnpike

Billerica, Massachusetts 01821

Attention: William F. Grieco, Vice President and
General Counsel

 

 

Copy to:                                                 Ropes &
Gray LLP

One International Place

Boston,
Massachusetts  02110-2624

Attention: David B. Walek, Esq.

 

Subject
to the provisions of Sections 19 and
21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

 

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10038

Attention:  Shareholder Services

 

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

 

27.                        Supplements
and Amendments.  Prior to the
Distribution Date, the Board, upon the vote of a majority of the Board, may
from time to time supplement or amend this Agreement without the approval of
any holders of the Rights.  From and
after the Distribution Date, the Board may, upon the vote of a majority of the
Board, from time to time amend this Agreement without the approval of any
holders of the Rights in order (a) to cure any ambiguity, (b) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (c) to change any time
period governing redemption of the Rights or any other time period or (d) to
make any other provisions in regard to matters or questions arising hereunder
which the Board, upon the vote of a majority of the Board, may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of the Rights (other than any Acquiring Person or Disqualified Transferee or
any Affiliate of an Acquiring Person or Disqualified Transferee).  Any amendment made pursuant to this Section 27 after a Stock Acquisition Date shall require
the approval of a majority of the Board. 
Upon the delivery of a certificate from an appropriate officer of the
Company, and, if requested by the 

 

36

 

Rights Agent, an
opinion of counsel, which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27,
the Rights Agent shall join with the Company in the execution and delivery of
any such supplement or amendment, unless such supplement or amendment affects
any of the rights, duties, or obligations of the Rights Agent hereunder, in
which case the Rights Agent may, but shall not be required to, join in such
execution and delivery.

 

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

 

29.                        Determinations
and Actions by the Board; Etc.  The
Board 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 (a) interpret
the provisions of this Agreement and (b) make all determinations deemed
necessary or advisable for the administration of this 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 and with the concurrence of a majority of the Board then in
office shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties and (y) not
subject any Director to any liability to the holders of the Rights.

 

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

 

31.                        Severability.  The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or enforceability of any
term or provision hereof shall not affect the validity or enforceability of any
other term or provision hereof shall not affect the validity or enforceability
of any other term or provision hereof. 
If any term, provision, covenant or restrictions of this Agreement is
held by such court or authority to be invalid, void or unenforceable and the
Board determines in its good faith judgment that severing the invalid language
from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close of Business on
the Tenth day following the date of such determination by the Board.

 

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

 

37

 

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

 

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

 

[Remainder of Page Intentionally
Left Blank]

 

38

 

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

 

 

	
   

  	
  AMERICAN SCIENCE AND ENGINEERING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  

 

 

	
   

  	
  AMERICAN STOCK TRANSFER & TRUST 

  
	
   

  	
   COMPANY, as Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  

 

- Signature
Page to Rights Agreement -

 

 

EXHIBIT A

 

FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES
AND

RIGHTS OF PREFERRED STOCK

 

of

 

AMERICAN SCIENCE AND ENGINEERING, INC.

 

American
Science and Engineering, Inc., a corporation organized and existing under
and by virtue of the General Laws of the Commonwealth of Massachusetts (the “Corporation”)
DOES HEREBY CERTIFY:

 

That
pursuant to authority conferred upon and vested in the Board of Directors of
the Corporation (the “Board of Directors”) by the Articles of
Organization of the Corporation, as amended as of the date hereof (the “Articles
of Organization”), the Board of Directors on April 16, 2008  adopted a resolution providing for the authorization of a
series of Preferred Stock, $0.00 par value per share (the “Preferred Stock”)
as follows:

 

RESOLVED:  That
pursuant to the authority vested in the Board in accordance with the provisions
of the Corporation’s Articles of Organization, as amended from time to time,
the Certificate of Designation of the 1998 Series (the “1998 Series Designation”)
attached hereto as Exhibit I, such 1998 Series Designation as
adopted at a meeting of the directors of the Corporation held on April 9,
1998 and filed with the Secretary of the Commonwealth of Massachusetts on April 14,
1998, is hereby amended by and replaced with the Certificate of Designation of Series A
Preferred Stock (the “Series A Designation”) attached hereto as Exhibit II.

 

[Remainder of Page Intentionally
Left Blank]

 

A-1

 

IN
WITNESS WHEREOF, this Certificate of Designation was executed on behalf of the
Corporation by its Chief Financial Officer and Treasurer and attested by its
General Counsel and Vice President on April 16, 2008.

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Kenneth J. Galaznik

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer and Treasurer

  

 

Attest:

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name: William F. Grieco

  
	
   

  	
  Title: Vice President and General Counsel

  

 

A-2

 

Exhibit I

 

The
Commonwealth of Massachusetts

 

William
Francis Galvin

Secretary of
the Commonwealth

One Ashburton
Place, Boston, Massachusetts 02108-1512

 

 

CERTIFICATE OF
VOTE OF DIRECTORS

 

ESTABLISHING A
CLASS OR SERIES OF STOCK

 

(General Laws,
Chapter 156B, Section 26)

 

We Ralph S.
Sheridan, President

and Jeffrey A.
Bernfeld, Clerk

of American
Science and Engineering, Inc.

(Exact name of
corporation)

 

located
at:       829 Middlesex Turnpike, Billerica, MA
01820

(Street
Address of corporation in Massachusetts)

 

do hereby certify that at a meeting of the
directors of the corporation held on April 9, 1998, the following vote
establishing and designating a class or series of stock and determining the
relative rights and preferences was duly adopted:

 

See Attachment
A.

 

Note: Votes for which the space provided
above is not sufficient should be provided on one side of separate 8 1/2 X 11
sheets of white paper, numbered 2A, 2B, etc. with a left margin of at least 1
inch.

 

A-3

 

ATTACHMENT
A

 

VOTED: That
pursuant to authority conferred upon and vested in the Board of Directors by
the Restated Articles of Organization, as amended as of the date hereof (the “Articles
of Organization”), of American Science and Engineering, Inc. (the “Corporation”),
the Board of Directors hereby establishes and designates a series of Preferred
Stock of the Corporation and hereby fixes and determines the preferences,
voting powers, qualifications and special and relative rights of the shares of
such series, in addition to those set forth in the Articles of Organization, as
follows:

 

Section 1.                                            Designation
and Amount.

 

The shares of
such series shall be designated as “Series A Junior Participating Cumulative
Preferred Stock” (the “Series A Preferred Stock”), and the number of
shares initially constituting such series shall be Ten Thousand (10,000)
provided, however, that if more than a total of Ten Thousand (10,000) shares of
Series A Preferred Stock shall be issuable upon the exercise of Rights
(the “Rights”) issued pursuant to the Shareholder Rights Agreement dated as of April 17,
1998, between the Corporation and American Stock Transfer & Trust Co.,
as Rights Agent (the “Rights Agreement”), the Board of Directors of the
Corporation, pursuant to Section 26 of the Massachusetts Business
Corporation Law, shall direct by resolution or resolutions that a certificate
be properly executed, acknowledged, filed and recorded, in accordance with the
provisions of said law, providing for the total number of shares of Series A
Preferred Stock authorized to be issued to be increased (to the extent that the
Articles of Organization then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of such Rights.

 

Section 2.                                            Dividends
and Distributions.

 

(A)                              (i) 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 shares of Common Stock and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and December in
each year (each such date being referred to herein as a Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1.00 or (b) subject to the provisions for adjustment
hereinafter set forth, 1000 times the aggregate per share amount of all cash
dividends, and 1000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. The multiple of
cash and non-cash dividends declared on the Common Stock to which holders of
the Series A Preferred Stock are entitled, which shall be one thousand
initially but which shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the “Dividend Multiple.” In the event
the Corporation shall at any time after April 

 

A-4

 

17, 1998 (the “Rights Declaration Date”) (i) declare or pay any
dividend on Common Stock payable in shares of Common Stock, or (ii) 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 Dividend Multiple thereafter applicable to
the determination of the amount of dividends which holders of shares of Series A
Preferred Stock shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied 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.

 

(ii)                                  Notwithstanding
anything else contained in this paragraph (A), the Corporation shall, out of
funds legally available for that purpose, declare a dividend or distribution on
the Series A Preferred Stock as provided in this paragraph (A) immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

 

(B)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series A Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix in accordance with applicable law 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 such number of days prior to the date fixed for the
payment thereof as may be allowed by applicable law.

 

Section 3.                                            Voting
Rights.

 

In addition to
any other voting rights required by law or the Articles of Organization, 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 one thousand votes on all
matters submitted 

 

A-5

 

to a vote of the stockholders of the Corporation. The number of votes
which a holder of a share of Series A Preferred Stock is entitled to cast,
which shall initially be one thousand but which may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the “Vote Multiple.”
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare or pay any dividend on Common Stock payable in shares of
Common Stock, or (ii) 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 Vote
Multiple thereafter applicable to the determination of the number of votes per
share to which holders of shares of Series A Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.

 

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

 

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

 

Section 4.                                            Certain
Restrictions.

 

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

 

(i)                                    declare
or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration 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 on 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)                              except
as permitted in subsection 4 (A) (iv) below, redeem, purchase or
otherwise acquire for consideration shares of any stock ranking on parity
(either as to

 

A-6

 

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

 

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

 

Section 5.               Reacquired Shares.

 

any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and 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 to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein and in the Articles of Organization.

 

Section 6.               Liquidation, Dissolution or
Winding Up.

 

A)           Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made (x) 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 an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $1,000 per share
or (2) an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of Common Stock, or (y) to the holders
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 other
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 after the Rights Declaration
Date (i) declare or pay any dividend on Common Stock payable in shares of

 

A-7

 

Common Stock, or (ii) 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 per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event under clause (x) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B)           Neither the consolidation nor merging
of the Corporation with or into any other corporation or corporations, nor the
sale or other transfer of all or substantially all of the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section 6.

 

Section 7.               Consolidation, Merger, etc.

 

In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case the shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1000 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, plus accrued and unpaid dividends, if any, payable with respect to
the Series A Preferred Stock. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on
Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

 

Section 8.               Redemption.

 

The shares of Series A
Preferred Stock shall not be redeemable.

 

Section 9.               Ranking.

 

Unless
otherwise provided in the Articles of Organization or a Certificate of
Designation Establishing a Class of Stock relating to a
subsequently-designated series of Preferred Stock of the Corporation, the Series A
Preferred Stock shall rank junior to any other series of the Corporation’s
Preferred Stock subsequently issued, as to the payment of dividends and the

 

A-8

 

distribution of assets on liquidation, dissolution
or winding up and shall rank senior to the Common Stock.

 

Section 10.             Amendment.

 

The Articles
of Organization and this Certificate of Designation shall not be amended in any
manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds or more of
the outstanding shares of Series A Preferred Stock, voting separately as a
class.

 

Section 11.             Fractional Shares.

 

Series A
Preferred Stock may be issued in whole shares or in any fraction of a share
that is one one-thousandth of a share or any integral multiple of such
fraction, 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 Series A
Preferred Stock. In lieu of fractional shares, the Corporation may elect to
make a cash payment as provided in the Rights Agreement for fractions of a
share other than one one-thousandth of a share or any integral multiple
thereof. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on Common Stock payable in
shares of Common Stock, or (ii) 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 issuance of
fractions of a share of Series A Preferred Stock in multiples of
one-thousandth of a share 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.

 

SIGNED UNDER
THE PENALTIES OF PERJURY, this 14th day of April, 1998.

 

	
  /s/ Ralph S. Sheridan

  	
   

  	
  President

  
	
  Ralph S. Sheridan

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jeffrey A. Bernfeld

  	
   

  	
  Clerk

  
	
  Jeffrey A. Bernfeld

  	
   

  

 

A-9

 

Exhibit II

 

CERTIFICATE OF DESIGNATION OF

SERIES A PREFERRED STOCK

 

1.                                       Designation
and Amount.  The shares of such
series shall be designated as “Series A Preferred Stock” (the “Series A
Stock”), shall have a par value per share equal to $0.00 and the number of
shares constituting such series shall be 10,000.  The number of shares of Series A Stock
may be increased or decreased by a resolution duly adopted by the Board of
Directors, but may not be decreased below the number of shares of Series A
Stock then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon conversion of any
outstanding securities convertible into Series A Stock.

 

2.                                       Dividends
and Distributions.

 

2.1.                             Dividend
Preference.  Subject to the prior and
superior rights of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series A Stock with respect to
dividends, the holders of shares of Series A Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
last day of March, June, September and December in each year (each
such date being referred to herein as a “Quarterly Dividend Payment Date”),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment set forth in Section 8
hereof, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 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, $0.66 2/3 par value per share, of the Corporation (the “Common
Stock”) or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Stock.

 

2.2.                             Timing
of Dividend Declaration.  The
Corporation shall declare a dividend or distribution on the Series A Stock
as in Section 2.1 immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of or a
subdivision with respect to Common Stock); provided, however, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Dates, a dividend of
$1.00 per share on the Series A Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.

 

A-10

 

2.3.                              Dividends
Cumulative.  Dividends shall begin to
accrue and be cumulative on outstanding shares of Series A Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of Series A
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series A Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Series A
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date
fixed for the payment thereof.

 

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

 

(a)        Subject to the provision for adjustment
set forth in Section 8 hereof, each share of Series A Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation.

 

(b)        Except as otherwise provided herein or
required by applicable law, the holders of shares of Series A Stock and
the holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.

 

(c)        Except as set forth herein or required
by applicable law, holders of Series A 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.

 

4.                                       Certain
Restrictions.

 

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

 

(a)        declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior 

 

A-11

 

(either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Stock;

 

(b)        declare or pay dividends on 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
Stock, except dividends paid ratably on the Series A 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;

 

(c)        redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock (i) 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 Stock or (ii) in
accordance with Section 4.2; or

 

(d)        redeem or purchase or otherwise acquire
for consideration any shares of Series A Stock, or any shares of stock
ranking on a parity with the Series A 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 the outstanding shares of such stock upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.

 

4.2.                              Subsidiaries.  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 Section 4.1, purchase or otherwise acquire such shares at
such time and in such manner.

 

5.                                       Reacquired
Shares.  Any shares of Series A
Stock redeemed, 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 to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

 

6.                                       Liquidation,
Dissolution or Winding Up.

 

6.1.                              Liquidation
Preference.  Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of Common Stock or any
other stock of the Corporation ranking junior (upon liquidation, dissolution or
winding up) to the Series A Stock unless, prior thereto, the holders of
shares of Series A Stock shall have received 

 

A-12

 

$1,000.00 per share plus
an amount equal to all accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the “Series A
Liquidation Preference”).  Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Stock unless, prior thereto, the holders of shares of Common Stock (which term
shall include, for the purposes only of this Section 6, any series of the
Corporation’s Preferred Stock ranking on a parity with the Common Stock upon
liquidation, dissolution or winding up) shall have received an amount per share
(the “Common Adjustment”) equal to the quotient obtained by dividing (a) the
Series A Liquidation Preference by (b) 1,000 (as appropriately
adjusted as set forth in Section 8 hereof to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock;
such number in this clause (b), as the same may be adjusted from time to time,
is hereinafter referred to as the “Adjustment Number”).  In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then any remaining assets shall be distributed ratably to the holders of Common
Stock.  Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Stock and Common Stock,
respectively, holders of shares of Series A Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of any
remaining assets to be distributed in the ratio of the Adjustment Number to one
(1) with respect to such Series A Stock and Common Stock, on a per
share basis, respectively.

 

6.2.                             Insufficient
Assets.  In the event, however, that
there are not sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series A Stock,
then any remaining assets shall be distributed ratably to the holders of the Series A
Stock and the holders of such parity stock in proportion to their respective
liquidation preferences.

 

6.3.                             Deemed
Liquidations Only for Cash.  None of
the merger or consolidation of the Corporation into or with any other entity,
the sale of all or substantially all of the property and assets of the
Corporation or the distribution to the stockholders of the Corporation of all
or substantially all of the consideration for such sale, unless such
consideration (apart from the assumption of liabilities) or the net proceeds
thereof consists substantially entirely of cash, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 6.

 

6.4.                             Parity
Upon Liquidation.  Each share of Series A
Stock shall stand on a parity with each other share of Series A Stock or
any other series of the same class of Preferred Stock upon voluntary or
involuntary liquidation, dissolution or distribution of assets or winding up of
the Corporation.

 

7.                                       Consolidation,
Merger, etc.  In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the outstanding shares of Common 

 

A-13

 

Stock are exchanged for
or changed into other stock or securities, cash and/or any other property, then
in any such case the outstanding shares of Series A Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject to
the provision for adjustment set forth in Section 8 hereof) equal to 1,000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged.

 

8.                                       Certain
Adjustments.  In the event the
Corporation shall at any time declare or pay any dividend on 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 amounts set forth in Sections 2.1, 2.2, 3(a), 6.1 and 7 hereof with
respect to the multiple of (a) cash and non-cash dividends, (b) votes,
(c) the Series A Liquidation Preference and (d) an aggregate
amount of stock, securities, cash and/or other property referred to in Section 7
hereof, 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.

 

9.                                       Ranking.  The Series A Stock shall rank pari passu
with (or if determined by the Board of Directors in any vote establishing any
other series of Preferred Stock, either senior and prior in preference to, or
junior and subordinate to, as the case may be) each other series of Preferred
Stock of the Corporation with respect to dividends and/or preference upon
liquidation, dissolution or winding up.

 

10.                                 Redemption.  The shares of Series A Stock may be
purchased by the Corporation at such times and on such terms as may be agreed
to between the Corporation and the redeeming stockholder, subject to any
limitations which may be imposed by law or the Articles of Organization, as
amended from time to time.

 

11.                                Amendment.  The Articles of Organization of the
Corporation, as amended from time to time, shall not be amended in any manner
which would materially alter or change the powers, preferences or special
rights of the Series A Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A Stock, voting together as a single class.

 

12.           Fractional Shares.  Series A 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 Series A Stock.

 

A-14

 

EXHIBIT B

 

FORM OF RIGHTS CERTIFICATE

 

	
  Certificate No. R-

  	
   

  	
  Rights

  

 

NOT EXERCISABLE AFTER APRIL 16, 2018 OR EARLIER IF ORDER OF REDEMPTION
IS GIVEN.  THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.  UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN ACQUIRING PERSON (AS
EACH SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. 
THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD,
BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE.  [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES)
OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT).  ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7.5 OF THE RIGHTS AGREEMENT. THE
RIGHTS AGENT WILL MAIL TO THE REGISTERED HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF SUCH MAILING, WITHOUT CHARGE
UPON WRITTEN REQUEST.]*

 

Rights Certificate

 

AMERICAN SCIENCE AND ENGINEERING, INC.

 

This
certifies that [                                               ],
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions, and conditions of the Rights Agreement dated as of April 17,
2008 (the “Rights Agreement”) between  American
Science and Engineering, Inc. (the “Company”),
and American Stock Transfer & Trust Company, 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 

 

*   The portion of the legend in brackets shall
be inserted only if applicable.

 

B-1

 

Agreement) and prior to 5:00 p.m., Boston,
Massachusetts on  April 16, 2018 (the “Expiration
Date”) at the office of the Rights Agent designated for such purpose, or
its successors as Rights Agent, one one-thousandth of a share of the Series A
Preferred Stock, with a par value of $0.00 per share (“Preferred Stock”),
of the Company per each Right represented hereby, at a purchase price of
$250.00 per one one-thousandth of a share (the “Purchase Price”) upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase set forth on the reverse side hereof and the certificate
contained therein duly completed and executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may reasonably
request.  The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of April 16, 2008, based on
the shares of Common Stock of the Company as constituted at such date.

 

As
more fully set forth in the Rights Agreement, upon the occurrence of a Common
Stock Event (as such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by (a) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (b) a Disqualified Transferee (as
defined in the Rights Agreement), such Rights shall automatically become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Common Stock Event.

 

The
Rights evidenced by this Rights Certificate shall not be exercisable, and shall
be void so long as held, by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the exercise by such holder,
of the Rights in such jurisdiction shall not have been obtained or be
obtainable.

 

As
provided in the Rights Agreement, the Purchase Price and the number of whole or
fractional shares of Preferred Stock which may be purchased upon the exercise
of the Rights evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events.

 

In the
circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby shall be
the common stock or similar equity securities or equity interests of an entity
other than the Company.

 

This
Rights 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 Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights
Agreement.  Copies of the Rights
Agreement are on file at the office of the Rights Agent designated for such
purpose and may be obtained by the holder of any Rights upon written request to
the Rights Agent.

 

B-2

 

This
Rights Certificate, with or without other Rights Certificates, upon surrender
at the office of the Rights Agent designated for such purpose, accompanied by a
signature guarantee and such other documentation as the Rights Agent may
reasonably request, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of whole or fractional shares of Preferred
Stock (or other consideration, as the case may be) as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase.  If this Rights
Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.

 

Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Rights  Certificate may be redeemed by
the Company by a majority vote of the Board (as defined in the Rights
Agreement) then in office at any time prior to the earlier of (a) the
Distribution Date or (b) the Close of Business  (as defined in the Rights Agreement) on the
Expiration Date, at a redemption price of $0.01 per Right (which amount is
subject to adjustment as provided in the Rights Agreement).

 

The
Company is not obligated to issue whole or fractional shares of Preferred Stock
(or other securities) upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment may be made at the election of the
Company, as provided in the Rights Agreement.

 

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

 

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

 

B-3

 

WITNESS
the facsimile signature of the proper officers and the seal of the Company.  Dated as of
                                  ,
        .

 

 

	
   

  	
  AMERICAN SCIENCE AND ENGINEERING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST 

  COMPANY, as Rights Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  

 

B-4

 

[Form of
Reverse Side of Rights Certificate]

 

FORM OF
ASSIGNMENT

 

(To be
executed by the registered holder if such

holder
desires to transfer the Rights Certificate)

 

FOR VALUE RECEIVED

hereby sells, assigns and transfers unto

 

	
   

  	
   

  

 

(Please
print name and address of transferee)

 

                                                                                                                                            
whose social security or tax identification number is
                            ,
the Rights evidenced by this Rights Certificate, together with all right, title
and interest herein, and does hereby irrevocably constitute and appoint                                         
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

 

 

	
  Dated: 

  	
                                                    

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Guaranteed:

 

B-5

 

Certificate

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1)           the Rights evidenced by this Rights
Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate of an Acquiring Person (as each such
term is defined in the Rights Agreement); and

 

(2)           after due inquiry and to the best
knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate after the occurrence of a Common Stock Event from any Person who
is, was or subsequently became an Acquiring Person or an Affiliate of an
Acquiring Person.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:*

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

NOTICE

 

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

 

FORM OF ELECTION TO PURCHASE

 

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

 

To American Science and
Engineering, Inc.:

 

The
undersigned hereby irrevocably elects to exercise
                                  
Rights represented by this Rights Certificate to purchase the number of one
one-thousandths of a share of Preferred Stock (or other securities) issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:

 

Please insert social
security

 

B-6

 

or other identifying
number

	
   

  
	
   

  
	
   

  

(Please print name
and address)

 

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

 

Please insert social
security

	
  or other
  identifying number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  

(Please print name
and address)

 

 

	
  Dated: 

  	
                                                

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature must
  conform in all respects to name of holder as specified on the face of this
  Rights Certificate)

  
	
  Signature
  Guaranteed:**

  	
   

  	
   

  	
   

  

 

**           Signature
must be guaranteed by an “Eligible Guarantor Institution” (with membership in
an approved signature guarantee medallion program) pursuant to Rule 17AD-15
of the Securities Exchange Act of 1934.

 

B-7

 

Certificate

 

The
undersigned hereby certifies by checking the appropriate boxes that:

 

(1) the
Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate of any such Acquiring
Person (as each such term is defined in the Rights Agreement); and

 

(2) after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate after the occurrence of
a Common Stock Event (as such term is defined in the Rights Agreement) from any
Person who is, was, or subsequently became an Acquiring Person or an Affiliate
of an Acquiring Person.

 

 

	
  Dated: 

  	
                                    

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Guaranteed:***

 

***         Signature
must be guaranteed by an “Eligible Guarantor Institution” (with membership in
an approved signature guarantee medallion program) pursuant to Rule 17AD-15
of the Securities Exchange Act of 1934.

 

B-8

 

EXHIBIT C

 

AMERICAN SCIENCE AND ENGINEERING, INC.

 

SUMMARY OF PURCHASE
RIGHTS

 

On  April 16, 2008, American Science and Engineering, Inc.
(the “Company”) declared a dividend distribution of one preferred stock
purchase right (collectively, the “Rights”, and individually, a “Right”)
for each share of its common stock, $0.66 2/3 par value per share (“Common
Stock”).  Each Right entitles the
registered holder to purchase from the Company after the Distribution Date
(described below) one one-thousandth of a share of its Series A Preferred
Stock, $0.00  par value per share (the “Preferred
Stock”).  The exercise price is
$250.00 for each one-thousandth of a share of Preferred Stock.  The dividend is payable on April 18,
2008 to the record holders of Common Stock at the close of business on April 16,
2008.  One Right will also be issued for
each share of Common Stock issued between April 16, 2008 and the
Distribution Date.

 

Exercisability
of the Rights; Distribution Date.  The Rights are not exercisable until the
Distribution Date.  The Distribution Date
would occur, if ever and unless delayed by the Company’s board of directors,
ten (10) business days after either of the following events:

 

·  A public announcement that a person or group
other than certain exempt persons (an “Acquiring Person”) has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
Company’s outstanding Common Stock (the “Stock Acquisition Date”), or

 

·  The commencement or announcement of an
intention to make a tender offer or exchange offer that would result in a person
or group, other than certain exempt persons, owning 15% or more of the Company’s
outstanding Common Stock.

 

In the
event that any person becomes an Acquiring Person, then each holder of a Right
would have the right to receive, upon exercise of the Right, that number of
shares of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a market value of two times the exercise
price of the Right.

 

Mergers
and Asset Sales.  If
after the Stock Acquisition Date the Company is acquired in a merger or other
business combination, or 25% or more of its assets or earning power is sold,
proper provision is to be made so that each holder of a Right would have the
right to receive, upon exercise of the Right, that number of shares of common
stock of the acquiring company which at the time has a market value of two
times the exercise price of the Right.

 

Following
the occurrence of any of the events described in this section, any Rights
beneficially owned by any Acquiring Person would immediately become null and
void.

 

Exchange
Option.  The Board 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 for shares
of Common Stock at an exchange ratio of one share of Common Stock per
Right.  The Board, however, may not
effect an exchange at any time after any person (other than (a) the
Company, 

 

C-1

 

(b) any subsidiary of the Company, or (c) any
employee benefit plan of the Company or any such subsidiary or any entity
holding Common Stock for or pursuant to the terms of any such plan), together
with all affiliates of such person, becomes the beneficial owner of 50% or more
of the Common Stock then outstanding. 
Immediately upon the action of the Board ordering the exchange of any
Rights and without any further action and without any notice, the right to
exercise such Rights will terminate and the only right thereafter of a holder
of such Rights will be to receive that number of shares of Common Stock equal
to the number of such Rights held by the holder.

 

Transferability
of Rights.  Until the
Distribution Date, the Common Stock certificates will evidence the Rights, and
the transfer of the Common Stock certificates will constitute a transfer of the
Rights.  After the Distribution Date,
separate certificates evidencing the Rights would be mailed to holders of
record of the Company’s Common Stock as of the close of business on the
Distribution Date, and such separate Rights certificates alone would evidence
the Rights.

 

Redemption.  The Board of Directors, by a majority vote,
may redeem the Rights at a redemption price of $0.01 per Right at any time
before the earlier of the Distribution Date or the close of business on the
Expiration Date described below. 
Immediately upon such redemption, the right to exercise the Rights will
terminate, and the Rights holders will become entitled only to receive the
redemption price.

 

Expiration
Date of Rights.  If not
previously exercised or redeemed, the Rights will expire on April 16,
2018.

 

Anti-Dilution
Adjustment.  The
exercise price, the redemption price, the exchange ratio and the number of
shares of the Preferred Stock or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution under the following circumstances:

 

·  in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, or

 

·  upon the grant to holders of the Preferred
Stock of certain rights or warrants to subscribe for shares of the Preferred
Stock or convertible securities at less than the current market price, or

 

·  upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends out of the earnings or retained earnings of the
Company and dividends payable in shares of Preferred Stock) or of subscription
rights or warrants (other than those referred to above).

 

With
certain exceptions, no adjustment in the exercise price will be required until
cumulative adjustments require an adjustment of at least 1% in such price.  At the Company’s option, cash (based on the
market price on the last trading date prior to the date of the exercise) will
be paid instead of issuing fractional shares of any securities (other than
fractional shares of Preferred Stock in integral multiples of one-thousandth of
a share).

 

C-2

 

No Shareholder
Rights.  A Right
holder, as such, has no rights as a shareholder of the Company, including,
without limitation, the right to vote or receive dividends.

 

Amendments.  Any of the provisions of the Rights Agreement
(described below) may be amended by the Board of Directors prior to the
Distribution Date without the approval of any holders of the Rights.  After the Distribution Date, the Board of
Directors may amend the Rights Agreement to cure any ambiguity, to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person) or to shorten or lengthen any time period
under the Rights Agreement.  A majority
vote of the Board of Directors is required.

 

Tax
Consequences.  Although
the Company believes that neither the distribution of the Rights nor the
subsequent separation of the Rights on the Distribution Date should be taxable
to the stockholders or the Company, stockholders may, depending upon the
circumstances, realize taxable income upon the occurrence of an event described
under “Mergers, Asset Sales and Self-Dealing Transactions.”

 

Rights
Agreement.  The terms
of the Rights are set forth in a Rights Agreement between the Company and  American Stock Transfer & Trust Co., as Rights
Agent.  A copy of the Rights Agreement is
an Exhibit to Form 8-A filed with the Securities and Exchange
Commission.  A copy of the Rights
Agreement is available free of charge from the Rights Agent at the following
address:

 

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10038

Attention:  Shareholder Services

 

This summary does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated in this
summary by reference.

 

C-3

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